Members of Paramount Global's board agreed on Wednesday to enter into exclusive merger talks with Skydance Media, favoring the independent studio over a $26 billion offer from private equity firm Apollo Global Management, a person familiar with the matter said.

The deal talks are more advanced than the offer from Apollo and if successful, would end Shari Redstone's control of the media empire built by her father, the late Sumner Redstone. The agreement grants Skydance 30 days of exclusive talks with Paramount.

A special committee of Paramount's board elected "to pursue the bird in hand," rather than chase a deal "that might not actually come to fruition," said the person with knowledge of the board's action.

Paramount's shares surged nearly 15% on Wednesday after The Wall Street Journal first reported the exclusive negotiations with Skydance.

Skydance declined to comment. Paramount and National Amusements could not be reached for comment.

A special committee of Paramount's independent directors has spent months in negotiations with Skydance, said the source, who added that the group's advisors, Centerview Partners and the law firm Cravath, Swaine & Moore, recommended the parties enter exclusive talks in an attempt to reach a deal.

Skydance is led by David Ellison, son of Oracle co-founder Larry Ellison, and is seeking to buy National Amusements, the Redstone family's holding company, which directly or indirectly owns about 77% of Paramount's voting class stock.

That sale is contingent upon Ellison's ability to merge Skydance and Paramount Global.

Two people familiar with Apollo's offer described it as "extremely preliminary," noting that it was not the result of negotiations or diligence, but rather to "stall" any deal with Skydance.

Apollo earlier this year bid $11 billion for the crown jewel among Paramount Global's media assets, its film studio. Paramount's enterprise value at the end of 2023 was about $22.5 billion.

Last weekend, it submitted its $26 billion all-cash offer for the whole company, according to three sources familiar with the terms of the bid.

All sources were not authorized to speak to media and declined to be identified.

A successful Skydance-Paramount deal would mark further consolidation in the media industry where traditional television businesses have declined as audiences gravitate to video streaming services. The industry is also grappling with the impact of Hollywood's labor strikes last year and a soft advertising market.

Paramount Global has lost more than $16 billion in value since it was formed through the hard-fought reunion of CBS and Viacom in 2019. The company’s market capitalization fell below $10 billion in January.

In January, a source said Ellison was exploring an all-cash bid to acquire National Amusements.

(Reporting by Mehnaz Yasmin in Bengaluru and Dawn Chmielewski in Los Angeles; Editing by Maju Samuel, Edwina Gibbs and Neil Fullick)