One of the lessons we’ve come to realize from Hollywood these past few years is that the stories they tell off-screen are sometimes even more interesting than those their top directors choose to tell on the screen. From the Disney CEO soap opera to the lack of self-awareness displayed by David Zaslav ever since he got the top office at Warner Bros. Discovery, there have been a lot of interesting stories coming out of the studios’ upper floors. Now, another one may be about to unfold: Is Paramount preparing for a sale?
Before we begin with the discussion, let us review a few bullet points we need to know about the company to fully comprehend the rest. The movie studio, Paramount Pictures, run by Brian Roberts, is a division of Paramount Global (formerly known as ViacomCBS). Bob Bakish is CEO but the company is owned by the Redstone family. Shari Redstone, heir to the family Empire, controls the board through the private firm National Amusements, which owns a majority stake in Paramount Global. Long story short: it’s a complicated structure.
Paramount’s financial complications over the past few years, mostly caused by the company’s investment in dying linear TV networks and the way it’s handled the Streaming Wars (even though Paramount Plus has a decent number of subscribers all things considered), have led most analysts and investors to the conclusion that Shari Redstone will need to sell the company at some point if she wants to get anything out of it.
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Things are complicated, of course, and this being a family business that Shari inherited from her father, with whom she did not have a great relationship (the history of Paramount Global/ViacomCBS would be worth it of a whole book — it exists, actually!) does not make it easier. But from all reports, it seems like they have assumed that at one point they will have to sell. The question now becomes: Who buys Paramount Global, and when? There are several options here.
The Skydance Buying Paramount Scenario
A month or so ago this may not have seemed like the most obvious case, but now it’s looking like a real possibility. Matt Belloni reported via his Puck newsletter earlier this month that David Ellison, CEO of Skydance Media, is in the very early stages of engaging with Shari Redstone and Paramount Global. NDAs have apparently been signed and a small number of people are crunching the numbers.
Apparently, Ellison’s way in would be through National Amusements, which controls 80% of the voting shares, though only 10% of the finances of Paramount Global. But he wouldn’t do it alone. Even though he comes from a very deep-pocketed background, he’s also enlisted RedBird’s Gerry Cardinale and would probably need one or two additional investors.
Wall Street clearly liked that idea, as the Paramount stock surged 14% the morning after Belloni published his newsletter (around the same time, Deadline also reported the news). Apparently, Redstone would want the stock to surpass the $30/share mark — it currently sits at $16. But would she like the idea, though?
Ellison already has business with Paramount through the Mission: Impossible franchise and last year’s Top Gun: Maverick, and has larger ambitions for the studio. As far as the linear networks and even Paramount Plus, though, it seems like he’d rather sell them for parts to private equity firms. And that’s probably where the hesitations will come in on Shari Redstone’s end. While Paramount Pictures is the biggest asset of the company, the truth is that the networks and TV stations it owns are also a big part of the legacy of her family.
There is also one thing we have to take into considereation for all of the options below, and that is anti-trust regulations. On paper, this would seem like the best option out of all of these to get the thumbs up from the government, but with 2024 being an election year and Joe Biden keen on moving against big consolidation, you never know. Should Trump return to the White House in 2025, though, that would change — not only is he more open to billionaires extending fat checks amongst themselves, he’s also friendly with Shari Redstone.
The Apple Route
It was reported a few weeks ago by The Wall Street Journal that Apple and Paramount had had in discussions about bundling their streaming services. The price would be lower than subscribing to the two of them separately, and it is the latest example of two major streaming platforms teaming up to maximize the revenue and facilitate the process to consumers. The question now becomes: Is that all there is to it?
On paper, Apple acquiring Paramount makes sense as well. Their whole business strategy for the first few years of Apple Studios has been letting filmmakers know they have a lot of money for them to come in and tell the stories they want to tell. They were also the first streaming platform to win the Best Picture Oscar, and it looks like Netflix will not be getting it this year either.
But by adding Paramount to their portfolio they would increase the value of Apple TV Plus, which currently relies only on original programming, and not a library, to lure in subscribers. But Apple TV Plus seems to finally have figured out what they want to do in the business, so folding Paramount Plus into their app seems like a big headache in a post-Streaming Wars landscape. And yet, Paramount Plus, which is also making big investments in original programming, mainly through their partnership with Taylor Sheridan, is perhaps the most similar streaming service to Apple TV Plus there is. So there might be a not-so-complicated way for the two companies to co-exist.
