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Paramount and Skydance have haggled for months over an ambitious merger that would usher in a new ruler of a sprawling media kingdom that includes CBS, MTV and the film studio behind “Top Gun.”

The talks reached an even greater intensity in the past week, but at least one major sticking point has emerged between Shari Redstone, Paramount’s controlling shareholder, and Skydance. In the event that Paramount’s investors sue over the merger, which party is on the hook to defend the deal in court?

National Amusements, the parent company of Paramount, wants Skydance to provide legal protection in the event of a lawsuit, warding off shareholders that may file objections to the merger, according to three people familiar with the matter. Skydance has not yet signed off on that deal term.

Legal protection — also known as indemnification — is among the crucial outstanding terms in this deal, which has already been condemned by some Paramount shareholders who protested that it would enrich Ms. Redstone at the expense of other investors.

The deal could still fall through. There are several outstanding issues in the negotiations between Skydance and Paramount, which have recently resumed talks. A special committee of Paramount’s board of directors supports a deal with Skydance. (Puck reported earlier that the special committee had greenlit the deal.)

Another issue that has yet to be settled is whether Paramount will be given a “go-shop” period to see if it can get a superior offer to the Skydance deal or submit the deal to a shareholder vote, according to two people familiar with the matter. A shareholder vote and a “go-shop” period would protect Paramount and National Amusements from lawsuits, but it could prolong the deal-making process.

Paramount is under increasing pressure to do a deal. As the traditional television industry comes under increasing pressure, Paramount has struggled to make the transition to the streaming business, losing hundreds of millions of dollars annually.

Skydance has recently sweetened its offer to acquire Paramount: It agreed to put in a minimum of $1.5 billion to pay down debt on Paramount’s balance sheet.

Paramount and Skydance also agreed to do a tender offer that would allow nonvoting shareholders to sell their stock at a $15 a share, The Wall Street Journal reported on Sunday.

Skydance, a Hollywood studio run by the tech scion David Ellison, is a producer of movie franchises like “Mission: Impossible” and “Top Gun.” Under the terms of the deal now under discussion, Skydance would purchase Ms. Redstone’s stake in National Amusements and then merge with Paramount.

An increasingly unlikely outcome is an outright acquisition by a rival. Sony Pictures Entertainment and the private-equity giant Apollo Global Management recently submitted a nonbinding letter expressing their intent to acquire Paramount for $26 billion in cash, and the two companies have been discussing a deal. But Sony has backed away from its initial proposal and is instead exploring different approaches to the acquisition.

Many of Paramount’s investors have come out against a deal with Skydance, saying it would enrich Ms. Redstone at the expense of other shareholders. The deal would guarantee that Ms. Redstone would receive an extra payout in exchange for her voting clout — typically called a control premium — which many shareholders have argued is unfair. Some have threatened to sue.



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