What Is Going on at Paramount?
If you’ve been reading entertainment news for the past 3-4 months, you may have stumbled upon headlines chronicling a possible sale of Paramount Global, something most analysts believe will happen sooner rather than later. But the situation has intensified over the past month and has seen some twists and turns in the last week in particular. What is going on exactly, and how will this end? Today, we’ll be breaking it all down.
Let us start with some corporate context. Paramount Global is the parent company of the film studio Paramount Pictures, but also CBS and Viacom, as well as several streaming ventures including the aptly named Paramount Plus, as well as Showtime and Pluto TV, and linear networks like MTV, BET, and more. It was previously split into Viacom and CBS, but the two companies merged in the 2010s and Paramount Global emerged as the result.
The company is publicly traded but it has a particularly strange structure, as National Amusements Inc., a family-owned 100-year-old business that also owns movie theaters, has the controlling majority. NAI owns 80% of the voting power of the company, meaning its leader, Shari Redstone (daughter of Sumner Redstone, previous owner of NAI), has final decision power.
The company has been in financial trouble for years, and it’s only getting worse. The cable and linear TV business is in decline, with the ad market getting increasingly worse every year as Wall Street looks towards a streaming future. This forced most studios in town to set up their own services to compete with Netflix, but it’s not going great — particularly for Paramount and its streaming rival, Peacock (from NBCUniversal). Paramount Pictures is also struggling at the box office, Tom Cruise-led movies aside, and after a now-infamous May 2023 investors call, the stock has been plummeting for a while.
It’s been clear to Shari Redstone for a long time that she will likely have to sell the family business if she wants to get anything out of it. She has only a 10% financial stake in Paramount, even if she lords over all of the company’s decisions. But after years of speculation about a potential sale, Puck and Deadline reported in late 2023 that David Ellison of Skydance was putting together a bid to buy Paramount. More bidders emerged along the way, some more serious than others, and now it seems like it comes down to two: Skydance, with the backing of Ellison’s father, Larry Ellison (the billionaire founder of Oracle), as well as the investment fund RedBird Capital; and the private equity firm Apollo Global, which owns a stake in Legendary. They are also bringing their own squad: Legendary itself is also said to be part of the bid (though its name has been kept off the latest coverage), along with Sony Pictures.
According to all the reports, Shari Redstone likes the Skydance deal and engaged earlier in April in a one-month exclusive window of negotiations. The current offer seems to be $3 billion for National Amusements, which would then give Ellison and RedBird access to the 80% voting power over Paramount Global. Then, they would merge Paramount Pictures with Skydance in a transaction valued at $5 billion, all stock.
While Redstone may favor this deal, Paramount’s investors are very upset about it. The competing offer from Apollo + Sony is $26 billion for all of Paramount. This includes a $12 billion offer for the company, which is currently valued at around $8 billion, plus the assumption of its $14 billion debt. Investors would cash in as well, but not so much Shari herself. This is where the situation gets especially tense. Shari Redstone wants to take care of the family business and would like to hand it over to another family-owned franchise.
A private equity bid seems that it would tear apart her baby — and it probably would. The second scenario would probably see Sony merged with Paramount Pictures, and Apollo stripping down the TV networks and selling them off for parts, or squeezing them for cash like other private equity firms have been doing with newspapers for years.
The split apparently got to Redstone’s relationship with her now-former CEO, Bob Bakish. Bakish took over as CEO in 2016 with litte experience for the job, and surprisingly held on to the office for eight years. But, as The Wall Street Journal reported on Friday and Paramount confirmed on Monday, Bakish is now out as CEO and has been replaced with a trio of executives taking over an interim CEO position: Brian Robbins, head of Paramount Pictures; George Cheeks, chief executive of CBS; and Chris McCarthy, chief exec of Showtime and MTV.
According to Puck, Bakish had been actively engaging with Apollo and Sony, and was more favorable to their bid than Ellison’s. But this was simply the stroke that broke the camel’s back. The divide between the CEO and Shari Redstone really started to show last May, when Bakish announced Paramount was cutting down on their quarterly dividends, which caused the stock to free-fall.
Bakish’s track record in the executive suite hasn’t been great either, especially on the streaming side. Paramount Plus pretty much solely depends on Taylor Sheridan writing as many shows as he can, and that’s ignoring the millions of dollars it loses every quarter. The most flagrant mistake, though, has been selling off the streaming rights of the biggest show on linear TV, Yellowstone, to Peacock. That will end soon, as Sheridan and Paramount are ready to move on to a sequel series that will go directly to Paramount Plus, but it’s a correction coming five or so years too late.
So what is next? The exclusive negotiating window between Paramount and Skydance ends on May 3, but it could be extended. Should it go through, it will be very interesting to see the response from Paramount shareholders, as it’s widely believed they could sue Redstone and NAI for breach of fiduciary duty given there is a much bigger offer on the table. On the other hand, if the Apollo + Sony deal goes through, it would be months, if not years before the US Department of Justice gave it a green light — if if did. There are serious anti-trust concerns when merging two big studios, which is also one of the arguments that shot down other potential Hollywood buyers, like Warner Bros. Discovery and NBCUniversal / Comcast.
Either deal will probably be announced over the next few months, but whether it’s completed or not will take years to see. Stay tuned as the situation develops.
Miguel Fernández is a Spanish student that has movies as his second passion in life. His favorite movie of all time is The Lord of the Rings, but he is also a huge Star Wars fan. However, fantasy movies are not his only cup of tea, as authors like Scorsese, Fincher, Kubrick or Hitchcock have been an obsession for him since he started to understand the language of filmmaking. He is that guy who will watch a black and white movie, just because it is in black and white.
