Sony, Apollo await response to $26 billion Paramount bid By Reuters

By Don Chmielewski

(Reuters) – Sony Pictures Entertainment and private equity firm Apollo Global Management (NYSE:) on Wednesday made a $26 billion offer for Paramount Global but had not yet heard back as of Friday, according to a person familiar with the matter.

A special committee of Paramount's board of directors, created to evaluate offers for the company, has held exclusive deal talks with Skydance Media. That exclusivity period expires on Friday, and a separate source familiar with the matter said the exclusivity period was unlikely to be extended, opening doors to other bidders.

The companies submitted a non-binding offer letter on Wednesday, previously signed Sony (NYSE:) Images CEO Tony Vinciquerra and Apollo partner Aaron Sobel, a source confirmed to Reuters. The $26 billion offer is a combination of cash and taking on debt.

A source previously told Reuters that Sony would own a majority stake in the project, and Paramount, whose film library includes the “Star Trek,” “Mission: Impossible” and “The Godfather” franchises, would be managed, along with TV characters such as SpongeBob SquarePants. Apollo will be a minority shareholder.

Last-minute expressions of interest from Sony and Apollo may force Paramount's board to evaluate other offers, especially after some shareholders raised concerns about the deal with David Ellison's SkyDance and urged Paramount to consider other offers, including one from Apollo. .

Apollo declined to comment to Reuters, which reported in April that Sony's SPE and Apollo were in talks about a joint bid. Paramount and Sony also declined to comment on the Apollo-Sony bid, which was first reported by The Wall Street Journal.

Skydance and a spokesperson for Paramount's special commission also declined to comment.

The competing bid comes at a turbulent time for Paramount.

Shari Redstone's media empire replaced CEO Bob Bakish with a trio of executives on Monday, while four independent members of Paramount's board are set to step down at the company's annual shareholder meeting on June 4.

Bakish was once seen as Redstone's loyal lieutenant. However, their relationship began to deteriorate in May 2023, when he urged Redstone to support a cut in the company's stock dividend, saying it would help lift Paramount's flagging shares — an expectation that never came true, according to two sources close to Redstone.

Paramount struggle

Paramount has been struggling to recover from months of strikes by Hollywood writers and actors last year, a weak advertising market and communications blackouts in the United States, which eroded the profits of its television business.

Its streaming service also widely lags behind rivals like Netflix (NASDAQ:) and Disney+ in terms of subscriber numbers — though Redstone hoped the 2019 merger of CBS and Viacom would help the combined company, later renamed Paramount Global, To compete better.

Paramount shares have fallen more than 65% since then, 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 data. It has more than $14 billion in debt.

The potential acquisition would help SPE increase its share of the North American box office. Sony Pictures generated $1.01 billion in box office revenue in the United States and Canada last year, compared with $842.4 million for Paramount, according to data from comScore.

SPE, a Tokyo-based unit of Sony Group, says its operations include film and television production, acquisitions and distribution, digital content creation and distribution, operation of studio facilities, and development of new entertainment products, services and technologies.

The group owns more than 3,500 movie titles and notable franchises such as “Jumanji,” “Resident Evil” and “James Bond.”

This isn't the first time Sony has gone after Paramount. Vinciquerra had previously approached Paramount's controlling shareholder, Shari Redstone, to consider acquiring the Paramount Pictures film studio, according to two people familiar with the matter. At the time, Redstone was not interested in breaking up the company, according to one source.

The latest offer would mark the beginning of a process requiring due diligence. There are also potential regulatory hurdles for Sony Pictures, a division of Tokyo-based Sony Group, which owns Paramount's CBS broadcast network.

Sony's US-based partner Apollo acquired Cox Media Group's television stations in a 2019 deal that required FCC approval.