Apollo Global Management Offers $11 Billion for Paramount TV, Film Studios; More than Market Cap of Entire Company
Paramount will have to seriously consider this latest bid to purchase some of its assets.
There’s seemingly too much smoke around Paramount and its discussions with other companies regarding mergers and acquisitions for it not to eventually lead to some fire. The Wall Street Journal is stoking those flames yet again by reporting that Apollo Global Management is offering $11 billion to acquire Paramount’s TV and movie studio, which is more than the market capitalization of the entire Paramount Global company, which also includes multiple TV channels, merchandising, and more.
Key Details:
- Apollo’s interest in Paramount was first reported earlier in March.
- Acquiring just Paramount’s studios would allow Apollo to sidestep regulatory concerns regarding CBS.
- Paramount is still mulling an offer from David Ellison of Skydance Media, as well.
Rumblings Apollo’s interest in Paramount first began to circulate in mid-March, but now more details about its offer are emerging. Instead of attempting to purchase all of Paramount’s assets, including the broadcast channel CBS and cable networks like Nickelodeon and Paramount Network, Apollo is reportedly after the studios that make the company’s shows and movies.
The $11 billion that Apollo is willing to pay to get its hands on the studios responsible for hits like “Mission: Impossible - Dead Reckoning” and the “Transformers” franchise is more than the entire market capitalization of Paramount Global, which is currently around $7.7 billion. Market capitalization is an investment term referring to the total dollar market value of a given company’s stock.
The WSJ reports that Shari Redstone, the controlling shareholder of Paramount Global is hesitant to sell off the movie studio, which she views as a critical component of the company. She would have to agree to breaking Paramount into smaller pieces and selling them off one at a time in order to allow the deal with Apollo to go forward.
Apollo’s bid to acquire solely Paramount’s TV and movie studios means it will not have to face concerns from regulators regarding CBS. Because Apollo owns a majority stake in Cox Media Group and the 14 television stations it owns. Purchasing CBS may have caused government officials to take a closer look at whether the company would have too much control over local TV violating broadcast regulations. Federal rules stipulate that a single station owner can only own one of the four highest-rated TV stations in a given market, and no entity is allowed to own commercial television stations that reach more than 39% of U.S. audience.
Who Else is Still in the Running for Paramount?
The WSJ reports that Paramount is still considering an offer from billionaire David Ellison of Skydance Media, which produces some of Paramount’s biggest flicks like the “Mission: Impossible” franchise and “Top Gun: Maverick.” Ellison’s interest was first reported in late January, and unlike Apollo, Ellison’s aim is to purchase the entire company and take it private, pulling its shares from publicly traded markets, at least temporarily.
The offers from Apollo and Ellison appear to be the most serious ones on the table. Byron Allen of Allen Media Group made a very public offer of $30 billion for Paramount in January, but there has been no reporting since then to indicate that he’s still in the running. Warner Bros. Discovery at one point did have a reported interest in an acquisition of Paramount, but has since pulled itself out of discussions.
A commercial partnership with Comcast in some form is on the table as well, though it’s more likely that this would take the shape of a bundle of Paramount+ and Peacock, as opposed to an outright merger. Since Comcast owns NBC, the acquisition of another company with a broadcast channel would be a non-starter with regulators.
Paramount says it’s focused on surviving on its own, but the best interests of its shareholders will always win out. If those interests dictate a sale of part or all of Paramount’s assets, that’s the most likely outcome in the end. It seems nearly assured that a transaction involving Paramount Global is coming, whether it be a sale of the entire company or just a significant part of it.
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