Sony & Paramount Sign Non-Disclosure Agreement Allowing Deal Talks To Start

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Sony has signed an NDA with Paramount Global, a move that will give it access to the books and allow deal talks to move ahead, sources hears.

Sony and private equity giant Apollo kicked things off previously with a preliminary bid of $26 billion, but what’s being contemplated now is not that, but something narrower. A look at the books is necessary to move forward in any case.

The non-disclosure agreement comes two weeks after a Paramount’s month-long exclusive negotiating window with David Ellison’s Skydance ended with no deal but the indie studio still hanging in, still interested.

After a few weeks passed with no Sony NDA, there’s was speculation its interest was waning as it considered the significant regulatory hurdles, and that’s possibly what’s at play in looking for a different kind of deal.

Sony just wants the studio. Some industry players believe Apollo mostly wants the studio lot as a real estate play. Paramount Global’s CBS broadcast assets might need to be sold off. Sony might not be able to own them under foreign ownership regulations, and may not want to. As things stand, Apollo’s current station holdings would put it over the Congressionally mandated broadcast cap.

Hollywood values the lot and is backing Ellison, although some question the circa $5 billion valuation put on the company as part of a proposed two-step deal. Skydance said its latest capital raise in the fall of 2022 valued it at over $4 billion. A merger of two studios envisioned in a Sony deal is, of course, unpopular with the town that saw downsizing when Disney acquired 20th Century Fox. Combining another two studios also poses a regulatory risk.

Paramount Global shareholders, on the other side, kind of hate the Skydance deal since it leaves the company public with the bulk of proceeds going to Redstone to acquire her controlling stake. Ellison, backed by Larry Ellison and Gerry Cardinale’s RedBird Capital, sweetened the pot once offering to buy out some shares from common shareholders. It did not appease them and its not sure anything would. It’s also not clear if they have a case to sue as they’ve been threatening legal action from day one. The Skydance deal would keep the company together at least at first and inject fresh capital into highly indebted company. Jeff Shell would step in to run things under David Ellison.

Shareholders loved the Sony-Apollo $26 billion cash offer. It will be interesting to see what they think with that no longer on the table.

Skydance’s Proposed Deal With Paramount Global Appears To Be Falling Apart

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After months of M&A talks, Paramount Global and controlling shareholder Shari Redstone might be going it alone after all — for now.

Insiders tell that the expectation at the company is that neither of the two offers in play — Skydance Media-RedBird Capital Partners and Sony Pictures Entertainment-Apollo Global Management — will come to fruition. And Redstone is said to have reluctantly concluded that a deal with David Ellison’s Skydance, a longtime partner of Paramount Pictures, will not be possible.

As of Friday morning, the special committee established by Paramount Global’s board to evaluate M&A proposals had not notified Skydance one way or the other about its best and final offer, which would involve Skydance acquiring Redstone’s National Amusements Inc. and merging Skydance and Paramount Global, per a source familiar with the talks. The exclusive negotiating window between Skydance and the Paramount Global board’s special committee established to review M&A offers is set to expire at midnight Friday.

Meanwhile, the Paramount board’s special committee will review the joint Sony-Apollo offer, floating a $26 billion all-cash buyout premium, after the May 3 expiration of the Skydance negotiating window. But that may be so the board fulfills its fiduciary duty to consider all credible M&A proposals. Insiders expect the proposal to ultimately be a deal-breaker, given anticipated regulatory hurdles required to complete such a transaction.

Moreover, Redstone — who has final say-so over what deal to accept — is known to be loath to sell her family’s media company to a private-equity-backed buyer. Those familiar with Redstone’s thinking say she remains open to any deal that’s in the best interests of shareholders and that she supports the Paramount special committee’s review of the Sony-Apollo overture. That said, the Sony-Apollo offer appears more attractive to Paramount Global’s Class B (nonvoting) shareholders than the Skydance deal. If the Sony-Apollo offer is deemed unworkable, the most likely outcome is that Paramount Global will not proceed on either front given the threat of investor legal action were the company to move forward with Skydance.

Reps for Paramount Global, Skydance and National Amusements have declined to comment, as has a spokesman for the Paramount board’s special committee reviewing M&A offers. Reps for Apollo and Sony have not responded to requests for comment.

The situation remains fluid, and no definitive decisions have been made about Paramount or Redstone’s next moves.

