The news is out of the rumor mill and in mainstream media: Japan’s Sony Pictures is bidding for Hollywood’s Paramount studios. The Wall Street Journal reported the news with a four-column headline, “A Sony Bid for Paramount Would Be a Win-Win,” after The New York Times first reported the rumor a few days ago.
Indeed, there would be no win-win situation since both entities own their own studios and synergies would mean lay-offs, reduced content production, divestitures, and diversification. The bone of contention that, in the view of Jacky Wong, who authored the article, would make the Sony-Paramount deal appetizing is the fact that the Redstone family controls 77 percent of Paramount’s voting rights even though it owns 10 percent of the studio. Sony’s bid, backed-up by private-equity firm Apollo Global Management, calls for a $12 billion all cash deal, plus assumption of Paramount’s $14 billion debt.
On the other hand, the Skydance Media’s bid, now being reviewed, calls for $2 billion in cash to buy the 77 percent control of Paramount from the Redstone family; Paramount would then acquire Skydance in a $5 billion, all stock deal.
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