Entertainment giant Paramount will merge with production company 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 the 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 through the estate of her late father, Sumner Redstone. She had battled to maintain control of the company 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 is valued at around $28 billion US.

Skydance, based in Santa Monica, Calif., has helped produce some major Paramount hits in recent years, including Tom Cruise films like Top Gun: Maverick and instalments 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. Ellison, if the deal is approved by U.S. regulators, will become chairman and chief executive officer of what's being called New Paramount.

Paramount's losses, debts ongoing

The on-again, off-again merger arrives at a tumultuous time for Paramount, which in an annual shareholder meeting in early June laid out a restructuring plan that includes major cost cuts.

Leadership at Paramount has been volatile this year after its CEO Bob Bakish, following a number of disputes with Redstone, was replaced with an "office of the CEO," run by three executives. Four company directors were also replaced.

Paramount, however, has struggled to find its footing for years and its cable business has been hemorrhaging. To capture today's growing streaming audience, the company launched Paramount+ back in 2021, but losses and debts have continued to grow.

Sumner Redstone used National Amusements, his family's movie theatre 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.