Paramount kicks CEO and examines takeover bid

Change is afoot in Hollywood. Film studio Paramount is about to be taken over. Last week the CEO was kicked out, now competitor Sony is launching a takeover bid.

In the news: Film studio Sony Pictures and asset manager Apollo Global Management are jointly making a takeover bid for Paramount worth 26 billion dollars, or just over 24 billion euros.

• According to The Wall Street Journal Sony CEO Tony Vinciquerra and Aaron Sobel of Apollo have announced in a letter that they want to acquire Paramount. The studio released the Mission: Impossible films, The Godfather and Top Gun: Maverick, among others, but is having difficulty taking the step towards streaming.
• The quarterly results did not look too good. Paramount reported a net loss of $554 million. TV channel CBS may have broadcast the Super Bowl, but it is still losing paying customers. Paramount’s streaming services Paramount+ and PlutoTV, which are supposed to take over traditional TV viewing, did gain subscribers. But at the same time, that branch also makes an operating loss of $286 million.
• The main shareholder, Shari Redstone, sees few options other than selling the company. She was not appreciated for the fact that she was thinking of a construction that would mainly make her herself richer. And CEO Bob Bakish certainly did not agree with a takeover. That cost him his job: he was promptly thrown out.

Two options for Paramount

To follow: Will Redstone accept Sony’s offer or will there be a shadowy construction?

• The offer now on the table would be a “non-binding expression of interest”, writes The New York Times. The shot across the bow would make Sony a majority shareholder and Apollo would then acquire a minority stake. The purchase would be a golden move for Sony: it is the only major studio that does not yet have a streaming service.
• Although it is possible that Redstone will join forces with Skydance Media, the entertainment company of producer David Ellison. The two companies had worked together before, but Skydance disagreed with the arrangement that would give Redstone 77 percent of the voting rights and only 10 percent of the shares, through her company National Amusements. Ellison subsequently reduced the proposed cash flow that would flow to National Amusements, while leaving Skydance with more money to pay down debt.
• Within Paramount, a three-person management team now carries out the duties of the CEO. It is Redstone who will have to make the decision, sooner or later.