The media giant Paramount, known for “Top Gun” and CBS, agrees to merge with Skydance

Paramount Global, the sprawling media empire behind CBS, MTV and one of Hollywood’s best-known movie studios, has agreed to merge with tech magnate David Ellison’s Skydance Media, ending years of speculation about the company’s fate.

The deal, announced late Sunday, came just weeks after Ellison’s previous bid to buy Paramount fell through at the last minute, stunning industry insiders and raising questions about the future of the troubled media company.

The agreement cements Ellison’s status as a media mogul and ends Shari Redstone’s control of Paramount through her family’s holding company, National Amusements, after her father, the late Sumner Redstone, won a fierce bidding war to combine the media conglomerates for the first time since the 1980s.

As part of the complex transaction, Skydance will first acquire National Amusements and then merge with Paramount. Skydance is valued at $4.75 billion.

Ellison’s production company will “invest $2.4 billion to acquire National Amusements for cash and $4.5 billion for the stock/cash merger consideration to be paid for publicly traded Class A shares and Class B shares, as well as $1.5 billion of primary capital to be added to Paramount’s balance sheet,” the company said in a statement.

The combined company would have Ellison as chief executive officer and former NBCUniversal president Jeff Shell as president.

The deal brings to an end a tumultuous and protracted saga that began in December when the two companies entered exclusive negotiations in April and led to the firing of longtime Paramount executive Bob Bakish. The company is currently led by three executives: Paramount Pictures CEO Brian Robbins, Showtime and MTV Entertainment Studios CEO Chris McCarthy and CBS CEO George Cheeks.

While traditional media companies have struggled in recent years, Paramount, with its extensive portfolio of cable channels including MTV and Comedy Central, has been hit hard by a stunning consumer shift away from traditional TV and streaming services. As services like Netflix exploded in popularity, millions of people ditched cable TV in favor of cheaper, on-demand streaming shows and movies. Paramount, which relies heavily on its TV business, was caught unprepared.

To stem the decline in cable revenues, Paramount spent billions of dollars building its own streaming service, Paramount+. But the service has lagged, and like competing streaming platforms from other traditional media companies, it has struggled to find enough consumer traction to offset losses in its linear TV business.

Valuations at the cult company have also plunged amid the turmoil. Paramount shares have fallen more than 75 percent in the past five years. At a company meeting last month, Mr. Robbins acknowledged that it was a tumultuous time, with questions about the conglomerate’s future.

“We’d like to take a moment to acknowledge the challenges of all the M&A speculation surrounding our company. We know what a difficult and disruptive period it has been,” Robbins said. “And while we cannot say that the noise will disappear, we are here today to lay out a go-forward plan that can set us up for success no matter what path the company chooses to go down.”

Redstone has been contacted in recent years to sell off pieces of Paramount’s vast media portfolio, which included Showtime and the cable network BET. However, a number of expensive proposals to split up the business were eventually turned down.

As tender offers for Paramount heated up again in recent months, Sony Pictures and private equity firm Apollo Global Management proposed a $26 billion deal that would have seen Sony become the largest shareholder and Apollo take a minority stake. But the deal could have led to the breakup of Paramount, a prospect rejected by Redstone, citing his strong ties to the company his father built over decades.

In exchange for billions of dollars and the security of selling the family business to the heir apparent of another titan who has pledged to invest in Paramount’s future, Redstone accepted an offer she couldn’t refuse when the company was sold to Skydance Media, which was created in 2010 by David Ellison, son of Oracle cofounder Larry Ellison. Along with their long-standing partnership, Skydance and Paramount had produced some of the biggest box office hits in recent years, such as “Top Gun: Maverick” and “Mission: Impossible.”

“Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king,” Redstone said in a statement. “Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment.”