Paramount and Skydance inch closer to a merger as key hurdle looms

Skydance Media and its private equity backers are targeting May to finalize terms on a deal with Paramount Global, sources told CNBC.

Paramount Global's special committee and David Ellison's Skydance Media, backed by private equity firms KKR and RedBird Capital Partners, are narrowing in on how to value Skydance's assets as part of a merger as well as how much equity to add to the company as part of a recapitalization, according to people familiar with the matter.

Skydance's plan is to name Ellison as CEO of Paramount Global and former NBCUniversal CEO Jeff Shell as the president, said two of the people. Current Paramount CEO Bob Bakish would depart the company, the people said. Spokespeople for Apollo, the Paramount Global special committee, Paramount Global, and Skydance's consortium declined to comment.One significant hurdle that remains is Paramount Global's renewal agreement with Charter Communications for CBS and its cable networks. That deal is relevant to the value of Paramount Global, which could take a hit if Charter drops the networks or agrees to a lower carriage rate, the people said.

There are signs Charter could prove to be a tough negotiator with Paramount Global: Last year the cable provider, the second-largest in the U.S., brieflywhen renewal negotiations between those two companies faltered. Thus far, Bakish has always reached renewal deals with the major pay-TV distributors since taking over as CEO, dating back to his time running Viacom, beginning in 2016.

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