Jeffrey Katzenberg commented on a Paramount drama, expressing optimism and support for a potential deal involving Paramount and Skydance. Katzenberg’s statement suggests that such an outcome would be beneficial and a significant win for Paramount.
Speaking a the Axios BFD Talks: LA this evening, the DreamWorks co-founder and former Walt Disney Studios head acknowledged that the situation is complicated.
“There’s a reason why the David Ellison deal did not fly, which I think is unfortunate. Because I think David is a phenomenal entrepreneur, and he is super ambitious, and loves the movie business, the studio business. I think that would have been a great win for Paramount and for people in the industry.”
Paramount is indeed continuing discussions with Ellison despite the conclusion of an exclusive negotiation period, and is concurrently engaging with a competing bid from the team of Sony and Apollo. The latter offer presents a higher financial benefit for shareholders but comes with regulatory challenges.
“Clearly, that [Sony-Apollo offer] can create an exit for shareholders and investors who have been with this company for a very long time, and it’s been a real roller coaster ride. [But] I wouldn’t say that’s it has straight path forward.”
Sony is unable to own broadcast assets, and the proposal is for Apollo to assume them. However, the assumption that the FCC would permit a private equity firm to acquire such a license is questionable. Consider the implications: this license operates America’s top broadcast network, and the FCC has the definitive authority to approve it. Will the FCC find merit in private equity ownership? That remains uncertain, especially given the current regulatory climate, as noted by Katzenberg.
There’s a third option, Paramount’s controlling shareholders Shari Redstone just decides to sit tight, not do either deal, and take a run at it in another year or two.”
Ellison and backers Larry Ellison and RedBird Capital would buy out Redstone’s stake with a bit of sweetener to common shareholders but not nearly enough to make them happy. The company would stay together and stay public.
Sony and Apollo are offering $26 billion, including the assumption of Paramount’s debt, to acquire the whole company and take it private. A special committee of Par’s board decided yesterday to engage with both. Shareholders like this one.