Paramount Stock Retreats on Report Shari Redstone Not Interested in Apollo’s $11 Billion Studio Buyout Bid

It appears Shari Redstone remains firmly opposed to breaking up Paramount Global.

Redstone, president of National Amusements Inc. — the controlling shareholder of Paramount Global — was “unconvinced” by Apollo Global Management’s $11 billion offer to buy Paramount’s film and TV studio, the Financial Times reported, citing anonymous sources. The reported price tag would be a premium over the market cap of the entire company. Instead, per the FT report, Redstone is preferring to continue negotiating a deal with Skydance’s David Ellison, in partnership with RedBird Capital and Tencent, to sell NAI (and then merge Skydance with Paramount Global).

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Shares of Paramount Global closed down 5.5% Thursday following the FT’s report, amid an uptick in broader market indexes. That came after the stock popped nearly 12% following the Wall Street Journal’s report that Apollo had made an $11 billion offer to acquire Paramount Pictures and the Paramount TV studios group.

Apollo’s bid would not include CBS, Paramount Global’s cable networks like BET, Comedy Central, Nickelodeon and MTV, or the streaming business unit that includes Paramount+ and Pluto TV. Redstone’s reluctance to entertain selling off the studio is that such a transaction would “make what is left of Paramount worth very little,” the FT reported.

Paramount Global, NAI and Apollo Global have not commented on the latest M&A reports.

Several Wall Street analysts believe that carving up Paramount Global for piece parts would not necessarily be in the best interests of shareholders. “We think there is too much interconnectivity between the film and TV IP, and for that matter, between TV and Studios and the recently segmented DTC division, for Paramount Global to be sold in pieces — we think that would be value-destructive,” David Joyce, a media and entertainment analyst at Seaport Research Partners. He added that he remains positive on the stock “amid strategic and financial buyer interest in some/all of Paramount Global’s assets.”

If Paramount Global were to sell off the studio business, “the rest of the company may appear hollow,” MoffettNathanson analysts led by Robert Fishman and Michael Nathanson wrote a March 20 research note. It’s possible that the company could forge a “creative deal” to license content from a newly separate studio, “but this would be a fundamental shift in a flywheel for businesses already in decline,” they added.

That said, Apollo’s studio bid “could help Paramount secure an increased price for the whole company if that is the preferred path without having to break up the company,” the MoffettNathanson team wrote.

Paramount Global chief Bob Bakish, on the Q4 2023 earnings call last month, was asked about the reports of deal talks. “In terms of M&A, look, at Paramount, we’re always looking for ways to create shareholder value. And to be clear, that’s for all shareholders,” he said. “But I’m not going to get into commenting on any speculation or timeline, et cetera. But it’s obviously something we are focused on.”

Paramount Pictures’ library comprises more than 1,000 film titles with rights to an additional 2,500, featuring films by filmmakers including Martin Scorsese, J.J. Abrams and Michael Bay. Its library includes the Star Trek, Godfather, Transformers, Indiana Jones, Scream and Mission: Impossible franchises, as well as Oscar-winners like “Braveheart,” “Forrest Gump” and “Titanic.”

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