Paramount Pictures has thrown a wrench into Skydance Media’s merger aspirations by opting not to extend their exclusive negotiation period, potentially jeopardizing a complex deal that has been in the works for months. This move by Paramount, confirmed by sources familiar with the matter on Friday, not only imperils the proposed merger but also invites competing offers for Skydance, the studio behind popular franchises like “Mission: Impossible.”

The exclusive 30-day window for talks between Skydance and a special committee of Paramount’s board is set to close at the end of Friday. The next steps for Skydance, led by tech scion and producer David Ellison along with backing from RedBird Capital Partners, remain uncertain. Options for Skydance include waiting for Paramount to reinitiate discussions, submitting a higher bid, or withdrawing from the negotiation table altogether amid concerns of being used as leverage to inflate offers from other interested parties.

Paramount’s decision shifts attention toward potential talks with Sony Pictures Entertainment, aligned with private equity giant Apollo Global Management, who have reportedly made a $26 billion cash bid for Paramount. Shareholders of Paramount are notably supportive of this offer, which includes assuming Paramount’s debt, as it promises a significant premium over the current stock price.

The special committee at Paramount is scheduled to convene on Saturday to deliberate on these critical developments, according to insiders familiar with the company’s plans.

However, the proposed deal with Sony and Apollo is not immune to challenges. Regulatory constraints limit foreign ownership of broadcast networks such as CBS, which falls under Paramount’s umbrella. Sony Pictures Entertainment, headquartered in Tokyo under the Sony Group, faces hurdles in obtaining the necessary license to own CBS. Potential solutions could involve Apollo seeking the license or considering a divestiture of the network.

The final say on Paramount’s fate rests with Shari Redstone, the board chair of Paramount’s parent company, National Amusements, who wields veto power over any potential agreement. Ms. Redstone has already signaled conditional approval for a Skydance-National Amusements deal, which hinges on the merger with Paramount moving forward.

CNBC previously reported Paramount’s intention to conclude exclusive negotiations with Skydance, signaling a dramatic turn in the studio’s acquisition saga.

This article was originally published on May 3, 2024, at 10:15 pm ET.