By Dawn Chmielewski
(Reuters) -Sony Pictures Entertainment and private equity firm Apollo Global Management (NYSE:) on Wednesday submitted a $26 billion offer for Paramount Global but have yet to receive a response as of Friday, according to a person familiar with the matter.
A special committee of the Paramount board, created to evaluate offers for the company, has been holding exclusive deal talks with Skydance Media. That period of exclusivity ends Friday, and a separate source familiar with the matter said the exclusivity period is unlikely to be extended, opening the doors to other bidders.
The companies submitted a non-binding offer letter on Wednesday, signed by Sony (NYSE:) Pictures Chief Executive Tony Vinciquerra and Apollo partner Aaron Sobel, a source confirmed to Reuters. The $26 billion offer is a combination of cash and assumption of debt.
Sony would hold a majority stake in the venture, a source previously told Reuters, and operate Paramount, whose movie library spans “Star Trek”, “Mission: Impossible” and “The Godfather,” alongside TV characters like SpongeBob SquarePants. Apollo would be a minority shareholder.
The last-minute expression of interest from Sony and Apollo may well force Paramount’s board to evaluate other offers, especially after some shareholders raised concerns about the deal with David Ellison’s Skydance and have urged Paramount to consider other offers, including the one from Apollo.
Apollo declined 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 comment on the Apollo-Sony offer, which was first reported by the Wall Street Journal.
Skydance and a spokesman for the Paramount special committee also declined comment.
The rival offer comes at a tumultuous time for Paramount.
Shari Redstone’s media empire replaced CEO Bob Bakish with a trio of executives on Monday, while four independent members of the Paramount board are set to step down at the company’s annual shareholder meeting on June 4.
Bakish was once viewed as Redstone’s loyal lieutenant. However, their relationship began to sour in May 2023, when he urged Redstone to support a cut the company’s share dividend, saying it would help lift Paramount’s sagging stock — a prediction that never came true, according to two sources close to Redstone.
PARAMOUNT’S STRUGGLES
Paramount has been struggling to recover from last year’s months-long strikes by Hollywood writers and actors, a soft advertising market and cord-cutting in the United States that has eroded profit for its TV business.
Its streaming service also widely trails rivals such as Netflix (NASDAQ:) and Disney+ in subscriber numbers – even though Redstone had hoped the merger of CBS and Viacom in 2019 would help the combined company, later renamed Paramount Global, compete better.
Shares of Paramount 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 of debt.
The potential acquisition would help SPE grow its share of the North American box office. Sony Pictures earned $1.01 billion in U.S. and Canada box office revenue last year, compared with Paramount’s $842.4 million, according to data from Comscore.
SPE, a unit of Tokyo-based Sony Group, says its operations span movie and television production, acquisition and distribution, digital content creation and distribution, studio facility operation and the development of new entertainment products, services and technologies.
The group has more than 3,500 movie titles and notable franchises such as “Jumanji”, “Resident Evil” and James Bond.
This is not the first time Sony has pursued Paramount. Vinciquerra had previously approached Paramount’s controlling shareholder, Shari Redstone, to explore acquiring the Paramount Pictures film studio, according to two people familiar with the matter. At the time, Redstone was uninterested in breaking up the company, according to one of the sources.
The latest overture would mark the beginning of a process that would involve due diligence. There also are potential regulatory obstacles to Sony Pictures, a division of the Tokyo-based Sony Group , owning Paramount’s CBS broadcast network.
Sony’s U.S.-based partner, Apollo, acquired Cox Media Group’s television stations in a 2019 deal that required approval of the Federal Communications Commission.
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