Paramount Pictures, the Hollywood film studio that forged countless silver screen classics like “The Godfather,” “Titanic,” “Forrest Gump” and “Transformers,” is about to begin a new chapter. There are reports that the storied movie production studio is ready to enter formal acquisition talks with a powerful consortium composed of Sony and the Apollo Group.
A historic acquisition might be staged. It is understood that the Sony-Apollo consortium has formally submitted a cash acquisition proposal to Paramount Pictures valued at up to $26 billion (equivalent to approximately 180 billion RMB), which could become the largest cash acquisition deal globally.
This is not the first time that Paramount faces a change in ownership. In the past, many consortia have covetously eyed Paramount, with fierce competition. It can even be traced back to 2016, when China’s Wanda Group also tried to negotiate for ownership of Paramount, and although it ultimately did not succeed, it showed Paramount’s market appeal.
Paramount is currently controlled by Sumner Redstone’s daughter, Shari Redstone, who has also expressed her intention to sell the company. Today, the largest acquisition of the year is about to be staged, which is not merely a business transaction, but a microcosm of the entertainment industry’s changing landscape.
On May 1st, the proposal from the Sony-Apollo consortium was officially laid on the table of Paramount. Compared to Paramount’s market value of about $9 billion, the offer of $26 billion is undoubtedly very tempting, almost three times its market value. In the whirlpool of acquisition, Apollo has always been eyeing Paramount, eager to play a key financial role. According to the terms of the acquisition proposal, in this merger, Sony will become the largest shareholder of Paramount, while Apollo will hold a minority stake and renounce operational control.
The timing of this proposal was chosen with precision, coinciding with a critical moment in negotiations between Paramount and another potential buyer, Skydance Media. Skydance, led by the son of the founder of Oracle Corporation, had expressed strong interest in Paramount and directly proposed an acquisition to Shari Redstone. However, even though the Redstone family was interested, they did not gain the support of Paramount’s other shareholders, who even urged them to consider more bidding options.
As a result, Paramount and Skydance Media settled on an exclusive 30-day negotiation period. And the offer from the Sony-Apollo consortium appeared just two days after the deadline of this exclusive negotiation period. Paramount has now initiated formal negotiation processes with Sony and Apollo.
In the climax of the game, Paramount’s acquisition case has attracted global attention. Looking forward to 2024, Paramount is hopeful of creating the largest acquisition case of the year. However, the courtship of the film giant Paramount isn’t a recent phenomenon; multiple forces have been vying for its control. In December 2023, RedBird Capital and Skydance Media’s interest in acquiring was exposed, emphasizing the value of Paramount’s IP and control of the film industry. David Zaslav of Warner Brothers and Bob Bakish of Paramount explored the possibility of a merger, while media mogul Byron Allen also submitted a purchase proposal. Previously, China’s Wanda Group also planned to invest in 49% of Paramount, valued at $8-10 billion, but the deal did not go through.
Investment guru Warren Buffett recalled Paramount as a failed investment case at the shareholders’ meeting, which Charlie Munger had strongly opposed while he was alive. Now, this once-legendary Hollywood shaping company is facing the prospect of acquisition.
Paramount Pictures has produced many enduring masterpieces, such as “The Godfather,” “Saturday Night Fever,” “Raiders of the Lost Ark,” “Forrest Gump,” “Transformers,” “Titanic,” “Star Trek,” “Mission: Impossible,” “Lara Croft: Tomb Raider,” and “The Truman Show,” among others. The twists and turns of its history are just as fascinating as the stories behind its films.
The history of Paramount dates back over a century, founded by Adolph Zukor, born in Hungary. His goal was to elevate the cinema from being mere entertainment for less-educated immigrants to an integral part of middle-class life. In 1912, Zukor, in partnership with the theater tycoon Frohman brothers, established the Famous Players Film Company, the precursor to Paramount.
Paramount was officially founded in 1916 and quickly rose to become one of Hollywood’s top film companies. Despite its ups and downs, even facing bankruptcy, the company experienced a turning point after the intervention of an oil capital group in 1966. In the early 1990s, Viacom and the former CEO engaged in a fierce battle over Paramount, with Viacom ultimately prevailing with a $10 billion acquisition.
The succeeding leader, Sherry Lansing, became the first woman to head one of Hollywood’s Big Eight movie groups. Under her leadership, Paramount produced classics like “Braveheart,” “Forrest Gump,” “Titanic,” “Mission: Impossible,” “Face/Off,” “The Truman Show,” “Saving Private Ryan,” and others, establishing another prosperous era for Paramount.
Not long ago, less than three years into the merger of Paramount Pictures with DreamWorks, they parted ways again. Subsequently, under the shadow of internal strife among the executives of parent company Viacom, Paramount witnessed the changing tides of Hollywood. Competitors like Disney and Netflix rose in the industry, leaving the once-glorious centennial old-Hollywood shop seeming increasingly decayed.
By 2019, after merging with CBS, Paramount Pictures was renamed to Paramount Global. Despite attempts to restructure, the company’s stock price continued to fall, and it rarely produced classic works like “The Godfather.” Paramount, once a giant in the film industry, is facing a decline unprecedented in its century-long history.
In the midst of all these changes, Shari Redstone took over the scepter of the media dynasty, the typical “generation two” inheriting the family business. Her father, Sumner Redstone, a media mogul who proposed the concept that “content is king,” was comparable to another heavyweight in the media world, Murdoch. However, when Sumner passed away at the age of 97 in August 2020, the dispute over the control of Paramount was finally settled. After years of family infighting, Shari Redstone eventually gained her footing and became the new master of this media empire.
But despite her hard work and struggle, Sally could not revitalize Paramount, ultimately deciding to sell the company. This is not an isolated incident; similar scenarios frequently play out among China’s top 100 family-owned enterprises. Most of these founders were born in the late 1950s and are now in their 60s to 70s, facing the significant decision to pass down or sell their businesses.
Looking at the bigger picture, on the one hand, we see an increasing number of cases where businesses are being passed on to the next generation; on the other hand, “selling the company” is gradually becoming an undeniable trend. For example, in early 2024, the A-share market witnessed a major acquisition when Mindray Medical spent 6.65 billion yuan to purchase control of HuiTai Medical, which became a sensational headline that rocked the industry. Behind this acquisition was the fact that the heirs of HuiTai Medical’s founder, Cheng Zhenghui, were unwilling to take over their father’s business. Ultimately, Cheng Zhenghui handed over control, and both parties were able to maintain their interests, achieving a win-win solution.
According to statistics from Morningstar Investments, among family businesses that have not yet gone public, only 15% are prepared to let their offspring take over. In contrast, over half of the family businesses that have gone public will experience a change of control within five years of listing. Many founders choose to sell their businesses before they retire. In the context of this era, gracefully selling the company sometimes becomes a profound tale at the end of the story. And handing the business over to someone more suited to manage it may just be the best continuation and tribute to the company.
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