NEW YORK — The entertainment giant Paramount will merge with Skydance, closing out a decades-long run by the Redstone family in Hollywood and injecting desperately needed cash into a legacy studio that has struggled to adapt to a shifting entertainment landscape.

It also signals rise of a new power player, David Ellison, the founder of Skydance and son of billionaire Larry Ellison, the founder of the software company Oracle.

Shari Redstone’s National Amusements has owned more than three-quarters of Paramount’s Class A voting shares though the estate of her late father, Sumner Redstone. She had battled to maintain control of the company that owns CBS, which is behind blockbuster films such as “Top Gun” and “The Godfather.”

Just weeks after turning down a similar agreement with Skydance, however, Redstone agreed to a deal on terms that had not changed much.

“Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king,” said Redstone, who is chair of Paramount Global.

The New Combined Company

The new combined company is valued at around $28 billion. In connection with the proposed transaction, which is expected to close in September 2025 pending regulatory approval, a consortium led by the Ellison family and RedBird Capital will be investing $8 billion.

Skydance, based in Santa Monica, California, has helped produce some major Paramount hits in recent years, including Tom Cruise films like “Top Gun: Maverick” and installments of the “Mission Impossible” series.

Skydance was founded in 2010 by David Ellison and it quickly formed a production partnership with Paramount that same year. If the deal is approved, Ellison will become chairman and chief executive officer of what’s being called New Paramount.

Ellison outlined the vision for New Paramount on a conference call about the transaction Monday. In addition to doubling down on core competencies, notably with a “creative first” approach, he stressed that the company needs to transition into a “tech hybrid” to stay competitive in today’s evolving media landscape.

“You’ve watched some incredibly powerful technology companies move into the … media space and do so very successfully,” Ellison said. He added that it was “essential” for New Paramount to chart a similar course going forward.

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That includes plans to “rebuild” the Paramount+ streaming service, Ellison noted — pointing to wider goals to expand direct-to-consumer business, such as increasing engagement time on the platform and reducing user churn. He also said that the company aims to transition to more cloud-based production and continue the use generative artificial intelligence to boost efficiency.

Restructuring Plans for New Paramount

Executives also outlined further restructuring plans for New Paramount on Monday’s conference call, with chairman of RedBird Sports and Media Jeff Shell noting that they had identified some $2 billion in cost efficiencies and synergies that they’ll “attempt to deliver pretty rapidly.”

Shell and others addressed the declining growth of linear TV. That will continue to represent a big chunk of the company’s operations, he said, but learning learn how to run this portion of business differently will be key.

The on-again, off-again merger arrives at tumultuous time for Paramount, which has struggled to find its footing for years and its cable business has been hemorrhaging. In an annual shareholder meeting in early June, the company also laid out a restructuring plan that included major cost cuts.

Leadership at Paramount was also volatile earlier this year after its CEO Bob Bakish, following a number of disputes with Redstone, was replaced with an “office of the C.E.O,” run by three executives. Four company directors were also replaced.

Paramount’s Rich History

Paramount is one of Hollywood’s oldest studios, dating back its founding in 1914 as a distributor. Throughout its rich history, Paramount has had a hand in releasing films — from “Sunset Boulevard” and “The Godfather,” to “Raiders of the Lost Ark” and “Titanic.”

The studio also distributed several early Marvel Cinematic Universe films, including “Iron Man” and “Thor,” before the Disney acquisition. In addition to “Mission: Impossible” and “Top Gun,” Paramount’s current franchises include “Transformers,” “Star Trek” and “Jackass.”

While Paramount has not topped the annual domestic box office charts for over a decade, the wild box office success of “Top Gun: Maverick” in 2022 (nearly $1.5 billion worldwide) was an important boon to both movie theaters and the industry’s pandemic recovery.

Still, its theatrical output has declined somewhat in recent years. Last year it released only eight new movies and came in fifth place for overall box office at around $2 billion — behind Universal (24 films), Disney (17 films), Warner Bros. and Sony.

This year the release calendar is similarly modest, especially with the absence of “Mission: Impossible 8,” which was pushed to 2025 amid the strikes. They’ve had some successes, with “Bob Marley: One Love” and “A Quiet Place: Day One,” and still to come is Ridley Scott’s “Gladiator” sequel.

Industry Reactions to the Merger

The National Association of Theatre Owners, a trade organization that represents over 35,000 screens in the U.S., said in a statement Monday that it plans to look closely at the details of the merger with an eye towards whether it will produce more or less theatrical releases.

“We are encouraged by the commitment that David Ellison and the Skydance Media team have shown to theatrical exhibition in the past,” said Michael O’Leary, president and CEO of the National Association of Theatre Owners. “A merger that results in fewer movies being produced will not only hurt consumers and result in less revenue, but negatively impact people who work in all sectors of this great industry – creative, distribution and exhibition.”

Sumner Redstone used National Amusements, his family’s movie theater chain, to build a vast media empire that included CBS and Viacom, which have merged and separated a number of times over the years. Most recently, the companies re-joined forces in 2019, undoing the split consummated in 2006. The company, ViacomCBS, changed its name to Paramount Global in 2022.

Under Sumner Redstone’s leadership, Viacom became one of the nation’s media titans, home to pay TV channels MTV and Comedy Central and movie studio Paramount Pictures.

It is a company with a rich history, as well as a deep bank of media assets, and Skydance wasn’t the only one to gun for Paramount in recent months — Apollo Global Management and Sony Pictures also made competing offers.

Late last year, Warner Bros. Discovery also made headlines for exploring a potential merger with Paramount. But by February, Warner had reportedly halted those talks.