Another day, another update on the potential sale of Paramount Global. Earlier this week, it was reported that private equity firm Apollo Global Management had offered $11 billion for Paramount's television and film studios, an amount larger than the current market capitalization of the entire company. However, a new report from the Financial Times suggests that Paramount's controlling shareholder, Shari Redstone, is not convinced by the offer and is leaning towards the offer made by billionaire David Ellison, owner of Skydance Media.
- Redstone prefers to sell Paramount as an entire company rather than take it apart and sell it piece by piece.
- Ellison may hire former NBCUniversal CEO Jeff Shell and former CNN chief Jeff Zucker to run cable and broadcast networks for Paramount if his bid is successful.
- Skydance is still conducting due diligence and has not yet submitted a final offer.
Redstone is the majority shareholder of Paramount Global, which it controls through a holding company called National Amusements Inc. (NAI). Ellison and Skydance could take control of the entirety of Paramount Global by purchasing a majority stake in NAI, combining the production company responsible for producing “Top Gun: Maverick” – one of Paramount's biggest hits in recent years – with the studio itself.
The Financial Times reports that Ellison has hired several top former media executives to help run Paramount if his bid is ultimately successful. Former NBCUniversal CEO Jeff Shell — fired by Comcast in April 2023 after a CNBC reporter filed a sexual harassment lawsuit against him — would oversee CBS and Paramount cable networks like MTV and Paramount Network. Jeff Zucker, CNN's chief until 2022, could also emerge to help run the CBS news unit.
Ellison's representatives continue to conduct due diligence on Paramount, a key step that allows them to take an in-depth look at the company's finances and see how healthy the company really is. Ellison and Skydance are backed by Redbird Capital, a private investment firm that has the funds to purchase Paramount.
Why is the Skydance offer more attractive than the Apollo offer?
At first glance, Apollo Global Management's $11 billion bid for Paramount's TV and film studios would require at least serious consideration. Given that the offer currently involves an amount greater than the entire value of Paramount's stock, shareholders would undoubtedly receive some benefit from accepting the offer.
However, Redstone is leaning more towards Ellison and Skydance because it wants to sell Paramount as a whole rather than piece by piece. Selling the TV and movie studios would leave Paramount with weaker cable channels, CBS and a streaming business headlined by Paramount+. This presents little choice for anyone who would like to come in and pick up these assets, especially if Paramount sold all of its intellectual property along with the studios to Apollo.
“Accepting a studio-only offer would mean separating the rest of the company from one of the key engines that drive it,” MoffettNathanson analyst Robert Fishman told the Financial Times. “Remove one of your unique content creators from the equation, and the rest of the company can feel empty.”
No deal for Paramount is close to finalization yet, and all negotiations may be over. However, as things stand, Shari Redstone, the controlling shareholder of Paramount Global, appears to be leaning towards David Ellison's offer to buy her company as a whole rather than break it up and sell it individually.
