David Ellison's Skydance Media is exploring buying Paramount Global

Skydance is working with private equity firms RedBird Capital Partners and KKR & Co. on a deal to purchase National Amusements, the holding company owned by Shari Redstone. It controls 77% of Paramount's voting shares.

But that deal is contingent on Skydance merging with Paramount, and the potential structure of the merger would be a full takeover of the larger media company, the people said.

Redstone is considering a sale as the media landscape shifts away from traditional television toward streaming. While Paramount Global has run a profitable business for decades, it is smaller than Netflix, Google's YouTube, Apple, Amazon and other larger streaming companies that have larger balance sheets for providing sports and entertainment content.

No takeover has been guaranteed, and talks could collapse.

It's not clear whether Redstone will demand a different premium for the sale of National Amusements than the rest of Paramount Global's shareholders will receive.

Skydance will need additional capital to acquire Paramount, which has a market cap of $8.2 billion and has about $15 billion in debt. Some of that funding could come from Skydance's private equity partners and Larry Ellison, the billionaire co-founder of Oracle and father of David Ellison. Skydance has not yet reached out to outside financing because it has not decided whether it wants to move forward with the deal, the people said.

Skydance is not interested in a deal in which it would acquire not only National Amusements but not all of Paramount, the people said. While such a deal would give Skydance control of Paramount, it would not solve Paramount's problems as a publicly traded company, which include running the growing but loss-making Paramount+ streaming service, and operating flagging linear cable assets like MTV, VH1, and Comedy. Central and Nickelodeon.

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Spokespeople for RedBird, Skydance, Paramount Global and National Amusements declined to comment.

Warner Bros. Discovery also has preliminary discussions about acquiring Paramount Global, according to people familiar with the matter. One of the people said that if Redstone sold to Skydance, one motivating factor would be its fear that Warner Bros. would favor the company. Discovery merges with Comcast's NBCUniversal.

Puck first reported Skydance's interest in acquiring National Amusements. The Wall Street Journal mentioned Last week Skydance was interested in a two-part deal that would involve merging Skydance and National Amusements. Bloomberg first reported about Initial exchange of company information.

Disclosure: Comcast NBCUniversal is the parent company of CNBC.

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