Skydance and Paramount Global highlighted the impact that their proposed merger will have on CBS and local stations in a filing with the FCC that is part of initial steps to secure regulatory approval.
The document also disclosed that Oracle co-founder Larry Ellison will own 77.5% of National Amusements, which will control Paramount Global, while RedBird Capital is expected to hold the remaining 22.5%. Ellison, whose son, David, will be chairman and CEO of Paramount after running Skydance, has always been known to be the main backer of the deal but the size of his holding had not previously been disclosed.
An FCC review typically kicks in when a transaction involves the transfer of ownership of broadcast licenses. The Skydance/Paramount deal involves the transfer of 28 CBS-owned station licenses to the new entity.
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The FCC reviews merger transactions to gauge whether that are in “the public interest, convenience, and necessity.” A factor in that is the impact on competition and localism, something that was apparent in the Skydance application overview, where the word “local” appeared more that 60 times.
Skydance wrote that the transaction “will deliver significant public interest benefits by bringing to New Paramount an infusion of capital and a strengthened balance sheet, as well as a highly qualified leadership team with proven expertise in the broadcasting, media, and technology industries.” They noted that the Ellison family and RedBird do not have any interest in other TV broadcast licenses, so the merger “will not result in a diminution of competition or present any other harms.”
Skydance emphasized the injection of $1.5 billion in new capital into the company. An improved balance sheet, the application stated, is something that will enable to company to “make strategic investments in the legendary newsgathering and reporting efforts of the national CBS television network and the company’s O&O local stations.”
They also promise that, at a time when local stations face “a host of challenges in the current media landscape,” the transaction will “revitalize” local news operations in 17 major U.S. markets of the CBS O&Os, “thereby preserving and promoting the localism and safeguarding the journalistic independence that long have been hallmarks of local broadcast television.”
Skydance’s pursuit of Paramount stretched over nearly eight months. The companies announced plans to merge in July, with a total investment by Skydance of $8 billion. A “go-shop” provision enabled a rival offer from an investor group led by Edgar Bronfman Jr. to surface, but Bronfman eventually withdrew the bid.
Among other things, Skydance said that one of the initiatives will be to rejuvenate the online presence of local stations, “further contributing to the sustainability of the company’s local journalism in the modern media landscape.” They also said that the merger will include unifying cloud providers for Paramount’s streaming services, improving recommendation engines and “optimizing” ad technology.
The application also noted that the new company’s leadership team – including David Ellison and Jeff Shell – “has a history of working productively with organized labor.”
“Mr. Ellison and Mr. Shell will draw upon these experiences to ensure that New Paramount continues to be a source of robust demand for Guild-created programming and maintains its cooperative relationships with the organized labor organizations of which its employees and contractors are or may become members,” the Skydance application stated.
Joe Biden’s administration has taken a particular interest in the impact of mergers on labor markets, and the Justice Department even successfully sued to block Paramount Global’s proposed sale of Simon & Schuster to Penguin Random House on the grounds that it would reduce competition and advances to authors.
Last year, the FCC put up additional hurdles to a proposed acquisition of Tegna’s broadcast stations by Standard General, with FCC Chairwoman Jessica Rosenworcel raising concerns about higher prices and that it would “put jobs in local newsrooms at risk.” Tegna ultimately scrapped the deal.
Paramount Global already is in the midst of slashing 15% of its U.S. workforce. The company also took a nearly $6 billion write-down on the value of its cable networks, which portends further contraction. The FCC filing, while emphasizing the new investments, did not reference whether the newly merged company would undertake additional job cuts.
The FCC review process typically includes a public comment component, where organizations and individuals can weigh in on proposed transactions. The agency typically sets a 180-day “shot clock” to review transactions, although that is an informal timeline.
Skydance and Paramount have said that they expect the merger to close in the first half of 2025.
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