How would this work, though? Would Shari Redstone sell only Paramount Pictures, perhaps bundled with Showtime (both of which are run by CEO Brian Robbins), or would the entire machinery of Paramount Global come in? Apple probably wants nothing to do with linear TV and would likely sell all of those assets as soon as possible to private equity.
There are, however, two major things working against this scenario, which are also similar to why Disney will not be sold to Apple in the near future. First, there’s the fact that Apple CEO Tim Cook is not a big buyer. Even though the company is constantly making small-time cquisitions, ever since he took office in 2011, Cook’s biggest paycheck was to Beats Electronics for $3 billion in 2014. With Paramount Global, the check would be ten times as big, at the very least.
But then we run into the issue of regulators and anti-trust laws. Apple and Paramount Global merging should get a big no-no from the courts. However, Apple Studios is relatively small and new to the game, so them acquiring Paramount Pictures and Showtime (for a lower price) could be their way in.
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Could Comcast and/or Warner Bros. Discovery Buy Paramount?
This is the option where the issue of anti-trust law could become really relevant. There’s already a major scenario where Comcast could potentially buy Warner Bros. Discovery (WBD) next year. If that happens, the chances of Paramount Pictures being acquired by any other major Hollywood studio would plummet, not to mention the impossibility of Comcast, WBD, and Paramount Global all merging into one — at least, as long as a Democrat is sitting in the Oval.
So let’s cross that scenario off the list. Could either one bid for Shari’s company? Let’s talk Comcast first. Brian Roberts already engaged in similar talks with Rupert Murdoch a few years ago when he came close to buying 21st Century Fox — or rather, forced Bob Iger’s hand to overpay for those assets. But Roberts acquiring control of another movie studio and a whole lot of additional linear TV networks seems to be pretty impossible at this point, and regulators would at the very least force him to sell off the TV assets.
What’s in it for Comcast, though? They are already out of the streaming business anyway, as they didn’t even try with Peacock, so it’s not like Paramount Plus will represent a lifeline for them. For a company that churns out so much money out of the ad market through its TV channels, it seems naïve to think they would care about the streaming world.
They also own the non-Disney animation market in the US, through Dreamworks and Illumination, and have a good handle on both adult dramas, thanks to Oppenheimer (which will inevitably sway directors to work for Universal Pictures CEO Donna Langley), and big franchises, through the Fast & Furious saga. If that wasn’t enough, they also own the horror market through Blumhouse. What can Paramount Pictures really offer?
Then there’s the option of Warner Bros. Discovery. CEO David Zaslav will clearly not settle for what he currently owns, and it’s pretty clear that he wants to expand his portfolio next year. Whether that is through a sale to or a merger with Comcast, or perhaps the acquisition or merger with another company like Paramount Global.
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There’s really no evidence to justify this move, other than the fact that Paramount wants to sell and other players in town are looking for growth opportunities. Zaslav’s company could qualify for either one, although I would argue here that the moves he’s been making over the past year and a half have been more in tune with selling the company rather than expanding it. We’re talking, of course, about the lenghts he’s taken to reduce its debt and making it look prettier and nicer to outside investors.
But the sale to NBCUniversal does have its own complications, so perhaps, should the opportunity arise, Zaslav would also like to merge with Paramount Global, which is probably around the same size as Warner Bros. Discovery. But how would that fly with legislators, then?
The number of Hollywood studios is going down by the day. Between the 21st Century Fox acquisition by Disney, or Amazon Studios buying MGM, there have been plenty of examples of consolidation in town in recent years.
There are also the looming possibilities of Lionsgate and/or A24 being sold (both companies are making small moves to entice potential buyers), which have higher chances of getting governmental approval. But should they happen, the Hollywood consolidation would be bigger than ever, diminishing the likelihood of Paramount merging with another studio.
For that, the most likely scenario remains Skydance.
But what do you think? Will Shari Redstone sell Paramount Global next year, or soon after that? Let us know on our social media, and stay tuned for more!
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