Sony and Apollo Global in talks for possible joint bid for Paramount

Although details have not been revealed on how the transaction would happen, the offer would make Sony the majority owner operating the company, with Apollo taking a minority stake in the joint venture.

19 APR 2024

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Sony Pictures Entertainment and Apollo Global Management are allegedly considering a possible joint bid for Paramount Global, as informed by The New York Times. Sources familiar with the matter verified the discussions but admonished that a number of challenges would need to be cleared before the parties could formally make an offer. Apollo has made two earlier independent offers for Paramount: a $26 billion offer for the company and a $11 billion offer for Paramount Pictures.

Tony Vinciquerra, chief executive of Sony Pictures Entertainment, participated in conversations last week with Apollo about teaming up on a bid, The New York Times reported. The bid would be an all-cash offer for the outstanding stock in Paramount, in effect taking the company private through a joint venture. The terms of the joint bid are still being worked out, and it has even been mentioned that Sony and Apollo may not make an offer for Paramount. One structure could have Apollo take a minority stake in the joint venture, with Sony becoming the majority owner and operating the company. At some point, Apollo could cash out its investment, possibly by selling its stake back to Sony.

Given the case Sony prevailed in its bid, the company would most likely operate the Paramount studio as a label within its own media structure, fusing the studio’s marketing and distribution arm with its own. It remains to be seen how CBS would fit into the combined company along with Paramount’s fading cable channels.

Currently, National Amusements, the company that controls Paramount Global, is into an exclusive 30-day negotiating window with Skydance Media. The companies are trying to work out a deal that would merge Paramount into Skydance and bring in a new management regime led by Skydance CEO David Ellison. Paramount Global has set up a special committee of board members to consider offers and options for Paramount. That committee is understood to have rebuffed Apollo’s overtures out of concern that the private equity firm might have trouble completing the deal given the mood in Washington. There’s also concern that a financial buyer like Apollo would be a less benevolent owner for challenged assets than a strategic buyer like Skydance with designs on growing the overall business.

Unlike Skydance, Sony and Apollo would not be seeking to buy out National Amusements. The fusion of Paramount and Sony would create a media colossus that would put a collection of TV channels and movie studios under the same corporate umbrella. But Vinciquerra has experience managing both TV and studio properties, having worked at both Fox and CBS.

In the Skydance scenario, Paramount Global would remain a publicly traded entity. Skydance and its private equity partner RedBird Capital partners, would give Paramount an influx of capital that would chip away at its $14.5 billion debt load. The Skydance transaction would also come with regime change as Ellison would serve as CEO of the enlarged company. Jeff Shell, the former NBCUniversal CEO who now steers RedBird alongside founder and managing partner Gerry Cardinale, would have a key role in a reconfigured Paramount Global.

As the basic outline of the Skydance transaction has emerged, some shareholders have been quick to voice concerns that controlling shareholder Shari Redstone will be enriched in the deal at the expense of others. If the Skydance deal happens, Skydance and RedBird would replace Redstone as the controlling shareholders, with nearly 80% of voting control in the company through preferred shares and about 11% of Paramount Global on an equity basis.