Another big Hollywood name is eyeing a deal between Paramount and Skydance, as Jeffrey Katzenberg says the result would be “a huge win for Paramount and the people in the industry.”
The DreamWorks co-founder and former head of Walt Disney Studios admitted tonight on Axios BFD Talks: LA that the situation is complicated. “There is a reason why the David Ellison deal didn’t work out, which I think is unfortunate. Because I think David is a phenomenal entrepreneur, he’s very ambitious and he loves the film business, the studio business. I think that would have been a huge win for Paramount and the people in the industry.”
“By the way, the economic complexity of how this has played out over the decades makes it really difficult to get to a successful outcome. But not impossible. And I would say you can’t discount Ellison,” said Katzenberg, whose last project was the 2020 ephemeral short-video mobile app Quibi, which was funded by his venture capital firm WndrCo.
In fact, Paramount is still negotiating with Ellison, even though an exclusive negotiating window has expired, and even though the company is also working with rival bidders Sony and Apollo. The latter deal brings more money to shareholders but poses regulatory risks.
“That is clear [Sony-Apollo offer] can provide an exit for shareholders and investors who have been with this company for a very long time and it has been a real roller coaster ride. [But] I wouldn’t say there’s a direct path forward.”
Sony can’t own broadcast assets and the idea is that Apollo would take them over. But “to assume that the FCC will allow a private equity firm to acquire this license? I mean, just think about it. This is the license to operate the leading broadcast network in America, and the FCC has full authority to approve it. You’re going to say there’s an advantage if this is in the hands of private equity? I don’t know. “That’s a high bar, especially in the regulatory environment we’re in right now,” Katzenberg said
There’s a third option: Shari Redstone, Paramount’s majority shareholder, simply decides to wait, not do a deal and try in another year or two.”
Ellison and his backers Larry Ellison and RedBird Capital would buy out Redstone’s shares, with some sweetening for the common shareholders but not nearly enough to make them happy. The company would stay together and remain listed. Sony and Apollo are offering $26 billion, including the assumption of Paramount’s debt, to acquire the entire company and take it private.