Remember Byron Allen?
You know, the loquacious media executive who infuriated Paramount’s shareholders by saying he wanted to buy Paramount from Shari Redstone for a whopping $30 billion.
Paramount’s market cap of just under $10 billion reflects the melting ice on most of its programming, so it sounded like a pretty good deal.
Well, no one but Byron himself seems to think he has any money, so he’s been nowhere to be seen in recent merger talks.
And then there was the complicated proposition offered by David Ellison, the wealthy son of tech billionaire Larry Ellison.
He runs a decent movie studio called Skydance and is trying to cut Shari a check for just $2 billion for control. It wouldn’t make sense in a normal world, but such is the mainstream media and its strange rules.
Shari owns Paramount through a complex structure that includes so-called controlling shares rather than common stock.
In this scenario, these investors are in an advantageous position as they receive little profit.
Now they’re threatening to sue, causing enough turmoil around Redstone that her CEO, Bob Bakish, goes nuts and fires himself.
I’m told Shari still likes the deal (David is offering more than double the actual value of his stock), but it’s so serious that Paramount is forced to close Skydance in negotiations. had no choice but to revoke its exclusive rights. You can also consider other offers.
Next up is Apollo, a greedy private equity firm that won’t pay a fortune for a cup of coffee.
They made a strangely worded “unofficial offer” to partner with Japanese media conglomerate Sony to acquire the company for $26 billion. It looks good until you start parsing the numbers and other factors.
Much of the funding will be used to pay down Paramount’s more than $14 billion in debt.
Then they plan to tear it all apart, but Sumner, whose late father, media merger icon, put together the once-famous series that combined original and top brands like CBS and MTV. Since it was redstone, Shari wanted to avoid it. notch movie studio.
Business, not nostalgia
But the people of Apollo don’t really like nostalgia.
Paramount’s stock price has fallen more than 70% over the past five years. This is because Paramount’s brand became less and less energetic during the cord-cutting era.
Sony Apollo believes parts of Paramount are worth more than the entire company, and they may be right.
But before Paramount’s remaining bag owners get their hopes up, consider this: Sony is owned by the Japanese, and Apollo does a lot of business with the Saudis. Two major attacks on this deal are needed if it goes before the Biden regulators, who loathe and look down on the deal. Regarding foreign ownership, particularly ownership of U.S. media assets.
Apollo says no Saudi money is involved (Biden’s regulators are said to be less likely than the Japanese to approve Saudi ownership).
Still, many smart Wall Street analysts doubt they have the money without the Saudis. That’s because Sony certainly doesn’t have the cash — it only has about $10 billion in cash on its balance sheet.
So what happens next?
That was the question I asked some smart media executives when I was looking for stories at the Milken Institute conference in Beverly Hills last week.
When I asked the aforementioned Byron Allen, he raised his hand and said, “That’s up to Shari.”
I didn’t pursue the issue after that because I felt like he wasn’t too keen on following up.
Another top media executive reminded me of the whole Les Moonves situation.
Moonves was once the king of all media, directing CBS to record profits and make shows hit when it was another company in the Redstone empire.
He unsuccessfully tried to wrest CBS from Shari’s control through a shareholder lawsuit before he was forced out of his CEO role over the #MeToo scandal in 2018.
He thought that Mr. Shari did not understand the television industry and that CBS would buy back his show for a higher amount before the ice began to thaw.
“Les was right…he saw the show coming and didn’t think Shari could manage it,” the executive said.
But the executive still thinks Mr Shari will win.
Despite her operational flaws, she inherits her father’s legendary determination and usually gets what she wants.
She wanted Mr. Moonves to step down in order to consolidate her power by formally merging the two media companies she controlled (Viacom and then CBS into one), which she did. .
The executive said there’s nothing stopping her from getting that $2 billion, so she’s likely to fight a long battle with public shareholders in court.
How dare you argue with the third top media executive, the CEO of a rival company, who I caught rushing into Milken’s panel discussion?
He told me he didn’t think anything would happen.
In fact, the current management structure after Bakish will probably be occupied by three executives in what must be a very large “CEO’s office”, but given the hurdles I have outlined, no deal will be reached for the time being. will remain as is.
The troika of Chris McCarthy, George Cheeks, and Brian Robbins is derisively known in the Wall Street analyst community as the “Hydra-headed monster.”
If they don’t do something to stop Paramount from collapsing, they will soon become even more derisively known as “The Three Stooges.”
