Paramount's stock price drops due to rumors that the Skydance merger may necessitate the company to issue new shares.

• CNBC's David Faber reported that Paramount may need to raise new equity to merge with Skydance Media, resulting in a decline in Paramount's stock.
• David Ellison of Skydance is reportedly in exclusive talks to purchase Shari Redstone's controlling stake in Paramount, and the companies are also reportedly in exclusive merger discussions.

On Thursday, the stock of the company dropped 8% after CNBC's David Faber announced that the company would need to raise up to $3 billion in new equity if it were to merge with David Ellison's Skydance Media, according to sources close to the deal.

According to Bloomberg, Shari Redstone, the controlling shareholder of Paramount, is in exclusive talks with Larry Ellison to sell her stake to him, and the companies have also reportedly entered exclusive merger discussions.

Ellison and his partners are likely to contribute significantly to the equity, but it would result in dilution.

Apollo Global Management made a $26 billion all-cash offer for Paramount, but Redstone rejected it and has not shown any interest in the deal.

Paramount's stock had jumped sharply in trading Wednesday after those reports.

Redstone is considering selling Paramount, which has been in talks with potential buyers. The MTV and CBS parent company has a market capitalization of nearly $10 billion and about $13 billion of net debt.