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Paramount sheds assets as consolidation pressure mounts

Tim Baysinger
Data: Yahoo Finance; Chart: Axios Visuals

Paramount's sale of its book publishing business Simon & Schuster is part of a wider effort to shed non-core assets and focus on streaming.

Why it matters: Shari Redstone's media giant is slimming down the company ahead of a potential sale, something that's long been anticipated since she recombined CBS and Viacom in 2019.

Driving the news: Paramount agreed to sell Simon & Schuster to KKR for $1.62 billion, the private equity giant announced Monday afternoon.

  • The expected deal gives Paramount cash to pay down debt and focus more on its entertainment business.

The big picture: Paramount is one of the smallest publicly traded media conglomerates within its peer set.

  • Shares in Paramount have declined 6% this year, as the company struggles to produce big box office hits and manage losses from its streaming business.
  • Paramount's parent company National Amusements is in talks to renegotiate some of its debt after it disclosed heightened financial risks; the company took out a $125 million preferred equity investment from BDT & MSD Partners in May.

Between the lines: Paramount is currently engaged in multiple deals to offload more assets.

  • The company has been looking to sell a majority stake in BET Group — which encompasses BET, BET Studios, BET+ and VH1 — but has yet to find a buyer willing to meet its $3 billion asking price.
  • Paramount has also been trying to sell a majority stake in Noggin, its learning-focused streaming service for preschoolers, since April.

What they're (not) saying: Paramount Global CEO Bob Bakish declined to give much detail when asked about the state of those sale talks.

  • "We're always looking for ways to maximize shareholder value. And as we said before, that might involve vesting, acquiring or potentially partnering on assets, all of which we've done," he said in Monday's earnings call.

Of note: Paramount folded in its pay cable network Showtime's business operations into Paramount+, including combining those two previously separate streaming services.

What to watch: Another round of consolidation within the media industry is expected next year, when the tax provision used to merge WarnerMedia and Discovery last year expires, allowing Warner Bros. Discovery to pursue an even bigger combination, if it so chooses.

  • That possibility, combined with a healthier market, could usher in a new wave of mergers that would force Paramount to consider a possible merger of its own, simply to compete.
  • Disney CEO Bob Iger made waves last month during a CNBC interview when he hinted the company is strongly looking at offloading its TV networks, including ABC, while also searching for a strategic partner for ESPN.
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