A Contemplated Partnership
Shari Redstone holds the controlling shares of National Amusements, effectively making her the boss of Paramount, which is valued at $10 billion. The acquisition of Redstone’s stake could facilitate a potential absorption of Paramount by Warner Bros. Discovery. Zaslav has also considered an outright takeover of the media company, although this option presents more challenges. Paramount currently carries a heavy debt load of $15 billion, and its bond rating has recently been downgraded by Standard & Poor’s.
Concerns over Paramount’s Financial Challenges
Zaslav has expressed concerns about Paramount’s financial situation, including the high costs associated with renewing sports rights and the shrinking audience share of properties like MTV due to cord cutting. Additionally, Paramount’s expansion into streaming programming has not yielded a substantial increase in revenues, leading to cash flow issues. Despite these challenges, the integration of Paramount’s movie studio and film library with Warner Bros. Discovery’s streaming service Max presents attractive possibilities.
Speculations on Paramount’s Desperate Position
Rich Greenfield, a seasoned media analyst at LightShed Partners, believes that Paramount’s business model is gradually collapsing, forcing the studio to explore potential buyers. However, he highlights the uncertainty surrounding the future of Paramount’s programming as a significant deterrent for potential investors. Greenfield adds that the leaks and rumors surrounding Paramount’s sale reflect the studio’s precarious situation. Non-disclosure agreements have been signed with other interested parties, including Redbird Capital, Skydance Media, and soon-to-retiring Activision Blizzard CEO Bobby Kotick, but a deal remains elusive at this stage.
Diverse Experience and Financial Capacity
David Zaslav, known for his expertise in integrating businesses, orchestrated the Time Warner-Discovery merger. He has since managed to reduce debt by $12 billion and now has $5 billion in free cash flow available for acquisitions. Zaslav’s experience at NBCUniversal and his reputation as an effective business integrator have positioned him favorably for potential acquisitions. However, at this moment, he is primarily focused on evaluating opportunities and monitoring the progress of the Paramount situation.