Shares of Paramount Global (PARA) rose as much as 8% on Thursday, closing up about 5%, following more M&A reports – this time on news that production studio Skydance Media plans to take Paramount fully private.
According to CNBC, Skydance and backers RedBird Capital and KKR are working on a deal to acquire National Amusements, the holding company that houses Paramount and controls the media giant through its Class A shares.
Shari Redstone is currently non-executive chairman of Paramount Global and president of National Amusements (NAI).
Of note, NAI owns about 10% of Paramount's equity value and holds 77% of the voting shares — worth about $1 billion, although that doesn't take into account the “meaningful control premium,” Wells Fargo analyst Steve Cahall wrote a current message to customers.
The deal, which is in early stages of negotiations, would be contingent on Skydance merging with Paramount, which would likely take the media company private, according to the report. Of course it is possible that the talks fail.
Paramount and RedBird Capital declined to comment. National Amusements and Skydance Media did not immediately respond to Yahoo Finance's request for comment.
Following the M&A chatter, Paramount announced layoffs in an internal memo later Thursday, citing the need to “operate as a leaner company and spend less.”
“As in recent years, this means that we will continue to reduce our workforce worldwide. These decisions are never easy, but are critical on our path to earnings growth,” the memo said. No specific numbers or timeline were given.
The memo, obtained by Yahoo Finance, also states that the company will work to increase streaming profitability and maximize “highest impact” content in 2024. This means producing less international content.
Paramount's long-rumored sale
Outside of Skydance, Warner Bros. Discovery (WBD) is also rumored as a potential buyer. WBD CEO David Zaslav and Paramount CEO Bob Bakish met back in December to discuss a possible merger, as Axios first reported.
The story goes on
Both companies declined to comment on the meeting, although Paramount's small size compared to competitors has certainly made it the industry's first choice for a separation or merger – which has also led to it being criticized by some consumers Just want to pay, so many streamers are ignored.
The company currently has a market cap of just under $9 billion, compared to $171 billion for Disney (DIS) and nearly $240 billion for Netflix (NFLX).
The company recently committed to divesting non-core assets to reduce debt and improve its balance sheet. Last year the company announced the sale of Simon & Schuster to investment firm KKR, following the collapse of the publishing giant's sale to Penguin Random House late last year. The $1.62 billion cash deal closed in October.
Showtime and BET Media Group are two assets that have also been the subject of sales rumors recently.
In December, Bloomberg reported that Paramount was again in talks to sell BET – this time to its CEO Scott Mills and former Blackstone executive Chinh Chu, who now runs private investment firm CC Capital Partners. According to the report, a price of almost $2 billion is being discussed.
Wall Street appears poised for the next big media merger as analysts predict a Paramount deal could spark an M&A frenzy.
In addition to Paramount, Bank of America analyst Jessica Reif Ehrlich predicted that Warner Bros. Discovery and NBCUniversal (CMCSA) are also “likely to be impacted.” [by consolidation] in the next 18 to 24 months.”
Shari Redstone is currently non-executive chairman of Paramount Global and president of National Amusements. (Evan Agostini/Invision/AP, File) (Evan Agostini/Invision/AP)
Alexandra Canal is a senior reporter at Yahoo Finance. Follow her on Twitter @allie_canalLinkedIn and email her at [email protected].
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