But if the M&A talks are abandoned, Paramount Global would indeed be run for the foreseeable future by the three-headed “Office of the CEO” — CBS’s George Cheeks, Paramount Pictures’ Brian Robbins and Chris McCarthy, head of Showtime/MTV Entertainment Studios and Paramount Media Networks — after Bob Bakish was shown the door. The trio have told employees they’re prepping a “long-term plan” for Paramount Global. As part of cutting the company’s debt load, insiders speculate that strategic plan might include selling BET Media Group (which media mogul Byron Allen has expressed interest in acquiring) and the famed 62-acre Paramount Pictures Studio lot on Melrose Avenue in L.A. The go-forward strategy might also see the company try to combine the Paramount+ streaming service with NBCUniversal’s Peacock in some way.

At this point, Paramount Global is preparing “to go it alone,” LightShed Partners analysts Rich Greenfield, Brandon Ross and Mark Kelley speculated in a blog post Friday. “While Skydance could come back later in 2024 or next year, we sense National Amusements sees too many legal headaches with proceeding, given the special committee’s view of the proposed transaction.”

Regarding the Sony-Apollo bid, the LightShed analysts noted, “National Amusements does not want to see a breakup of the company and can stop any transaction they do not desire.” They suggested that regulatory approval of such a deal, given restrictions on studio and TV station consolidation and foreign ownership, would take at least 12 months “and potentially far longer if the administration turns over in November.”

Skydance Media Exclusive Talks With Paramount Global Conclude As Apollo And Sony Make Bid To Acquire The Company

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Skydance Media is prepared to walk away from its offer for Paramount Global unless it receives a firm commitment from controlling shareholder Shari Redstone, following the latest offer from Apollo Global Management and Sony Pictures, according to a person familiar with the matter.

The exclusivity window for discussions between David Ellison's Skydance, backed by private equity firms RedBird Capital and KKR, and Paramount ends Friday and won't be extended, people familiar with the matter mentioned Paramount shares rose following the report.

The consortium has been waiting for word from Paramount's special committee on whether the panel will recommend its bid to acquire the company to Redstone. Now, with Apollo and Sony formally expressing interest in acquiring the company for about $26 billion, the Skydance group is looking for Redstone to reaffirm her commitment to the deal.

The Skydance consortium is not keen to hang around to be a stalking horse offer for Apollo and Sony, one of the people said. Still, depending on what Redstone says, Ellison may be willing to work with her, a second person said.

Spokespeople for Skydance, Redstone's National Amusements and Paramount's special committee declined to comment on Friday.

Apollo and Sony made their latest offer Thursday, CNBC previously reported. The special committee is currently considering the bid, the people said.

As part of Skydance's latest deal on the table, Redstone may take less than $2 billion for her controlling stake in Paramount, which is lower than Skydance's initial offer. The consortium is contributing additional capital to pay common, Class B shareholders at a nearly 30% premium to the undisturbed trading price of about $11 per share. In total, Redstone and Skydance would contribute $3 billion, with the vast majority going to Class B shareholders, according to people familiar with the matter.

Skydance's valuation as part of the deal remains around $5 billion, the people said. It's unclear if the Apollo-Sony offer gives Redstone the same premium.

Previously, Redstone rejected an offer by Apollo in favor of exclusive talks with Skydance. Redstone has preferred a deal that would keep Paramount together, as Skydance's offer would. A private equity firm is likely to break up the company.

The Canal+/MultiChoice Effect: Sony Reportedly In Talks To Join Bid With Apollo To Acquire Paramount Global

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Even as Paramount Global continues to hold exclusive talks with David Ellison’s Skydance and Gerry Cardinale’s Redbird Capital, another potential buyer group is considering its own moves.

It has been confirmed that executives at Sony Corp., including Sony Pictures chief Tony Vinciquerra, have been in touch with Apollo Global Management about making a joint bid for the entertainment company.

Apollo had previously made a $26 billion offer for Paramount, inclusive of equity and debt, though it was reportedly dismissed. But partnering with Sony would likely eliminate any cash or financing concerns.

The New York Times first reported the Sony talks, adding that no offer has been made, given that the exclusive negotiating window is still in place. The Times reported that one structure under consideration would see Sony and Apollo effectively take Paramount private, with Sony owning a majority of the company, with Apollo operating as a minority owner..

The actual structure of the deal is not clear, though the Paramount film and TV studios would likely fit in nicely with Sony’s own studios. It would raise questions about both Paramount+, given Sony’s decision to avoid entering the streaming wars, as well as Paramount’s linear TV assets, including CBS. There are federal regulations restricting foreign ownership of U.S. broadcast stations, and as a Japanese company Sony could face scrutiny under such rules.

Meanwhile, the talks between Skydance and Paramount continue, with a source saying that the Ellison-led company has articulated a plan to deliver operating efficiencies, and to leverage the executive teams at both Skydance and Redbird (including former NBCUniversal CEO Jeff Shell), to help turn Paramount around. Paramount would remain a public company under the Skydance deal.

