Paramount looks likely to walk away from exclusive talks with Skydance

Los Angeles/Bengaluru — Paramount Global will end its exclusive negotiations with Skydance Media without reaching a deal, the New York Times reported on Friday, citing people familiar with the matter.

Shares of Paramount rose 3% in extended trading.

A special committee of the Paramount board, created to evaluate offers for the company, has been holding exclusive deal talks with Skydance Media. That period of exclusivity ends on Friday.

Skydance Media and a spokesperson for the special committee of the Paramount board declined to comment.

Sony Pictures Entertainment and private equity firm Apollo Global Management on Wednesday submitted a $26bn offer for Paramount Global but have yet to receive a response, a person familiar with the matter said on Friday.

The companies submitted a nonbinding offer letter on Wednesday, signed by Sony Pictures CEO Tony Vinciquerra and Apollo partner Aaron Sobel, a source said. The $26bn offer is a combination of cash and assumption of debt.

Paramount’s special committee was set to meet on Saturday to discuss the deal, NYT reported, citing two people with knowledge of the company’s plans.

Sony would hold a majority stake in the venture, a source has said, and operate Paramount, the movie library of which spans Star Trek, Mission: Impossible and The Godfather, alongside TV characters such as SpongeBob SquarePants. Apollo would be a minority shareholder.

The last-minute expression of interest from Sony and Apollo may well force Paramount’s board to evaluate other offers, especially after some shareholders raised concerns about the deal with David Ellison’s Skydance and have urged Paramount to consider other offers, including the one from Apollo.

Apollo declined to comment.

Tumultuous time

It was reported in April that Sony’s SPE and Apollo were in talks about a joint bid. Paramount and Sony also declined comment on the Apollo-Sony offer.

The rival offer comes at a tumultuous time for Paramount.

Shari Redstone’s media empire replaced CEO Bob Bakish with a trio of executives on Monday, while four independent members of the Paramount board are set to step down at the company’s annual shareholder meeting on June 4.

Bakish was once viewed as Redstone’s loyal lieutenant. However, their relationship began to sour in May 2023, when he urged Redstone to support a cut the company’s share dividend, saying it would help lift Paramount’s sagging stock — a prediction that never came true, according to two sources close to Redstone.

Paramount has been struggling to recover from last year’s months-long strikes by Hollywood writers and actors, a soft advertising market and cord-cutting in the US that has eroded profit for its TV business.

Its streaming service also widely trails rivals such as Netflix and Disney+ in subscriber numbers — despite Redstone hoping the merger of CBS and Viacom in 2019 would help the combined company, later renamed Paramount Global, compete better.

Shares of Paramount have fallen more than 65% since then, losing more than $14bn in market value.

Grow share

At Wednesday’s closing price of $12.26, the company was valued at $7.67bn, according to LSEG data. It has more than $14bn of debt.

The potential acquisition would help SPE grow its share of the North American box office. Sony Pictures earned $1.01bn in US and Canada box office revenue last year, compared with Paramount’s $842.4m, according to data from Comscore.

SPE, a unit of Tokyo-based Sony Group, says its operations span movie and television production, acquisition and distribution, digital content creation and distribution, studio facility operation and the development of new entertainment products, services and technologies.

The group has more than 3,500 movie titles and notable franchises such as Jumanji, Resident Evil and James Bond.

This is not the first time Sony has pursued Paramount. Vinciquerra had previously approached Paramount’s controlling shareholder, Shari Redstone, to explore acquiring the Paramount Pictures film studio, according to two people familiar with the matter. At the time, Redstone was uninterested in breaking up the company, according to one of the sources.

The latest overture would mark the beginning of a process that would involve due diligence. There also are potential regulatory obstacles to Sony Pictures, a division of the Tokyo-based Sony Group, owning Paramount’s CBS broadcast network.

Sony’s US-based partner, Apollo, acquired Cox Media Group’s television stations in a 2019 deal that required approval of the Federal Communications Commission.

Reuters