Sony, Apollo Plan Paramount Break-Up

Sony Pictures Entertainment and private equity firm Apollo Global Management are planning to acquire Paramount Global for a whopping $26 billion. However, their intentions go beyond a simple acquisition. According to the New York Times, they intend to break up the company into different parts1. Here’s what we know so far:

The Breakup Plan: The CBS broadcast network, cable channels like MTV, and the Paramount Plus streaming service would be auctioned off. Paramount Pictures, known for blockbuster films like “The Godfather,” “Top Gun,” and the “Mission Impossible” franchise, would be combined with Sony’s existing business. Sony and Apollo are also likely to retain Paramount’s library of films and TV shows, along with the rights to well-known characters like the Teenage Mutant Ninja Turtles and SpongeBob SquarePants.  Interestingly, they haven’t yet shared this plan with Paramount or its advisers.

Changing of the Guard: Paramount has been under the control of the Redstone family for decades. Sumner Redstone, the media mogul, assembled the sprawling conglomerate through audacious deals. Shari Redstone, his daughter, championed a 2019 deal to reunite Paramount with CBS, and she remains Paramount’s controlling shareholder.  Sony and Apollo’s interest in acquiring Paramount represents a significant shift in the entertainment industry’s landscape.

Next Steps: Sony and Apollo submitted a nonbinding expression of interest in acquiring Paramount. They are now engaging with Paramount’s financial advisers to determine the next steps. Formal nondisclosure agreements and due diligence reviews are yet to begin, a process that could take several weeks.

Joint Venture Possibility: If the deal goes through, Sony and Apollo would likely operate the company as a joint venture. Sony would control the venture, with Apollo holding a minority stake. The plan involves combining marketing and distribution functions while divesting other properties over time.

Ms. Redstone’s Perspective: Shari Redstone would prefer to see Paramount pass intact to another buyer. However, if the offer is compelling, a breakup wouldn’t necessarily be a dealbreaker.

Other suitors, such as Skydance, have also been in discussions with Paramount about potential deals, but negotiations with Sony and Apollo have taken center stage.