Paramount’s Sony/Apollo Bid is Now Formalized— What Now?

 Despite the (mostly unexpected, at least this early) announcement that CEO Bob Bakish will be replaced by a three-person-strong leadership team at Paramount and their continuing negotiations with Skydance and RedBird Capital, it seems Paramount will have another bidder to consider. Namely Sony and Apollo Capital Management in a joint bid. Blake & Wang P.A. entertainment lawyer, Brandon Blake, unpacks what we know.

Brandon Blake

Negotiating Window Ending

Paramount and their controlling owner, National Amusements, have been in an exclusive negotiating window with David Ellison’s Skydance but that period will expire shortly. Sony and Apollo have now formally reached out to the Paramount special board committee with a formal $26B cash offer, news which pushed up Paramount’s ailing shares considerably as it broke.

 

While National Amusements and the Redstone family seem to be mostly focused on the potential Skydance deal, it is pretty clear that not all stakeholders in the Paramount Group are sold on this potential new owner. There have been some concerns raised that the Redstone family, rather than Paramount’s public shareholders, would benefit the most from the deal closing.

A Preferred Deal?

In many ways, as that 13% jump in share price aptly demonstrates, non-National Amusements shareholders seem to view the potential Sony/Apollo deal as the better choice, at least based on how the potential Skydance deal is currently configured.

 

However, due to the exclusive negotiating window, Sony and Apollo will not yet have had the opportunity to do their due diligence on Paramount’s books, so this is best seen as an overture, rather than an offer. Under their deal, the entirety of Paramount will be bought out, taking it back to private ownership. This contrasts with Skydance’s intent to pay out the Redstone interest, take over the voting shares, and reduce some of the company’s “Class A” common shares in the process. Let’s not lose sight, either, of the fact that Sony would have to sell off Paramount’s broadcasting assets under law, leading to a split in the company, and would need to approve the merger of two Hollywood studios with regulators- complications that don’t exist with Skydance.

 

Where to now? Nobody knows! By the end of the week, however, we will know if Paramount will formally consider the offer, or if they are fully sold on the Skydance bid. Interesting things are coming for Paramount, either way.