Paramount has spent a decade as the source of buyout rumors. That might finally come to an end.
Paramount Global (PARA) has been at the center of media merger talks for years. Now, the company's fate could soon be determined with a key negotiation window set to expire on Friday.
National Amusements, the holding company run by Shari Redstone, is in exclusive talks with David Ellison's Skydance Media to sell its controlling stake in the media giant, according to a source familiar with the matter. Skydance has previously collaborated with Paramount on the production of popular film franchises, including "Mission Impossible," "Top Gun: Maverick," and "Transformers," among others.
Paramount's exclusivity window with Skydance expires on Friday, although it's possible that deadline could be extended. Paramount's nonvoting shareholders have publicly expressed concerns over the terms of a Skydance deal, which they say unfairly benefits Redstone at the expense of other investors.
Skydance isn't Paramount's only suitor either. Sony Pictures Entertainment and private equity firm Apollo Global Management have formally expressed interest in purchasing the media giant for $26 billion, according to a source familiar with the situation. (Disclosure: Yahoo Finance is owned by Apollo.)
Paramount's fate ultimately comes down to what Shari, the daughter of the late media mogul Sumner Redstone, decides.
"We don’t expect Paramount, as currently constituted, to operate independently for much longer," Morningstar analyst Matthew Dolgin wrote in a note to clients on April 30.
Amid the turmoil over its future, Paramount recently announced the departure of its CEO Bob Bakish, who was reportedly at odds with Redstone over a Skydance deal.
"I've never seen anything like it," Ariel Investments co-CEO John Rogers told Yahoo Finance. "It's just really crazy to have the CEO fired in the midst of earnings season, in the midst of an M&A transaction, in the midst of a crucial negotiation with Charter Communications."
Dolgin added Bakish's ousting signals "the company is simply biding time until it either merges with Skydance or accepts a superior takeout offer."
Paramount's M&A rumor mill
Paramount has long been viewed as a potential acquisition target due to its small size relative to competitors. The company boasts a current market cap of just about $10 billion, compared to Disney's (DIS) $200 billion and Netflix's (NFLX) roughly $240 billion.
Rumors of a sale have circulated the company for years following highly publicized corporate governance issues dating back about a decade ago.
In 2015, Sumner Redstone — the billionaire media magnate whose vast empire included Viacom and CBS as well as National Amusements — became the subject of shareholder outcry amid his deteriorating health.
Redstone's mental capacity was frequently questioned and even led to a civil lawsuit that was eventually dismissed. One year later, the fight for control of the company reached a fever pitch.
Sumner Redstone stepped down from his position as chairman of CBS and Viacom in February 2016, prompting a nasty legal battle between former Viacom chairman Philippe Dauman and Shari Redstone on who would ultimately control the Viacom-CBS empire.
Shari Redstone eventually won that fight, with the family holding on to its controlling stake. However, the legal drama prompted a severe leadership shake-up across the board with Bob Bakish eventually placed at the helm of Viacom in December 2016. Sumner stepped down from his board position a few days later.
The public turmoil led to increased chatter surrounding a potential sale throughout the late 2010s, both prior to and after the eventual merger of Viacom and CBS Corp. in 2019.
Over the years, telecom giants including AT&T (T) and Verizon (VZ) reportedly expressed interest in purchasing CBS, while tech giants Apple (AAPL) and Netflix eyed acquiring a major studio like Paramount Pictures to beef up their respective streaming services.
The most recent flurry of M&A reports surrounding Paramount kicked off with Warner Bros. Discovery CEO David Zaslav meeting with Bakish at the end of 2023 to discuss a potential merger, as first reported by Axios.
That opened the M&A floodgates with media mogul Byron Allen offering a reported $30 billion to buy all of Paramount's outstanding shares, including debt, at the start of the year.
The company also weighed selling parts of its business. BET and Showtime were two assets that had been the subject of consistent sale rumors in recent years. Paramount ultimately decided against selling the company in parts, largely due to Redstone's preference to keep the company together.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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