6 MAY 2024

Paramount opened talks with Sony And Apollo

After the two companies had presented an offer to acquire Paramount Global for $26bn, Paramount’s board decided to negotiate with all the suitors, including Skydance as well.

6 MAY 2024

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Paramount has decided to initiate formal negotiations with a bidding consortium led by Sony Pictures Entertainment and the private equity firm Apollo, following the expiration of exclusive talks with Skydance on May 3, as reported by the New York TimesA special committee of Paramount’s board of directors authorized the commencement of discussions with Sony and Apollo, who had submitted a letter of interest valuing the company at $26 billion last week. The committee also resolved to pursue further discussions with Skydance, a studio founded by David Ellison.

Paramount, which owns Nickelodeon, MTV, CBS, and Paramount Pictures, has been exploring a deal in response to industry challenges such as the decline of cable TV and the financial struggles of its streaming ventures. However, any potential deal between Sony and Paramount faces obstacles. Government regulations limit foreign ownership of broadcast networks, potentially complicating Sony's bid due to its Japanese parent company. The bidding group may propose that Apollo, being a U.S.-based entity, holds the CBS broadcast license.

Under the contemplated terms of the Sony-Apollo alliance, Sony would assume a controlling interest, with Apollo holding a minority stake. Sony executives have discussed integrating the Paramount studio into their broader operations, leveraging franchises like "Spider-Man" and "Mission: Impossible" and consolidating theatrical marketing and distribution efforts. While the specifics of the deal are yet to be finalized, Sony and Apollo have discussed the possibility of placing Paramount, including its Paramount+ streaming service and CBS network, into a joint venture. One scenario involves Apollo potentially divesting its minority stake to Sony in the future.

Meanwhile, the next steps for Skydance remain uncertain. Despite enhancing its offer to Paramount last week with a $3 billion investment for stock repurchase and debt reduction, the deal fell through. Skydance could revise its bid, but one insider indicated reluctance to continue negotiations merely to inflate the price for another bidder. Nevertheless, Paramount remains open to the prospect of a deal with Skydance and has even offered to cover the company's legal expenses, according to sources familiar with the matter.