Paramount’s Merger Talks With Skydance Fall Apart

Skydance’s merger talks with Paramount were called off Tuesday after Paramount’s controlling shareholder scuttled the deal, ending a drama that has captivated Hollywood for months.

The suspended negotiations derail attempts to unite Paramount — the parent company of CBS, MTV and Nickelodeon — with Skydance, the up-and-coming movie studio behind “Top Gun: Maverick” that is an important partner for Paramount’s film business.

The deal died just as it neared fruition. Right before Paramount’s special committee was to vote on the deal, lawyers for National Amusements emailed the committee to say it was ending the discussions. The email said that though National Amusements and Skydance had come to an agreement on economic terms, they could not agree on outstanding “noneconomic terms,” according to two people familiar with the matter.

In a statement, Paramount’s special committee confirmed that version of events, adding that “it did not vote on any potential transaction.”

There were several hitches in the last week as Skydance, Paramount and its parent company, National Amusements, reached the final stages of negotiations. Shari Redstone, Paramount’s controlling shareholder, wanted Skydance to agree to provide some legal protection for the deal in case investors filed a lawsuit. Advisers worked through the weekend toward a compromise on those and other terms that had been outstanding. Even as the two sides made progress, a committee of Paramount’s board members evaluating the plan fired a public relations firm it had been using.

The deal was ultimately doomed by a breakdown in negotiations between Skydance and National Amusements. Ms. Redstone was irked that Skydance’s revised terms reduced the value of National Amusements to $1.7 billion from $2 billion, an adjustment that would have affected her family’s personal holdings, according to two people familiar with the matter.