Why Shari Redstone is trying to sell Paramount — and why she needs the right deal

Paramount
Global
nonexecutive
chair
and
controlling
shareholder
Shari
Redstone
has
been
talking
to
potential
buyers
interested
in
acquiring
her
media
company
—
or
parts
of
it
for
years
—
but
the
seriousness
of
those
discussions
has
heightened
in
recent
months.

There
are
sector-related
reasons
for
why
a
deal
seems
increasingly
urgent.
The
media
world
is
changing
rapidly.
During
the
Covid-19
pandemic,
legacy
media
companies
seemingly
had
a
path
to
growth
by
launching
their
own
streaming
services.
But
Wall
Street
turned
its
collective
back
on
that
narrative
after


Netflix

growth
stalled
in
2022,
leaving
companies
such
as
Paramount
Global
twisting
in
the
wind.

Paramount
Global’s
flagship
streaming
service,
Paramount+,
has
successfully
accumulated
63
million
subscribers,
and
it’s
still
growing.
But
it’s
also
still
losing
money,
albeit
not
as
much
as
it
used
to.
Third-quarter
streaming
operating
losses
were
$238
million.
A
year
ago,
they
were
$343
million.

Without
a
clear
growth
narrative,
Paramount
Global
has
struggled
as
a
publicly
traded
company.
Shares
are
down
56%
in
the
past
two
years.
This
has
piqued
the
interest
of
some
private
equity
firms
and
other
potential
buyers,
including

David
Ellison
at
Skydance
Media
and

media
mogul
Byron
Allen.

If
Paramount
Global
—
which
owns
Paramount
Pictures,
CBS,
cable
networks
such
as
Nickelodeon
and
Comedy
Central,
and
intellectual
property
such
as
“Star
Trek”
and
“SpongeBob
SquarePants”
—
is
withering
as
a
publicly
traded
company,
perhaps
taking
it
private
or
selling
some
of
the
assets
for
parts
makes
more
sense.

Redstone
has
personal
reasons
for
considering
selling
now,
too.
She
has
long
had
an
active
interest
in
Jewish
causes,
including
having
served
on
the

board
of
Combined
Jewish
Philanthropies.

Redstone’s
focus
on
fighting
antisemitism
has
increased
since
the
Oct.
7
Hamas
terrorist
attack
on
Israel,
which

killed
about
1,200
people,
according
to
people
familiar
with
Redstone’s
thinking.

“Look,
I’m
not
doing
well,
to
be
honest,”
Redstone

told
The
Hollywood
Reporter
in
October.
“I
think
there
are
no
words
to
describe
what
took
place,
and
all
I
do
every
day
is
try
to
do
something
that’s
going
to
make
a
difference
and
help
people.”

Then
there’s
a
significant
financial
consideration
related
to
National
Amusements
Inc.,
or
NAI,
the
holding
company
that
owns
the
majority
of
Paramount
Global’s
voting
shares.

When
Redstone’s
father,
Sumner
Redstone,
the
founder
of
National
Amusements,

died
in
2020,
Shari
Redstone
inherited
his
shares.
National
Amusements
directly
or
indirectly
through
subsidiaries
owns
77%
of
the
Class
A
voting
stock
of
Paramount
Global
and
5.2%
of
the
Class
B
common
stock,
constituting
about
10%
of
the
overall
equity
of
the
company.

According
to
tax
law,
Shari
Redstone
must
pay
taxes
on
the
shares
tied
to
their
value
at
the
time
of
her
father’s
death.
That
amounts
to
more
than
$200
million,
according
to
a
person
familiar
with
the
matter.

Redstone
has
deferred
the
tax
bill
for
10
years,
until
2034,
and
only
owes
about
$7
million
this
year,
said
the
person,
who
asked
not
to
be
named
because
the
details
are
private.
Still,
the
looming
tax
payment,
along
with
an
additional

$37
million
debt
payment
due
to
Wells
Fargo
in
March,
could
be
compelling
motivation
to
sell
off
National
Amusements
for
cash,
rather
than
a
trade
of
equity
with
a
strategic
partner.

National
Amusements
will
make
its
March
payment
on
time,
according
to
a
Redstone
spokesperson.

“National
Amusements
has
significant
assets
including
our
well-located
movie
theaters
in
the
US,
UK
and
Latin
America, owned
real
estate
properties
and
shareholding
in
Paramount
Global.
We
continue
to
take
steps
to
improve
our
financial
position
including
through
debt
reduction
with
a
meaningful
paydown
in
March,”
the
spokesperson
said.

Redstone’s
varied
motivations
for
selling
mean
she’s
looking
for
the
right
kind
of
deal,
at
the
right
price
—
and
so
far,
she
has
had
options.

