According to a report by Bloomberg, David Ellison’s Skydance has initiated discussions by making a preliminary offer to purchase Shari Redstone’s stake in National Amusements, the family’s holding company that wields control over Paramount Global.

Representatives for Skydance, National Amusements, and Paramount Global have opted to remain silent on the matter, declining to offer any official comments.

Deadline has gathered that the situation remains unchanged regarding Skydance’s pursuit of the media conglomerate, an endeavor first disclosed by Deadline in early December. However, there are still significant hurdles to overcome before securing a deal for the ultimate prize: Paramount Global.

With National Amusements holding approximately 80% of Paramount Global’s voting stock, Ellison’s primary interest lies in acquiring the studio. However, Paramount is reluctant to part with its crown jewel independently. Thus, acquiring Redstone’s stake in NAI presents a more cost-effective option compared to purchasing the entire company outright. The envisioned strategy involves merging Skydance and Paramount while seeking to divest the company’s other assets.

Meanwhile, Warner Bros. Discovery has also explored the possibility of acquiring NAI/Paramount Global, with CEO David Zaslav engaging in discussions with both Shari Redstone and Paramount Global CEO Bob Bakish. However, this proposition has been met with skepticism from Wall Street, given WBD’s financial challenges following the merger of Discovery and Warner Media.

Rumors surrounding a potential Paramount deal have intensified amidst the company’s financial strain attributed to streaming losses, the ongoing decline of linear television, and a sluggish ad market. Plans for significant layoffs involving hundreds of staffers further underscore the company’s challenges.

Backing Ellison’s endeavor are his family, including his father, billionaire Oracle co-founder Larry Ellison, who serve as Skydance’s majority shareholders. The rapidly expanding studio has played a pivotal role as a financier and producer of Paramount films, including the highly anticipated “Top Gun: Maverick,” along with producing TV series and maintaining an animation division with a multi-year deal with Netflix.

However, the decision to pursue National Amusements has sparked controversy among some Paramount Global investors. While Shari Redstone stands to gain a premium for her NAI stake, Paramount Global shareholders may not reap similar benefits in this scenario.