A Rival Hollywood Studio Just Offered To Buy Paramount In Major Shake-Up

Paramount Pictures is in the midst of fielding offers from other companies as the legendary studio looks to shore up its future. Now, a new contender has emerged in the form of Sony Pictures as the drama continues to unfold. One of Paramount's most direct rivals in Hollywood has thrown its hat in the ring to buy the studio for $26 billion. If this is the option the powers that be decide to go with, it would represent a huge shake-up for the industry on several fronts.

According to the Wall Street Journal, Sony and private equity firm Apollo Global Management have submitted a $26 billion, all-cash offer to buy Paramount. Rather crucially, the deal would take the company private, whereas it currently exists as a publicly traded company. As a result, it would be a major change beyond combining two of the biggest studios in Hollywood under one roof, so there is much to consider here.

This is far from a done deal, though. Paramount has assembled a special board to evaluate various merger and acquisition proposals that have come through. Late last year, it was reported that Warner Bros. Discovery was in talks to acquire Paramount. That potential deal, however, seems to have fallen through as other, more viable suitors have emerged in recent months. Paramount's board is currently reviewing an offer from Skydance, the studio behind the "Mission: Impossible" franchise, that would see the companies merge. That proposed deal would keep the company public, rather than taking it private. Owner Shari Redstone, the company's board, and Paramount's shareholders have a lot to consider, with no shortage of interest from rivals looking to secure a future in an ever-changing landscape.

Interestingly, Sony is the only major Hollywood studio that doesn't currently have its own streaming service. Should they get this deal done, they would then be in control of Paramount+, which would be a dramatic shift.

Shari Redstone, who is the controlling shareholder of Paramount Global, is said to favor closing a deal with Skydance. Paramount's board has also previously rejected offers from private equity firms (and remember this Sony deal is paired with private equity company Apollo Global Management). But former Paramount CEO Bob Bakish made it pretty clear in early 2022 that the company was probably going to be put up for sale. We say "former," because Bakish was removed as CEO of the company earlier this week as all of the acquisition talk has heated up. It's really a matter of when, not if, Paramount changes hands at this point.

This all comes as Hollywood reckons with how to survive in a streaming-focused future where box office revenue is increasingly uncertain (yet no less essential) and where seemingly only the big can survive. That's why all of these media mergers have been happening in recent years. Disney acquired Fox. Discovery bought WarnerMedia, creating Warner Bros. Discovery. Most of the major studios have tried to launch their own streaming services, with Netflix being the only one that is reliably profitable at the moment. It's a time of chaotic change. Sony clearly sees an opportunity to compete more meaningfully by growing larger.

Should Sony win the day, the downside would be losing another major Hollywood studio. We would go from five to four, with Disney, Warner Bros., and Universal Pictures still on the board as well. A decrease in studios means fewer places for filmmakers to sell projects, most likely fewer movies released in theaters per year by major studios, and fewer jobs to go around. No matter who ends up acquiring or merging with Paramount, there will be mass layoffs. That much is certain.

Whether or not any of this is for the better of consumers remains to be seen. Other recent mergers have been hectic and it would be hard to say that the end result has been better for consumers — or movie theaters, for that matter. But for those who are hoping Sony does not end up subsuming one of its rival studios, it seems all but certain that this deal would come under significant regulatory scrutiny. Under the Biden administration, the Federal Trade Commission has been aggressive in suing major tech companies and trying to squash potential monopolies in order to protect American consumers, and a deal like this would absolutely come under that agency's microscope. Plus, the Federal Communications Commission has rules that ban foreign companies — in this case Sony, which is based in Japan — from having majority ownership of broadcast television stations in the United States, and Paramount Global currently has 25+ TV stations under its umbrella, so, as Variety notes, Sony would have to create some kind of distinct U.S. ownership structure for those TV stations. Those are significant hurdles, but we'll see what happens — wilder things have happened in this industry in the past, so stay tuned for more as it develops.