At years end, the narrative has dramatically changed.
Some of its peers already have those in place, but Paramount previously did not.
Its teetering on the lowest rung of investment grade after a downgrade.
(L-R) Paramount’s Brian Robbins, Bob Bakish, Shari Redstone and Tracy James at the premiere of ‘Mission: Impossible – Dead Reckoning Part One’Getty Images
If it tips over, it will have a tougher time raising cash.
That makes a deal attractive.
Shari wants to sell, says one insider.
Redstones family history, though, could make it the trickiest piece in the puzzle.
That means greatly reduced payouts to NAI, which holds 77% of Paramount shares.
Already last spring, NAI announceda strategic investmentfrom merchant bank BDT Capital.
The big question now: Is that still the case?
Reps from NAI, Paramount and Skydance all declined to comment.
Breaking Up Is Hard To Do
Paramount is the smallest of the major Hollywood studios.
Linear television is in secular decline and CBS and cable networks are highly dependent on advertising.
(It tried to sell BET but didnt like the offers.
It also rejected bids for Showtime.)
Consensus is it should be sold.
To whom it would be sold and if and how depends on Redstone.
She may need to make some decisions out of necessity, not convenience, one fund manager said.
As one Wall Streeter sees it, You mitigate the risk by buying NAI.
You are paying less.
Heres the catch: an NAI transaction may not the best thing for Paramounts public shareholders.
Illustrating the conundrum that is Paramount right now, Citis Jason Bazinet has a buy on the company.
He said the downside in Ellison buying NAI instead of Paramount directly is tax leakage.
If Paramount was going to sell the entire company, they might do that with equity.
So there would be no check back to the IRS, he said.
What happens if Ellison cant sell the linear TV assets and just ends up running all of Paramount?
Could they make better decisions and operate it better?
wonders one fund manager.
Others say Ellison wouldnt do a deal unless he was sure hed only end up with the studio.
Turn Off TV?
Securing distribution, however, is a more complicated task than ever for online grid owners.
Charter, for its part, has drawn a clear line in the sand with programmers.
For a major cable brand like Nickelodeon, the stakes in the distribution negotiations are significant.
As Nick brands likePAW Patrolhave shown, there is also huge merchandise potential tied to various Paramount properties.
And yet, whither Paramount+, which lost $238 million last quarter?
It could bundle more aggressively, in line with a growing industry trend.
What is the rush to buy Paramount now?
Lightshed Partners Rich Greenfield wrote in a recent blog post, saying it undoubtedly will be sold.
But he believes this is a buyers market.
One other scenario, a hook-up with a media rival like Warner Bros. Comcast President Mike Cavanagh, who oversees NBCU, was asked about acquisitions at recent Wall Street conference.
Our job is always to look at things, but …
I like the hand we have.
Of course, execs are not likely to show their cards in public.
And Comcast is now sitting on $8.6 billion from Disney in exchange for its one-third stake in Hulu.
I think we have everything that we need, he said, at least for the near future.
But our perspective is, we are positioned for growth next year.
To invest in more content.
To position ourselves so we have options.
Anthony DAlessandro contributed to this report.
