(Reuters) - Paramount Global's ( PARAA ) board of directors Sunday approved a deal to merge with Skydance Media, opening a new chapter for one of Hollywood's oldest studios.

The agreement could be finalized as soon as Sunday night.

The deal marks the end of an era for the Redstone family, whose late patriarch, Sumner Redstone, transformed the family's chain of drive-in movie theaters into a media empire that included Paramount Pictures, the CBS broadcast network and cable television networks Comedy Central, Nickelodeon and MTV.

The merger would combine Paramount, home of such classic films as "Chinatown", "The Godfather" and "Breakfast at Tiffany's", with its financial partner on several major recent films, including "Top Gun: Maverick", "Mission: Impossible-Dead Reckoning" and "Star Trek Into Darkness".

The deal would elevate David Ellison, the 41-year-old tech scion who founded Skydance, as Hollywood's newest power broker. He stands to inherit a media company that has a mountain of challenges, as it navigates an entertainment business upended by the streaming video revolution.

Paramount has shed nearly $17 billion in value since late 2019, as its traditional television business has eroded faster than its Paramount+ streaming service could turn a profit.

There has been tension in the executive suites. Its chief executive, Bob Bakish, was ousted in April after clashing with the company's controlling shareholder, Shari Redstone, over the Skydance deal. He was replaced by a trio of executives who occupy the "office of the C.E.O.," a group that has proposed making $500 million in cuts, selling off certain assets, and exploring a possible joint venture partner for Paramount+.

These plans, which would mean more layoffs at a company that has already undergone a wave of job cuts, may now be in question.

Ellison will likely be joined at Paramount by veteran media executive Jeff Shell, former chief executive of NBCUniversal, once the deal closes, according to two people familiar with the discussions. Shell left NBCU last year after an investigation into an inappropriate relationship and subsequently joined RedBird as its chair of sports and media.

The Paramount-Skydance deal culminated months of talks that appeared to have derailed when Redstone abruptly called off negotiations on June 11.

At that time, Skydance and its partners had reached an agreement to acquire the Redstone family's holding company, National Amusements, which owns 77% of the voting shares of Paramount. However, talks reached an impasse over other issues, including National Amusements' request that the deal be approved by a majority of non-Redstone shareholders, a condition Skydance considered a non-starter.

Other prospective bidders for National Amusements emerged: independent Hollywood producer Steven Paul, Seagram heir Edgar Bronfman, who is backed by private equity firm Bain Capital, and IAC Chair Barry Diller.

Meanwhile, discussions between Ellison and Redstone quietly resumed, and became more constructive, according to two people familiar with those discussions.

Skydance sweetened the Redstone family's payout for the sale of National Amusements to $1.75 billion, said one of the sources familiar with deal terms. It also enhanced legal protections from possible shareholder lawsuits, clearing the way for a new agreement, the source said.

Ellison and his financial backers, including Redbird Capital Partners, also took steps to bolster Paramount's balance sheets, promising an injection of $1.5 billion, the source told Reuters. They also offered to buy about 50% of Paramount's nonvoting shares for $15 a share, the source said.

Holders of Class A voting stock would receive $23 a share, according to another source.

The deal also gives Paramount 45 days to find a better offer, leaving open the possibility of yet another plot twist in an already chaotic deal process.