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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Cash is king, unless there is a queen in the picture.
The struggling media conglomerate Paramount Global has the chance to sell the whole company in an all-cash takeover from joint bidders Apollo Global and Sony. The premium reportedly offered is 50 per cent to where Paramount’s non-voting shares — which comprise 90 per cent of the company’s economic value — trade in the market, implying a $26bn enterprise value for the whole company.
Paramount’s matriarch, Shari Redstone, has other ideas. She has been angling to sell only her precious Paramount voting shares to a nascent Hollywood player, Skydance Media, which would then merge into Paramount. Ordinary non-voting shareholders would keep their stock and hope for the best while Redstone exits the throne with her distinct payday.
Even media royalty has to pay some heed to their subjects. The Financial Times reported on Monday that Skydance was now willing to stump up a modicum of cash to give ordinary Paramount shareholders a small distribution, even as the Skydance stock merger structure remains largely the same. Shareholders had been furious at Redstone apparently putting her need for liquidity above everyone else’s. Do not expect such tokens to be enough just yet with such little trust in the Paramount kingdom.
Shares of Paramount’s Class A voting shares trade at almost double the premium to their non-voting counterparts. That discount had historically been just 10 to 15 per cent. Still, the market value of the voting shares remains just under $1bn, compared with $7.5bn for non-voting shares.
It then becomes understandable why Skydance would try to use its firepower to buy the Redstone voting shares to take control of the broader company without offering ordinary shareholders a premium. They have now decided to spend $2bn to buy out a portion of non-voting shares at premium to the current trading price. These shareholders will then get a package of an effective cash dividend along with a slice in the ongoing Paramount/Skydance company.
What remains unknown is how much of that pie will belong to Skydance backers whose company, according to news reports, will have $2bn of revenue in 2025. By comparison, Paramount — which spans movies and television — is forecast to have $30bn in revenue this year.
For shareholders, then, a bet on this plan remains that streaming content somehow turns profitable while traditional television stops losing viewers. But Redstone is abdicating responsibility for that, even as she consigns her empire to live under the rule of some other monarch.
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