Shareholders of Paramount Global are considering a $26 billion merging offer from Sony, while industry members call for the Skydance option.
Paramount Global is flirting with two fair pretenders as the legacy media giant looks for a future in the fast-shifting entertainment market. The offer initially made by David Ellison’s Skydance Media expired last Friday, it’s not completely off the table yet.
Meanwhile, Sony Entertainment offered a $26 billion bid for a merger with Paramount. The offer was made in conjunction with private equity firm Apollo.
A Sony - Paramount union would set off immediate regulatory fights, as it would merge two of the world’s largest entertainment companies. The US antitrust authority would immediately jump on Sony’s neck, especially given the current administration’s hostility against market consolidation.
Sony’s offer would also cancel out Paramount’s immense pile of debt. The firm lost billions of dollars in the past few years, especially because of its unsuccessful streaming attempt.
However, the latest quarterly report by Paramount Global showed the situation is improving, leaving the firm with more leeway for negotiations.
Being a foreign firm, Sony cannot hold any broadcasting assets, meaning it would leave control to Apollo. Approval from the Federal Communications Commission would be necessary, and it may not be guaranteed, especially during an election year.
Paramount shareholders love Sony’s deal, as it would give the firm some much-needed financial stability. However, it would also come at a great cost for Paramount’s independence.
The Skydance deal
On the other hand, David Ellison still has not given up hopes for a Paramount - Skydance merger even after the expiration of the 1-month exclusivity period.
The deal would make Skydance Entertainment the majority owner of Paramount Global, overthrowing Shari Redstone’s current grip on the firm. The Redstone family has controlled Paramount for decades.
Unlike the Sony deal, however, this would not entail a major autonomy loss. Shari Redstone would remain an influential board member, and a fresh cash influx would help Paramount stay afloat.
David Ellison would be aided by his father, tech pioneer and world’s fourth-richest person Larry Ellison. As founder and CEO of Oracle, speculation around the use of AI in Paramount’s operations made a deal with Skydance even more captivating.
Hollywood is rooting for David Ellison, a long-time and well-respected film producer. Big names in the industry including James Cameron and Jeffrey Katzenberg are pleading for a Skydance - Paramount merger.
“I think [David Ellison] is a phenomenal entrepreneur, and he is super ambitious, and loves the movie business, the studio business,” Katzenberg told Deadline. “I think that would have been a great win for Paramount and for people in the industry.”
A third and final option for Paramount is to refuse both offers and try to survive on its own. Last week’s ousting of CEO Bob Bakish and the institution of the “emergency triumvirate” seems to point in that direction. Bakish was replaced by Brian Robbins, George Cheeks, and Chris McCarthy, chief executives of Paramount Pictures, CBS, and MTV respectively.
