Paramount Global Controlling Shareholder Shari Redstone Open to Transformative Deal
Shari Redstone, the controlling shareholder of Paramount Global, is actively seeking a transformative deal but has yet to find the right opportunity, according to sources. Consolidation within the large media companies is necessary, although challenging due to current market conditions. Redstone has been open to a merger or selling the company for several years; however, finding a suitable deal for shareholders has proven difficult. The entertainment industry is in need of reshaping and consolidation, but immediate concerns regarding ad sales, subscription video numbers, and debt costs have hindered large-scale transactions. Paramount Global, consisting of various valuable assets, including Paramount Pictures, CBS, and streaming service Paramount+, showcases the media industry’s consolidation dilemma. While Paramount Global’s assets would fit well within larger media companies, the company’s declining revenue from pay-TV cord-cutting and streaming losses, coupled with rising interest rates, have created challenges for Redstone. Paramount Global’s current market valuation stands at $7.7 billion, significantly lower than its post-merger valuation of $30 billion in 2019. Redstone faces the task of turning investor sentiment, with Berkshire Hathaway CEO Warren Buffett stating that streaming is not a lucrative business. Paramount Global’s direct-to-consumer businesses have been incurring losses, making it necessary to transform the streaming service to achieve profitability. Executives at Paramount Global hope that large technology companies such as Apple, Amazon, or Alphabet might view the company’s assets as an opportunity to strengthen their content ambitions. With 61 million subscribers, Paramount+’s potential for growth could enhance existing streaming services or diversify YouTube’s offerings. While regulatory concerns may limit the acquisition of broadcast TV networks, technology giants are better positioned than legacy media companies to make a deal. However, there is no evidence to suggest that technology companies desire ownership of declining legacy media assets. Another option for Redstone is to merge or sell to another legacy media company, such as Warner Bros. Discovery. However, previous media mergers have generally resulted in shareholder value loss. Ultimately, if Redstone cannot find a deal to her liking, she may consider selling National Amusements, the holding company founded by her father and the majority owner of Paramount Global.
