Yahoo Finance

The Paramount saga is starting to sound like a movie Paramount would make. Just last week, hours before the studio was set to close a deal with Skydance Media, a new bidder Edgar Bronfman Jr. stepped forward with a $6 billion offer. That motivated Paramount to extend its go shop period to September 5th, with Skydance releasing a statement claiming Paramount had committed a breach of their agreement. With just a few minutes until the closing bell on Wall Street, we're looking at how to navigate streaming stocks with the Yahoo Finance Investor Playbook. Joining us now is Jamie Lumley, Third Bridge Group Sector Analyst. And Jamie, it felt like this Skydance deal was locked in at this point. I mean, we've been through a lot, there's a ton of moving parts here. How likely is it though that Edgar Bronfman Jr. can win over Shari Redstone, and what are the biggest differences in these two proposals?

It's a really good question, and this is the saga which just does not end. I mean, if we think about this, we've been talking about Paramount for almost the last year. We think that the story's over and the next thing happens, we have a new offer. So if we look at what we know right now, Bronfman's offers $6 billion, it doesn't involve a merger with Skydance. And really, the key differences are one, uh, he's offering a little bit more towards your average shareholders. This is something which um was not initially included in the Skydance offer. He has a $16 buyout for some of the common equity holders. Uh, and then outside of that, it's no potential integration risk with another studio. It's keeping the business roughly as is. Um, if we look over towards what the Skydance offer has, it one has a studio integration. Also, one thing which Shari Redstone might care about is there's these protections against any potential shareholder lawsuits, which is something she definitely is thinking about in terms of whether or not this is giving as good of a deal to her as also the common shareholders. So those are kind of the key things and focus right now between these two offers.

When you, Jamie, you think about that Skydance Ellison group. And you think about the Ellisons, which is basically bottomless resources. I mean, Larry Ellison has a worth estimated at more than $170 billion according to Forbes. How do you beat that?

It's definitely tough. And it's one of the main things within this deal, because not only does the Ellison family have incredible wealth. There's also, looking over Bronfman's bid, a key risk, which is worth mentioning, is the fact that there are a lot of different parties on this. Uh, Bronfman had to go to roughly 20 different parties to get the financing together for this. So that just goes to show how hard it is to really get the cash to even try to match an Ellison type offer. And there's the other piece, outside of just the money from the Ellison Skydance side, there's the fact that there is a technology lead in. One of the news stories we heard over the last few days is that Bronfman is trying to get a tech partnership to get Paramount plus really up and running and off the ground. There's tech over at Oracle. They have the tech forward strategy, they want to get the studio in the cloud. This is something which Ellison really has to offer, which is almost impossible for other players to match.

Yeah. And speaking of really the the news cycle and all the developments we we have gotten over the past week or so, Paramount is exploring a sale of 12 local TV stations. They're trying to offload some of those undesirable assets, raise cash. Where do you think the future stands with with the linear business, the cable networks? CBS, I mean, it is a storied entity. Who wants to buy it? Where where does that go? And where does that leave Paramount at the end of the day?

So there are a couple of important things to look at here. I think one thing we've heard a lot from the experts we speak with at Third Bridge is the fact that it's beneficial for shareholders to divest some of these assets to get a bit more of a streamlined business. Now, if we look at the potential station sales, this is definitely something that helps shore up the balance sheet, uh, position that capital towards paying off debt, and then focus on the new part of the business, which is of course streaming. So if we think about where Paramount is today, let's not forget it just had a $6 billion write-down to its cable business. It is really, uh, a business in freefall. So it's trying to pivot as quickly as possible, cut costs, and really put everything into producing world-class content and focusing on streaming. So it'll look for these various station assets, potentially, you know, real estate holdings, anything they can divest to really shore up its balance sheet to then focus on the key growth areas, which are its content and its streaming.

How much, you know, some some analysts who cover the name too, Jamie, have kind of speculated, and I realize this is tough to get a read on, but whether the Redstones just have had kind of buyers remorse here about Skydance and and and an Ellison bid.

Yeah, it's it's a really good question, and it's one of those things where it's so hard to read, because as we've seen over the last year, the Redstones seem not entirely sure what they want. If we think about how initially Skydance made its bid, it seemed like there was going to be a deal made, and then Shari Redstone backed away. It's not entirely clear what are the most important things to the Redstone family and what they're going for here. Because one of the things talked about a lot as well between these two bids is how much involvement Shari Redstone may or may not have in an acquired National Amusements. So while certainly, if we look at the path of Paramount, it's had a rocky few years. Uh, the cable business, as we've seen, is not as valuable today as they thought it was five years ago, or when you had the Paramount global merger. So it's definitely clear there's a lot going on in the Redstones mind, but it's not exactly clear exactly what they're thinking right now.

So a lot of unknowns of Paramount. Also, some unknowns with another media company we talk about often, which is Disney. We saw Bob Iger, he came out last week in a podcast saying he's been obsessed with the succession process. We also know James Gorman is going to be heading up that succession committee. But the clock is ticking, though. His contract is out in 2026. So what's your read on where Disney is at with succession and some of those early contenders as well?

It's a really good question, and there's so much speculation on who's going to be the next CEO at Disney. And I think one thing which is fair to say is that Iger wants to do it right this time around. You know, it's not his first rodeo when it comes to CEO succession. And after the Chapek experience, one thing we hear a lot from our experts is he really wants to make sure the business is in the right position with the right person leading it. Uh, with that in mind, uh we might not hear anything uh definitive anytime soon. What we're hearing from our experts is that they really want to make sure the content business is back up and running, it's on the right track, they're getting the right quality content both through their traditional channels, studio linear, as well as streaming, uh before Iger is really confident in uh, you know, picking out the next person. With that being said, the name which seems to be at the top of everyone's minds is Dana Walden. She's incredible background on the content side, a lot of experience in creating world-class content. There are definitely a lot of other people in uh to potentially consider. Jimmy Pitaro is also a name which comes up a lot. But really, that focus on content is something which makes Dana Walden usually the top of a lot of people's lists.