KEVIN WINTER

The production company behind Top Gun: Maverick might fly to the top of Paramount’s mountain of content.

Skydance Media, the production studio owned by Larry Ellison’s son David, is in advanced negotiations to take a significant stake in Paramount Global. The exact nature of the deal has not yet been defined, including whether or not Skydance and its private equity backers RedBird Capital Partners and KKR will take a majority stake. But talks between the two sides are moving quickly, following Skydance and Paramount entering an agreement to engage in exclusive talks last week.

If the deal were to go through, it would cement David Ellison’s rise as a Hollywood power player.

For an upstart like Skydance, buying Paramount Global, ordinarily considered an ailing company, would represent a coup. Skydance would own Paramount’s storied library, which counts properties like The Godfather and Titanic, the entire CBS brand and its valuable news outlet, several cable channels like Nickelodeon and Comedy Central, and a streaming service with 67 million subscribers in Paramount+ among its assets. Closing the deal would announce that the wealthy son of the ninth-richest man in the world—who would still be providing some of the capital needed to fund the deal—has perhaps well and truly made it in Hollywood.

Ellison first showed up in the movie business as a fresh-faced 23-year-old whom many studios and executives thought they could fleece for some cash. Instead he took his family money and put it to work building a successful company that’s created a long-lasting relationship with Tom Cruise, produced dozens of movies, and recently branched out into video games. Now Ellison is poised to strike a deal for one of the dying embers of Hollywood’s Golden Age in Paramount Global.

Paramount and KKR declined to comment. RedBird and Skydance did not respond to a request for comment.

The current outline of the deal would be structured so that the Skydance contingent would acquire Shari Redstone’s holding company, National Amusements, which controls about 77% of the voting shares of Paramount Global, but notably less than 10% of the total equity. Skydance and Redstone already have an agreement in principle, according to Bloomberg. The deal would see Skydance and its partners pay over $2 billion for National Amusements, effectively giving them control of Paramount. They are also in talks to buy a certain number of common shares. The combined number of shares would give Skydance and its partners control of about 45% to just over 50% of Paramount, according to CNBC.

By Thursday it appeared negotiations between the two groups were picking up speed. Executives from Paramount and Skydance are scheduled to meet sometime next week, according to a CNBC report Thursday, while the investment firm RedBird, a specialist in the media sector, will begin due diligence at Paramount.

Skydance would then merge with Paramount Global. If that were to happen the new company would be run by Ellison with a senior role for former NBCUniversal CEO and current RedBird executive Jeff Shell.

Ellison and Paramount have a long-standing relationship. When the young scion was just breaking into Hollywood he financed and produced several Paramount pictures, including Star Trek and Mission: Impossible movies. Eventually he branched out on his own, founding Skydance in 2010. Since then the company has produced several major hits including Top Gun: Maverick and Mission Impossible: Dead Reckoning Part One.

In the early days it was hard to shed the rich-kid aura, Ellison said. “There was a period of time where people just looked at us as money, and we knew that,” he told the New York Times in 2021. “But there has been a shift. Our content, the ideas, the execution, has become more important than our capital.”

Since then Skydance has expanded to include animations, video games, and VR content. It’s also started to attract some of the best talent in the business. The animation division is headed by John Lasseter, a man who is already familiar with Silicon Valley’s encroachments into Hollywood, having started Pixar alongside Steve Jobs. Cruise, who has worked with Skydance on multiple projects, sang Ellison’s praises effusively in a 2015 GQ profile. Skydance’s video game division has secured licenses for major IP franchises like Marvel and Star Wars.

If Skydance were to succeed in taking over Paramount Global, it wouldn’t just represent a personal triumph for Ellison, but a corporate one for an independent movie studio that entered a deal with a legacy media company as a buyer, not a seller. More often than not in the history of the entertainment business, successful independent companies have eventually been subsumed by the behemoths that dominated the industry. One need not look any further than Pixar, where Lasseter made his name, bought by Disney for $7.4 billion in 2006. Skydance could also have been lapped up by a tech company in the same way Amazon bought MGM for $8.5 billion in 2021.

Whether or not a Skydance deal represents the best option for Paramount shareholders remains to be determined in full. Paramount had an independent committee comprising eight of its 11 board members that was tasked with finding the best possible deal for the company. On Thursday, three people on that committee, along with another board member, left their directorships. In the meantime, several shareholders are up in arms about the deal, setting up a potential boardroom showdown. If the deal falls apart Redstone and the Paramount board might have to settle for another deal, which at the moment seems to be a $26 billion all-cash offer from private equity firm Apollo.