Don Chmielewski
(Reuters) – Sony Pictures Entertainment and private equity firm Apollo Global Management (NYSE:) presented a $26 billion offer to Paramount Global on Wednesday but had not received a response as of Friday, according to a person familiar with the matter.
A special committee of Paramount’s board of directors, created to evaluate the company’s proposals, is negotiating an exclusive deal with Skydance Media. That exclusivity period ends Friday, and a separate source familiar with the matter said the exclusivity period is unlikely to be extended, opening the door to other bidders.
On Wednesday, the companies submitted a non-binding offer letter signed by Sony (NYSE:) Pictures CEO Tony Vinciquerra and Apollo partner Aaron Sobel, a source confirmed to Reuters. The $26 billion offer is a combination of cash and debt assumption.
Sony will own a majority stake in the venture, a source previously told Reuters, and control Paramount, whose film library includes “Star Trek,” “Mission: Impossible” and “The Godfather,” as well as TV characters such as SpongeBob Square Pants. Apollo will be a minority shareholder.
Last-minute expressions of interest from Sony and Apollo may well force Paramount’s board to evaluate other offers, especially after some shareholders raised concerns about David Ellison’s Skydance deal and called on Paramount to consider other offers, including Apollo’s.
Apollo declined to comment to Reuters, which reported in April that Sony SPE and Apollo were in talks about a joint bid. Paramount and Sony also declined to comment on the Apollo-Sony proposal, which was first reported by the Wall Street Journal.
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Skydance and a spokesman for Paramount’s special committee also declined to comment.
The competing proposal comes at a turbulent time for Paramount.
Media empire Shari Redstone replaced CEO Bob Bakish with a trio of executives on Monday, and four independent members of Paramount’s board of directors are set to resign at the company’s annual shareholders meeting on June 4.
Bakish was once considered Redstone’s loyal assistant. However, their relationship began to sour in May 2023, when he urged Redstone to support cutting the company’s stock dividend, saying it would help boost Paramount’s flagging shares – a forecast that never materialized, according to two sources close to Redstone.
PARAMOUNT WRESTLING
Paramount is struggling to recover from last year’s months-long strikes by Hollywood writers and actors, a weak advertising market and cord-cutting in the United States that have depressed profits at its television business.
Its streaming service also lags far behind competitors like Netflix (NASDAQ:) and Disney+ in subscriber numbers, although Redstone had hoped the 2019 merger of CBS and Viacom would help the combined company, later renamed Paramount Global, better compete.
Since then, Paramount shares have fallen more than 65%, losing more than $14 billion in market value.
At Wednesday’s closing price of $12.26, the company was valued at $7.67 billion, according to LSEG. It has more than $14 billion in debt.
The potential acquisition will help SPE increase its share of the North American box office. Sony Pictures earned $1.01 billion at the U.S. and Canadian box office last year, compared with Paramount’s $842.4 million, according to Comscore.
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SPE, a unit of the Tokyo-headquartered Sony Group, says its activities span the production, acquisition and distribution of films and television shows, digital content creation and distribution, studio operations and the development of new entertainment products, services and technologies.
The group has over 3,500 film titles and famous franchises such as Jumanji, Resident Evil and James Bond.
This isn’t the first time Sony has gone after Paramount. Vinciquerra previously approached Paramount majority shareholder Shari Redstone about exploring the possibility of acquiring Paramount Pictures, according to two people familiar with the matter. According to one of the sources, at that time Redstone was not interested in splitting the company.
The latest initiative will mark the start of a process that will require due diligence. There are also potential regulatory hurdles for Sony Pictures, a unit of Tokyo-based Sony Group, which owns Paramount’s CBS broadcast network.
Sony’s US partner Apollo acquired Cox Media Group’s television stations in a 2019 deal that required Federal Communications Commission approval.