Warner
Bros.
Discovery

has
held
preliminary
talks
to
acquire
Paramount
Global.
While
Warner
Bros.
Discovery
board
member
John
Malone

suggested
in
an
interview
with
CNBC
in
November
that
Paramount
Global
could
be
a
future
distressed
asset,
that
fate
can
be
avoided
if
CEO
Bob
Bakish
can
make
Paramount+
profitable.

There
could
be
structural
issues
with
a
Warner
Bros.
Discovery
deal,
in
terms
of
a
cash-stock
split,
including
how
much
debt
a
combined
company
would
want
to
carry.
It’s
also
possible
Warner
Bros.
Discovery
may
choose
to
wait
to
see
if


Comcast
is
willing
to
part
with
NBCUniversal.

In
early
talks
with
buyers,
Redstone
has
pushed
for
a
high
premium
for
both
National
Amusements
and
Paramount
Global,
according
to
people
familiar
with
the
matter.
Paramount
Global
has
a
market
capitalization
of
nearly
$10
billion
and
about
$13
billion
of
net
debt.

Redstone
also
has
fiduciary
duties
as
Paramount
Global’s
nonexecutive
chair.
If
she
agrees
to
sell
either
National
Amusements
or
all
of
Paramount
Global,
she’ll
need
buy
in
from
other
investors.

Banker
Byron
Trott,
who
is
helping
Redstone
navigate
sale
talks,
has
long
been
an
advisor
for
Warren
Buffett,
whose


Berkshire
Hathaway
is
Paramount
Global’s
largest
Class
B
shareholder.

No
deal
is
imminent,
said
people
familiar
with
the
process.
As
CNBC

reported
last
month,
Skydance
is
interested
in
acquiring
NAI
as
part
of
a
two-step
transaction
that
would
involve
merging
Skydance
with
Paramount
Pictures.

Talks
are
further
along
with
Redstone
regarding
NAI
than
they
are
with
Paramount
Global,
two
of
the
people
said.
Still,
Skydance
is
only
interested
in
acquiring
NAI
if
it
can
get
a
deal
done
with
Paramount
Global,
CNBC
reported
in
January.

Spokespeople
for
Skydance,
National
Amusements
and
Paramount
Global
declined
to
comment.

There’s
also
the
issue
of


Charter‘s
looming
carriage
deal
with
Paramount
Global,
which
is
set
to
expire
in
April,
according
to
people
familiar
with
the
matter.
This
may
not
be
guiding
Redstone’s
urgency
for
a
sale,
as
a
likely
deal
will
be
reached
long
before
an
acquisition
closes,
but
it’s
certainly
looming
over
the
company’s
future
prospects.

While


Comcast,
the
largest
U.S.
cable
provider,
and
Paramount
Global

renewed
their
deal
with
little
fanfare
in
December,
Charter
is
a
different
animal.
The
second-largest
U.S.
cable
operator
struck
a
deal
with


Disney
last
year
that
paved
the
way
for
Charter
to
begin
lopping
off
little-watched
cable
networks
while
directly
selling
subscription
streaming
services
to
its
millions
of
broadband
customers.

Paramount
Global
charges
$5.99
per
month
for
Paramount+
with
advertising.
Most
of
what
airs
on
CBS
and
Paramount
Global’s
cable
networks
is
available
on
Paramount+.
That
gives
Charter
two
advantages
in
a
renewal
deal.

First,
Charter
will
likely
argue
Paramount
Global
has
set
a
price
of
$5.99
for
the
value
of
all
its
cable
networks
and
CBS.
Charter
can
point
to
that
as
the
ceiling
price
for
what
it’s
willing
to
pay
for
Paramount
Global’s
linear
channels.

Second,
Charter
now
has
some
blackout
leverage
with
consumers
because
they
can
point
them
toward
Paramount+
as
a
relatively
inexpensive
way
of
accessing
Paramount’s
content.
Charter
will
make
the
same
argument
it
did
with
Disney:
The
existence
of
the
same
content
on
both
the
streaming
service
and
the
linear
channels
is
effectively
double
charging
the
consumer.

Paramount
Global
probably
can’t
afford
to
lose
carriage
for
the
bulk
of
its
networks
with
Charter,
given
Paramount+
continues
to
lose
money.
Paramount
Global
is
still
dependent
on
its
linear
business,
which
earned
$15
billion
of
its
$22
billion
in
revenue
in
the
first
nine
months
of
2023
from
traditional
TV.
More
than
$6
billion
of
that
was
from
cable
affiliate
fees.

Bakish
has
always
successfully
reached
renewal
deals
with
the
major
pay
TV
distributors
since
taking
over
as
CEO
in
2019
and
even
dating
back
to
his
time
running
Viacom,
beginning
in
2016.
Still,
given
Bakish’s
lack
of
leverage,
he
may
have
to
settle
for
lower
affiliate
fees
or
an
agreement
that
devalues
Paramount+.

Disclosure:
Comcast
owns
NBCUniversal,
the
parent
company
of
CNBC.

WATCH:
CNBC’s
Jim
Cramer
on
Paramount
Global

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