Remember Byron Allen?
You know, the voluble media executive who got Paramount shareholders all juiced up when he said he wanted to buy the company from Shari Redstone for a cool $30 billion.
Sounded like a great deal since Paramount’s market cap at just below $10 billion reflects the melting ice cube of much of its programming.
Well, he’s nowhere to be found these days in the merger talks because no one seems to think he has the money except Byron himself.
Then there was that convoluted thing offered by David Ellison, the rich-kid son of tech billionaire Larry Ellison.
He runs a decent movie studio named Skydance and wants to write Shari a check for just $2 billion for her controlling stake, which in a normal world wouldn’t make sense but this is major media and weirdness rules.
Shari owns Paramount through some tangled structure that includes so-called controlling shares as opposed to the common stock.
Those investors are the bag holders under this scenario because they get next to nothing.
Now they’re threatening to sue, causing enough agita in Redstone’s orbit that her CEO, Bob Bakish, went nuts and got himself axed.
Shari, I am told, still loves this deal (David is offering more than twice as much as her stake is actually worth), but its dog-with-fleas quality is so profound that Paramount was forced to let Skydance’s exclusivity on negotiations lapse so they can explore other offers.
Next up: Apollo, the rapacious private equity firm that wouldn’t overpay for a cup of coffee.
They have made a strangely worded “informal offer” to buy the company for $26 billion in a partnership with Japanese media conglomerate Sony. Sounds good until you start parsing through the numbers and other factors.
Much of the money goes to pay off Paramount’s $14 billion-plus in debt.
Then they plan to break the whole thing up, something Shari would like to avoid since it was her late father, media-merger icon Sumner Redstone, who cobbled together the once-storied franchise that combines seminal brands like CBS and MTV with a top-notch movie studio.
Business, not nostalgia
The Apollo people aren’t much for nostalgia, however.
Shares of Paramount have declined more than 70% over the past five years because Paramount’s brands are increasingly un-seminal in an era of cord cutting.
Sony-Apollo believe that pieces of Paramount are worth more than the company as a whole and they may be right.
But before Paramount’s remaining bag holders get their hopes up, consider: Sony is owned by the Japanese and Apollo does plenty of business with the Saudis, two big strikes against this deal when it goes before the deal-hating Biden regulatory apparatus, which looks down on foreign ownership, particularly of US media assets.
Apollo says there is no Saudi money involved (the Biden regulatory cops are said to be less inclined to approve Saudi ownership than Japanese).
Still, plenty of smart Wall Street analysts question whether without the Saudis these guys have the money because Sony certainly doesn’t — with just around $10 billion in cash laying around its balance sheet.
So, what’s going to happen next?
That was the question I had for some savvy media executives while trolling for stories at this past week’s Milken Institute conference in Beverly Hills.
When I asked the aforementioned Byron Allen, he threw up his hands and said, “It’s up to Shari.”
I then got the feeling he wasn’t too keen on any follow-ups so I didn’t press the issue.
Another top media executive reminded me of the whole Les Moonves situation.
Moonves was once the king of all media, having steered CBS when it was a separate company in the Redstone empire to record profits and hit shows.
Before he was ousted as CEO in a 2018 #MeToo scandal, he unsuccessfully sought to wrest CBS from Shari’s control through a shareholder lawsuit.
He thought Shari didn’t understand the TV business and CBS would fetch a higher price back before the ice cube of his programming began melting.
“Les was right . . . he saw the s–tshow coming and didn’t think Shari could manage it,” the exec said.
Yet, this executive still thinks Shari will prevail.
Despite her operational deficiencies, she inherited her father’s legendary determination and usually gets what she wants.
She wanted Moonves out so she could formally merge the two media companies she controlled (Viacom and then CBS into one) and consolidate power, and did it.
She will play a long game with the common shareholders in court because nothing will stop her from getting that $2 billion, the exec says.
No way, counters a third top media executive, a CEO of a rival company whom I snagged as he was rushing into a Milken panel discussion.
He told me he thinks nothing will happen.
In fact, the current post-Bakish management structure — three execs who will occupy what must be a very large “Office of the CEO” — will remain in place for the foreseeable future because no deal will get done given the hurdles I outlined.
The troika, Chris McCarthy, George Cheeks and Brian Robbins, are known in the Wall Street analyst community derisively as the “hydra-headed monster.”
If they don’t do something to stop Paramount from imploding, they will soon be known even more derisively as the “Three Stooges.”
Credit: Source link
