Paramount Global’s share price spiked on Thursday following a report that Sony Pictures and Apollo Global Management had offered a $26 billion deal to the troubled media giant. Per the Wall Street Journal, the offer was made on Wednesday, April 1, by Sony’s chief executive Tony Vinciquerra, and a partner at Apollo, Aaron Sobel. As soon as the word of the possible hefty deal got out, Paramount’s share price shot up by 13%. 

Paramount shelters some of the biggest media assets including Paramount Pictures, CBS, MTV, and Channel 5. Additionally, the studio takes pride in calling itself the owner of blockbuster movie franchises like The Godfather, Mission: Impossible franchise, and more. 

However, Paramount has struggled to keep up with the advent of technology and the new media viewing experience attributed to it, including transitioning to streaming media. Also, it's faced internal power struggles. Earlier this week, Bob Bakish, Paramount’s chief executive was removed as the CEO, replaced by a tripartite leadership consisting of CBS chief George Cheeks, Paramount Pictures CEO Brian Robbins, and President and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks, Chris McCarthy. 

Bakish, per The Guardian, was ousted amid reports that he had clashed with Shari Redstone, Paramount’s current controlling shareholder, over her plans to sell the company. 

Paramount is also considering a merger with Skydance Media — A production company led by David Ellison 

Skydance has backed Paramount movies like Top Gun: Maverik, but the offering has reportedly riled some shareholders who believe the entity in question favors Redstone (Shari Redstone, Paramount’s majority shareholder.) Paramount has an exclusive negotiating window with Skydance open until Friday, May 3, however, conversation between the parties could extend beyond that. 

Coming back to Apollo, Sony Entertainment Pictures, and Paramount’s probable merger; here's how things would turn out if the deal materialized.

Sony and Apollo's Potential Merger with Paramount: Challenges and Implications

Under the joint bid with Apollo, Sony would be the majority owner of the company. Sony Corp would merge Sony Entertainment Pictures into a combined venture, Paramount Global, and both Apollo and Sony would contribute cash to seal the deal. Having said that, what would happen to the 28 local TV stations that CBS owns is still cloudy, as FCC rules bar foreign organizations from having majority control of TV broadcast stations. Sony, as everyone knows, is Tokyo-based. 

Another challenge that the entities involved will have to carve a plan for is the merger of the two biggest studios in Hollywood would draw the attention of the Biden administration, which has lately displayed a more aggressive stance toward big conglomerate mergers. Federal Trade Commission chair Lina Khan has been sure to block several recent high-profile mergers, including Kroger’s $24 billion takeover of Albertsons, and Nvidia’s $40 takeover of Arm Holdings.

Per Variety, the merger would also likely result in mass layoffs. 

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