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Paramount deal vibes could set industry tone

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Dec 19, 2023
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Illustration: Sarah Grillo/Axios

Paramount could be the first dealmaking domino to fall in 2024 as Hollywood grapples with a post-strike landscape ripe for consolidation.

Why it matters: If Paramount tips, a deal for the company could be a catalyst that sets off a wave of media industry M&A next year.

The latest: Speculation of a Paramount deal picked up pace early this month when media outlet Puck reported that studio Skydance and private equity firm RedBird were "kicking the tires" on a majority stake in National Amusements Inc., the Redstone family business that controls Paramount.

  • NAI holds about 80% of the voting power (and a 10% financial stake) for Paramount.
  • Any NAI buyer would control the future of Paramount's sprawling assets, which includes the studio and its famed Hollywood lot, streaming services Paramount+ and PlutoTV, a slew of cable networks, and broadcaster CBS.
  • "[W]e think Skydance/RedBird could be more willing to do what NAI wouldn't: keep what it wants and break up the rest," Wells Fargo's Steven Cahall wrote earlier this month.
  • NAI declined to comment.

Yes, but: Redstone has so far refused to break up Paramount. A buyer has never materialized for the entire company.

  • One M&A deterrent looming over the company is Paramount's debt load, with $2 billion due next year. The company will likely need a capital infusion or it risks going bankrupt, Needham's Laura Martin warned recently.

Be smart: Deal speculation around Paramount is a constant. Redstone has previously held talks about an NAI agreement with Netflix, Amazon and Activision Blizzard's Bobby Kotick, per multiple news reports.

Zoom in: Some kind of Paramount transaction is likely to materialize. That could spark other deals across the sector, analysts and investors say.

  • Warner Bros. Discovery is expected to be open for deals beginning in the spring, when certain restrictions lift. CEO David Zaslav said he plans to be opportunistic over the next two years.
  • Early next year, we'll find out if Disney has to pay more to Comcast for Hulu. With more cash in hand, Comcast CEO Brian Roberts may be hungry for his own purchase, including a look at Paramount assets.
  • Endeavor Group is on the open market after Ari Emanuel got fed up with his company's lagging stock price; Silver Lake is weighing a take-private offer.

What they're saying: "It has long been our view that the media industry needs to undergo another wave of consolidation. We believe we are inching closer to the tipping point," Bank of America's Jessica Reif Erlich wrote last week.

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