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After months of negotiations, Paramount has inked a merger agreement with film studio Skydance Media, owned by David Ellison, son of billionaire Oracle founder Larry.
A key player in the negotiations is Skydance's private equity backer RedBird Capital Partners. The Ellison family and RedBird will invest $6 billion and $2 billion, respectively, to take over Paramount and bolster its balance sheet. The merged entity, dubbed "New Paramount," will stay public.
An investor in Skydance since 2020, RedBird is the media company's largest shareholder other than the Ellison family. In the 10 years since its founding, RedBird has emerged as a top dealmaker in sports and entertainment with $10 billion in assets.
Founder and chief executive Gerry Cardinale made his name at Goldman Sachs as the banker to the New York Yankees, the Dallas Cowboys, and the NFL. The merger comes as "incumbent media companies are increasingly challenged by technological disintermediation," Cardinale said in a press release.
"Paramount has the intellectual property foundation to ensure longevity through this evolution — but it will require a new generation of visionary leadership together with experienced operational management to navigate this next phase," he added.
RedBird, owner of football club AC Milan since 2022, has been on a shopping spree. In May, it acquired All3Media, the TV and film production company behind "Fleabag," for £1.15 billion (some $1.4 billion). It attempted to buy the UK newspaper, the Telegraph, before withdrawing in April. Last month, RedBird joined forces with Weatherford Capital to launch an investment fund for collegiate sports.
David Ellison will helm New Paramount as its CEO. Jeff Shell, ex-NBCUniversal CEO and current chairman of sports and media at RedBird, will report to Ellison as president.
The deal is typical of Cardinale's playbook. RedBird isn't a typical buyout firm, instead installing new management and leveraging intellectual properties to build larger businesses. Skydance has already successfully co-produced the "Top Gun" reboot with Paramount and holds the rights to produce and finance other Paramount properties, including Transformers.
"I think it's my biggest competitive advantage that I don't get emotionally attached," Cardinale told Business Insider in 2022. "They're all pieces of intellectual property that have a legitimate right to be monetized as long as they balance the fan-social contract at the same time."
Business Insider spoke with 27 of Cardinale's colleagues and peers to learn more about his winning strategy. One of his superpowers, many said, is his relationship savvy. Many of RedBird's business partnerships date back to his Goldman days.
"He had a knack for developing relationships with entrepreneurs, particularly those with more of a maverick style," said Jon Winkelried, the CEO of TPG and the former copresident of Goldman Sachs. "There are a lot of smart investors who can run the numbers, who can figure out the cash flows, but it is very hard to get high-powered people who have accomplished a lot to want to allocate some of their valuable time to you. People want to spend their time with Gerry."
