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Shari Redstone, Paramount’s controlling shareholder, is unconvinced by an $11bn offer from Apollo for its Hollywood studio, people briefed on the matter said, and is instead negotiating a rival deal with billionaire David Ellison to secure the future of her family’s media empire.
Ellison’s Skydance, which is backed by private equity investor KKR, RedBird Capital and Tencent, has been in talks with Redstone for several months to acquire a majority stake in National Amusements (NAI), the holding company through which she controls Paramount.
That deal would result in Ellison running the combined Paramount and Skydance, which already produce movies together including Top Gun and Mission: Impossible, according to those briefed on the plan.
Ellison’s bid would also add a deep bench of media operators including former NBCUniversal chief Jeff Shell, who would run broadcaster CBS as well as Paramount’s cable networks, which include MTV and Nickelodeon, two people said. Another person said that former CNN boss Jeff Zucker could help run the CBS news broadcasting unit. A representative for Zucker did not have an immediate comment.
Skydance is conducting due diligence and has yet to submit a final offer. The two sides hope to reach an agreement in the coming months but people with direct knowledge of the matter warned that there was still a good chance the talks would fall apart.
Apollo has also been circling Paramount for several months and had made an offer to buy the group’s Hollywood studio for $11bn, two people briefed on the matter said.
That would be well above the $7.7bn stock market valuation for the entire company as of Wednesday morning and shares in Paramount jumped nearly 12 per cent after The Wall Street Journal reported on Apollo’s offer.
However, Redstone, who is president of NAI and non-executive chair of Paramount, is convinced that a deal with Ellison would make more strategic sense than selling to a financial buyer, according to several people familiar with the matter.
If Paramount sold just the studio unit it would be left with its lower-performing cable, broadcast and streaming businesses, without the more valuable content arm. Such a scenario could make what is left of Paramount worth very little, people close to NAI said.
The competing bids are the latest twist in a long-running saga for Redstone, the media scion who in 2020 inherited control of the entertainment conglomerate that her late father Sumner Redstone built from his own father’s chain of drive-in cinemas.
Paramount is behind some of the most storied properties in entertainment, such as The Godfather, Star Trek, Titanic and Mission: Impossible.
But Paramount’s stock has dropped by more than 70 per cent in the past two years. Investors are sceptical that the group can compete in a cut-throat streaming business in which it is battling against much larger groups such as Disney, Netflix and Amazon.
“Accepting a studio-only offer would mean divorcing the rest of the company from one of the key engines that drives it,” said MoffettNathanson analyst Robert Fishman. “Remove one of its unique content creators from the equation and the rest of the company may appear hollow,” he said.
Skydance and Redbird declined to comment. Paramount and Apollo did not immediately reply to a request for comment.
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