Private equity firm Apollo Global Management has put forward an $11 billion bid to acquire Paramount Global’s (PARA) film and TV studio, the Wall Street Journal reported, citing sources familiar with the matter.
However, according to CNBC’s David Faber, Paramount is not interested in selling its studio separately, the journalist said without citing source of information.
This proposal emerged while a separate committee of Paramount's directors is considering a different offer from Skydance Media. This other offer involves a merger that would include all of Paramount, a company that encompasses CBS, Nickelodeon, and several other cable networks.
“Apollo’s studio bid presents a plus one bidder for what we would argue is one of the most valuable assets of the company,” Moffett Nathanson analysts commented on the bid.
“This could help Paramount secure an increased price for the whole company if that is the preferred path without having to break up the company,” they added.
Analysts believe that if Paramount considers selling its studio separately, despite its low cash flow, other strategic buyers might show interest.
This could significantly aid in reducing the company's debt and leverage. However, they caution that selling off the studio could detach a crucial content creation engine from Paramount, potentially diminishing the company's overall value and making it seem “hollow.”
“Perhaps a creative deal could be worked out to license the content back to the newly separate studio, and programming slates can always be filled with content from third parties, but this would be a fundamental shift in a flywheel for businesses already in decline.”