Paramount, the media company known for the “Top Gun” franchise and Nickelodeon, was in talks to sell itself to Skydance when Apollo Global Management expressed interest in acquiring the entire company for over $26 billion, including debt. Paramount had previously received an $11 billion offer for just the movie studio. Despite Apollo’s bid, Paramount chose to focus on its negotiations with Skydance, which became exclusive this week. Apollo’s bid would have required due diligence, taking time, and the firm expressed interest in buying out all of the company’s shareholders in cash.
The potential deal with Skydance would involve the company purchasing National Amusements, which holds controlling stock in Paramount, and merging with Paramount. Approval from Paramount’s board is necessary for the deal to move forward, and the board has been evaluating its options with the help of advisers for weeks. David Ellison, founder of Skydance, met with Paramount’s board committee to discuss his vision for the deal. Paramount’s stock has fallen 18% since the start of the year due to challenges in the media industry, with a market value of $9.4 billion and $15 billion in long-term debt.
Paramount+, the company’s streaming service, is still incurring losses, but the losses have slowed down, and more subscribers are being added. However, the ratings agency S&P Global downgraded Paramount’s debt to junk status, citing declining traditional television business and uncertainty in its streaming push. Some analysts believe this downgrade could make Paramount an easier target for acquisition, as it may allow a buyer to avoid immediately paying off the company’s debt.
Ultimately, the decision on Paramount’s acquisition will depend on the board’s approval, which is crucial to finalizing the deal with Skydance or potentially considering Apollo’s bid. As the company weighs its options, it aims to strike a deal that satisfies both Shari Redstone, who controls Paramount, and the common shareholders. Despite the challenges Paramount has faced in the media industry, its potential acquisition by either Skydance or Apollo could lead to significant changes in the company’s future. As negotiations continue, the media industry awaits the outcome of Paramount’s potential sale.
