ALBAWABA - Paramount has opted to officially begin discussions with a bidding coalition headed by Sony Pictures Entertainment and the massive private equity firm Apollo, the New York Times cites undisclosed sources, after the expiration on Friday night of an exclusivity period of discussions with the Hollywood company Skydance.
Apollo has issued a nonbinding letter of interest last week, according to individuals close to the negotiations, NYT notes, proposing to purchase the business for around $26 billion in cash, with the Paramount committee also making the decision to press for more talks with Skydance in the meantime.
According to the Financial Times, Paramount, owner of Nickelodeon, MTV, CBS and Paramount Pictures, has been having a difficult time in Hollywood, finding it tricky to stand out in the fierce streaming competition that has completely changed the entertainment industry, despite being one of the largest companies in the industry.
Concerns in Hollywood are growing regarding how if Apollo-Sony were to acquire Paramount, fewer major film studios would remain, which may result in employment losses and perhaps call into doubt the survival of the iconic Paramount sight on Melrose Avenue.
On the other hand, Apollo's strategy seems to be preferred by Paramount investors, who informed the FT that it would provide a higher premium for regular stockholders, despite billionaire Warren Buffett’s earlier selling of $2.6 billion stake at the firm, after his shares dropped over 60 percent since his investment.
It's unclear exactly how the entertainment businesses of Sony and Paramount would work together. Paramount has chosen to enter the direct-to-subscriber market like Netflix, bringing in over 71 million paying consumers worldwide, while Sony has erred on the side of selling its shows to industry majors like Disney and Netflix.
