Sony and Apollo make formal $26-billion joint bid for Paramount
Sony Pictures Entertainment and Apollo Global Management have officially put in a bid for Paramount Global, as competition for the storied film and TV company continues to heat up.
Sony and Apollo submitted their $26-billion all-cash offer this week, according to a person familiar with the matter who was not authorized to comment.
Under the terms of the proposed deal, Sony would take a majority shareholder role in the company, with Apollo as a minority shareholder. The joint bid is a nonbinding expression of interest.
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The companies do not see regulatory approval as a hurdle to the deal, the person said, even though it would lead to the combination of two of Hollywood's major movie studios.
Apollo already owns a minority stake in "Dune" producer Legendary Entertainment. The deal could run up against Federal Communications Commission rules that restrict foreign ownership of broadcast TV stations, so Paramount's CBS station group likely would have to be sold or licensed to Apollo, which already controls Atlanta-based Cox Media Group.
Culver City-based Sony Pictures is owned by Tokyo-based Sony Corp., the electronics giant behind the PlayStation video game system.
The bid comes as Paramount nears the end of a 30-day exclusive negotiating period on Friday with tech scion David Ellison's Skydance Media, which recently sweetened its takeover offer after outcry from shareholders, who saw the original bid as dilutive to their shares.
Ellison has teamed up with investment firms RedBird Capital Partners and KKR to make a bid to acquire Paramount controlling shareholder Shari Redstone’s National Amusements holding company.
The complicated two-step proposition would involve Paramount acquiring Skydance Media and Ellison taking control of Paramount, including the storied Melrose Avenue Paramount studio lot, broadcast network CBS and various cable channels such as MTV and Comedy Central.
Skydance's revised offer includes a cash infusion for Paramount and money earmarked for nonvoting shareholders, who have raised concerns that the prior bid would benefit the Redstone family at their expense.
On Monday, Paramount ousted chief executive Bob Bakish, who was known to have opposed the Skydance proposal. His opposition irked Redstone, who also had questioned some of Bakish's business decisions, including not selling cable network Showtime, according to people familiar with the situation.
The company said three of its top entertainment executives would jointly run the firm: Paramount Pictures CEO Brian Robbins; CBS CEO George Cheeks; and Showtime/MTV Entertainment Studios chief Chris McCarthy.
Analyst Jamie Lumley at financial research firm Third Bridge described the bid as Sony and Apollo's best attempt to make Paramount an offer it couldn't refuse, though it could be futile at this point.
"Ultimately, this offer could be coming in after the 11th hour if the sweetener Skydance added in last weekend is enough to get a deal over the line," Lumley wrote in a statement. "With the exit of Bob Bakish as CEO, Paramount is likely looking to finalize a deal as soon as possible as it plots a path forward for its beleaguered business."
Shares of Paramount were up 12.5% to $13.80 around 12:30 p.m. PDT on Thursday.
Adding to the complications, Paramount also is in negotiations with Charter Communications to work out a new deal for carriage of the company's TV channels. Paramount is heavily reliant on the fees it reaps from its TV stations, despite flagging ad revenue and increasing cord cutting. The outcome of these negotiations could factor into Paramount’s valuation in the event of a sale.
This story originally appeared in Los Angeles Times.
