Sony ‘Rethinking’ Paramount Bid as List of Suitors for the Company Dwindles
As another M&A opportunity is potentially headed to the scrap heap, Paramount may be left to go it alone.
There’s very little about Paramount Global’s recent ownership question that has gone the way that company officials would want. The special committee designated to consider merger and acquisition opportunities is now working through its second major offer for the company, a $26 billion bid by Sony and its private equity firm partner Apollo Global Management. But a new report from CNBC is casting doubt on whether Sony really wants to follow through with its attempt to purchase Paramount Global, and it appears increasingly likely that the company won’t be sold at all.
Key Details:
- CNBC’s David Faber reports that Sony is “rethinking” its bid for Paramount Global.
- Due diligence has not begun, so while deal talks could still heat up, the two sides are not progressing as they would have hoped.
- David Ellison and Skydance Media are still observing the proceedings, but their previous offer to Paramount was characterized as their best and last.
According to CNBC’s David Faber, Sony is reevaluating its decision to make a meaningful pursuit of Paramount Global. Citing a falling stock price for Sony’s parent company and the continuing deterioration of the cable market, Faber said that Sony was “rethinking” its Paramount bid.
He cautioned that “rethinking” could simply mean Sony is reconsidering the way that the deal is structured, and that it appears no final decisions have yet been made. But he also pointed out that Sony has still not signed a non-disclosure agreement, which is a necessary step before the two sides exchange books and take a deep dive into each other’s financial data.
That is to say that despite Sony and Apollo coming together to work out a bid before Paramount exited its exclusive negotiating period with Skydance Media, Sony and Paramount are not very far along in their talks. Faber says that there could be a resolution on the matter soon — which itself could serve as an indication that the deal between the two sides is doomed — since Paramount and Sony are still in such an early negotiating stage.
“There is a hope, given how long this has gone on that it something will be concluded over the let’s call it the next couple of weeks,” Faber said.
As it’s currently constructed, the Sony offer for Paramount would see Paramount's movie studio merged with Sony's, while assets like broadcast and cable channels, as well as streamers like Paramount+ and Pluto TV would be sold off.
Could Skydance Deal Come Back if Sony Talks Fall Through?
Faber also said that David Ellison and Skydance Media have “continued to do their work” on an offer for Paramount. Ellison’s plan for Paramount is to keep the company whole as he merges it with Skydance, but wants to take it private. However, Skydance made this offer toward the end of its exclusive negotiating period with Paramount, only to be rebuffed.
Reports indicated that the final Skydance offer before it emerged from its exclusivity window with Paramount would be its “best and last,” so even if it is still keeping an eye on Paramount, there’s no guarantee that it will reengage with the company if the Sony talks fall through.
Sony and Skydance appear to be the two most interested parties in Paramount at the present, though other buyers could emerge. But as things stand, it appears more and more likely that the company won’t be at the center of any major deals in 2024. Paramount is continuing to gain customers and cut its streaming losses, though it continues to see revenue declines thanks to the reduction of its cable and broadcast audiences due to cord-cutting.
Paramount is already at risk of being left out of the bundling craze that appears to be sweeping the streaming world. Now, the company could find itself without a partner in its M&A talks, as well. There’s still plenty of time for it to get a deal done with Sony/Apollo, but whether there’s enough interest on both sides to carry a deal across the finish line is appearing more and more doubtful.
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