Some investors have complained about the decision not to pursue the Apollo deal, given the all-cash offer.

Shares in Paramount rose in after-hours trading, after reports about the talks were published.

Apollo Global Management Offered To Buy Paramount Global Studios For $11 Billion

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Recently, we learned that Warner Bros. Discovery and Skydance Media are both in talks to buy a majority control of Paramount. Only last month to find out that Warner Bros. Discovery was no longer interested. Now, the Wall Street Journal reports that Appollo Global Management has offered to buy the film and TV studio for $11 billion.

This deal is only for the studios and is very different from other offers to buy or merge with all of Paramount. This includes an offer from Skydance to merge with Paramount.

Talks with Skydance are reportedly in the early phases and could easily fall apart, especially with investment firms now possibly driving up the price of Paramount. No date for an auction has been revealed, but bankers have reportedly started the process of sharing details about Paramount with potential bidders, it is reported that Redstone is looking at selling its share of Paramount at auction to the highest bidder.

Currently, Paramount Global is controlled by media executive Shari Redstone. Redstone also controls National Amusements, which owns 77% of Paramount’s voting shares. Reportedly the Redstone family is also looking to sell their 77% ownership of Paramount.

Any new owner of National Amusements would control Paramount’s cable TV networks, which include Nickelodeon, Comedy Central, MTV, and multiple movie theaters.

The news comes as the entertainment industry faces difficult times with cable TV viewership is declining and a majority of streamers struggling to achieve profitability. Paramount’s streaming service, Paramount+, is among the companies fighting to stay afloat.

Apollo Global Management Also Looking To Acquire Paramount Global

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Private equity firm Apollo Global Management has “reached out” to Paramount Global about a possible buyout or purchase of some of its holdings, Axios reported Tuesday.

The company faces competition, including a bid from Byron Allen, who in January offered to buy Paramount Global for $14 billion. The entertainment conglomerate’s parent, National Amusements, has also gotten an offer from David Ellison’s Skydance Media in a bid that was backed by rival private equity firms RedBird Capital Partners and KKR.

Warner Bros. Discovery also reportedly considered buying some or all of the entertainment conglomerate’s assets, but backed off last month.

The report said Apollo is looking at a deal only with Paramount, which would involve Paramount Pictures, the CBS network, along with Comedy Central, BET and other Viacom cable networks and the streaming services Paramount+ and PlutoTV.

“It’s also possible that Apollo could wind up bidding only on select assets,” Axios reported, citing two sources familiar with the matter.

Shares of Paramount Global initially jumped about 5% on the report, but the gains quickly disappeared. The stock was trading down 5 cents to 11.57, down nearly 20% since the start of the year, in late morning.

Apollo has long invested in news and entertainment companies, including purchasing “American Idol” owner CKx in 2011. It also has or previously held interests in Barnes & Noble, Cox Media Group, Legendary Entertainment, Redbox, Sirius Satellite Radio. It also bought Yahoo Inc. from Verizon in 2021.

Apollo Global Management Is Looking To Set It's Bid For A Possible Acquisition Of Paramount Global

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National Amusements, Inc., the Shari Redstone-led company that owns the majority of voting shares in Paramount Global, is reportedly fielding interest from another entity mulling an acquisition offer. Apollo Global Management is among the wealthy individuals and companies that have contacted the investment bank advising NAI, BDT & MSD Partners, according to Bloomberg.

NAI owns a portfolio of movie theaters as well as nearly 80% of voting shares. As with recently discussed scenarios involving Skydance Media and RedBird Capital, the Apollo deal would be a route to gain control of Paramount, though the voting shares owned by NAI do not represent a majority of the economic value of the company, only most of its voting class of shares.

Redstone, who spent years gaining control of Viacom and CBS, withstanding legal challenges and objections from critics including her own father, the late Sumner Redstone, has been more willing than ever to entertain offers. Paramount, which was formed when Viacom and CBS reunited in 2019, has struggled due to pay-TV cord-cutting, a soft ad market, a loss-producing streaming operation and volatility in the movie business. While its namesake film studio has had its share of hits, including last weekend’s Mean Girls, the broader company does not have the scale of many media rivals. With its stock worth less than half of what it was when the merger closed, Redstone reportedly is open to turning the page if the right offer comes along.

Paramount shares perked up late in the trading day Friday on the report of Apollo’s interest, rising 2% to close at $13.40.

Apollo is one of the more active private equity players in media, with stakes in companies like Dune producer Legendary Entertainment, Peter Chernin’s North Road, Cox Media Group and Yahoo. It has also been a player in the TV station sector, taking part in the proposed takeover of Tegna by Standard General, which was ultimately quashed by regulators.