Sony and Apollo in Talks to Acquire Paramount

Paramount has decided to formally open negotiations with a bidding group led by Sony Pictures Entertainment and the private equity giant Apollo, according to three people familiar with the matter. The move comes after a period of exclusive talks with the Hollywood studio Skydance lapsed on Friday night.

A special committee of Paramount’s board of directors met Saturday and signed off on beginning deal talks with Sony and Apollo, which last week submitted a letter of interest valuing the company at $26 billion, the people said. The committee also decided to push for further negotiations with Skydance, a studio founded by the technology scion David Ellison.

Paramount, the owner of Nickelodeon, MTV, CBS and Paramount Pictures, has been exploring a deal as it faces industrywide headwinds, including the decline of cable TV and the unprofitability of its streaming businesses.

Any deal between the Sony group and Paramount faces hurdles. Government regulations restrict foreign ownership of broadcast networks and would probably prevent Sony’s parent company, based in Japan, from owning CBS outright. The bidding group would likely push for Apollo, which is based in the United States, to hold the rights to the CBS broadcast license, according to two people familiar with their strategy.

Government regulators have also aggressively evaluated acquisitions under President Biden, with the Department of Justice and the Federal Trade Commission moving to block a number of proposed deals. Not all of those moves by regulators have been successful.

It also remains to be seen whether National Amusements, Paramount’s parent company, will support the Sony-Apollo bid. National Amusements has the power to veto any deal, giving the new bidders an extra incentive to secure its approval, though National Amusements has committed to supporting the special committee’s decision.