May 6, 2024 - Business

Paramount sale reopens, as Sony-Apollo swoops in

Redstone

Shari Redstone. Photo: Kevin Dietsch/Getty Images

Paramount Global's sale process is wide open after an exclusive window with Skydance Media lapsed, opening the door for Sony's joint bid with Apollo Global Management.

Why it matters: Time is of the essence. Deal talks have dragged on since December, and Paramount has a long list of reasons for wanting to wrap up an agreement soon, including its debt pile and struggling business.

Driving the news: Sony and Apollo Global Management have already submitted a $26 billion joint cash bid to buy the whole company, Axios reported.

  • The special committee overseeing the sale process at Paramount Global initially declined to look at a solo bid from Apollo for the same amount.
  • But now that Apollo is teamed up with Sony, and Sony is the majority backer of the bid, the special committee is expected to engage with the suitors.
  • The New York Times reported on Sunday that Paramount's special committee directors are already negotiating with Sony-Apollo.

Zoom in: One of the factors deterring the special committee from initially reviewing the solo Apollo bid was concerns over regulatory approval, given Apollo's ownership of local TV stations, sources told Axios.

  • In teaming together, Apollo and Japan-based Sony feel confident there would be fewer regulatory concerns, including deal approval from the Committee on Foreign Investment in the U.S. (CFIUS).

Between the lines: Whether Skydance remains in the hunt is unclear. The Times said that Paramount is seeking further negotiations with Skydance.

  • On Sunday, two of Hollywood's most powerful voices, Endeavor CEO Ari Emanuel and Hollywood director James Cameron, endorsed the Skydance deal in an interview with The Financial Times, arguing Skydance CEO David Ellison's leadership of the joint company would be a win for Hollywood.
  • The Skydance deal faces rebellion from Class B shareholders who have said that the Ellison agreement would prioritize Redstone's interests over company shareholders.
  • That deal, if approved by shareholders, would have given controlling shareholder Shari Redstone a cash windfall. The terms also would allow Paramount's assets — including Paramount Pictures, CBS and Viacom cable stations — together under one management team.
  • Skydance and its private equity backers Redbird and KKR presented Paramount with a final offer last week that included some concessions to alleviate shareholder concerns.

The big picture: The deal drama comes as Paramount struggles to make a business case to Wall Street.

  • Billionaire investor Warren Buffett on Saturday said his firm,Berkshire Hathaway, sold its entire Paramount stake. "[W]e lost quite a bit of money," he said.
  • The firm's stock is down more than 70% since its public debut as a combined company in 2019, when CBS and Viacom merged.
  • The ousting of CEO Bob Bakish last week has complicated the company's strategy as it looks to sell itself, with his departure tied partly to his resistance to the Skydance deal.
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