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US private equity group Apollo Global is in discussions with Sony Pictures Entertainment about making a joint takeover bid for Paramount Global that would rival ongoing talks between controlling shareholder Shari Redstone and Skydance, the film studio behind movies including Top Gun: Maverick.
The talks with Apollo about a deal were at an early stage, said three of the people familiar with the matter. They added that any successful deal would face multiple challenges, including how to deal with Paramount’s cable business. An offer by Apollo and Sony Pictures has not been presented to the board of Paramount.
Earlier this month, Paramount entered exclusive negotiations with Skydance. Skydance is offering to buy Redstone’s National Amusements, which controls 77 per cent of Paramount’s voting stock, and later merge with the two companies.
Apollo previously submitted a takeover bid of more than $26bn, which would have given shareholders a large cash premium to Paramount’s trading price, but it was rebuffed. Paramount questioned the financing of Apollo’s bid and refused to engage with the New York-based private equity group.
The New York Times first reported the talks between Sony and Apollo.
Sony’s talks with Apollo come as Skydance’s approach faces criticism from some Paramount investors, who say the structure of the deal leaves them at a disadvantage. Four members of the Paramount board, including some longtime Redstone allies, recently decided not to stand for re-election following the failed Apollo approach.
The tensions with shareholders have opened the door for a rival deal, said three people with knowledge of the discussions.
Unlike other big Hollywood studios, Sony management decided not to pour billions into building its own streaming service to compete with Netflix. Instead it has pursued an “arms dealer” approach that allows it to sell content to various streaming services.
It also does not have the burden of legacy cable television networks that Paramount, Disney, Warner Bros and Universal do. This has left Sony with a relatively healthy balance sheet, although it lacks the scale of the other studios. A tie-up would combine Sony’s film franchises including Ghostbusters and Uncharted, with Paramount, which has had recent hits such as Mean Girls and Bob Marley: One Love.
There would also be the potential for consolidation of some marketing and distribution capabilities between the studios.
Paramount, Sony and Apollo declined to comment. Skydance did not immediately return a request for comment.
Additional reporting by James Fontanella-Khan in New York
