Top line
It’s a battle of the billionaire scions for the faltering Paramount media empire, with gin heir Edgar Bronfman Jr. reportedly making his own multi-billion dollar bid for media heiress Shari Redstone’s stake in the CBS parent company, competing with an agreed offer from David Ellison, the son of tech billionaire and fifth-richest person in the world, Larry Ellison.
Edgar Bronfman, Jr. speaks at a conference in 2019.
Key data
Several media outlets reported that Bronfman made an offer of around $4.3 billion for Redstone’s holding company National Amusements, which owns a majority stake in Paramount.
Bronfman’s offer includes $1.75 billion in equity for National Amusements, a $1.5 billion cash injection for debt-laden Paramount, another $650 million in debt for National Amusements and $400 million in severance pay that Paramount owes for David Ellison’s Skydance, according to the Wall Street Journal.
Bronfman, 69, a former chairman of Warner Music Group and son of the late Seagram liquor billionaire Edgar Bronfman Sr., now faces direct competition from Ellison, 41, whose company Skydance Media agreed to a deal worth about $8.4 billion with Redstone on July 8 to take control of Paramount.
The complicated structure of the deal explains why Bronfman’s offer could be more attractive to Paramount shareholders, even though he would only have to pay half the value on paper, because his offer would not dilute existing Paramount shares in the same way as Skydance’s.
News of Bronfman’s offer comes just before the end of Wednesday’s 45-day “go-shop period” during which Paramount’s board can consider competing offers to Skydance.
Both Bronfman and Ellison have long careers in the media industry, built on family capital: Bronfman oversaw Seagram’s later-maligned acquisition of Universal’s film and music studios, while Ellison’s Skydance produced blockbusters such as Top Gun: Maverick.
Forbes Ratings
None of Bronfman, Ellison and Redstone are on Forbes’ list of billionaires, but all of their fathers are or were. Bronfman’s father, Edgar Bronfman Sr., was worth about $2.6 billion in 2010 shortly before his death, while Redstone’s father, Sumner Redstone, was also worth $2.6 billion at the time of his death in 2020. Ellison’s father, Larry Ellison, was worth more than $171 billion on Tuesday thanks to his stake in cloud computing giant Oracle, which he co-founded in 1977.
Important background
Redstone’s National Amusements owns 77.4% of Paramount’s Class A voting stock and about 5.1% of Paramount’s Class B common stock. This means Redstone’s company has majority control over Paramount’s direction while owning only a fraction of Paramount’s equity, further complicating the structure of any mergers or acquisitions. Paramount’s assets include the CBS television network, the eponymous film studio Paramount Pictures and the Paramount+ streaming service. Paramount is in a prolonged slump as the media industry generally falters. The company recently announced it would lay off 15% of its workforce and write down $6 billion in the value of its cable television networks. The company’s stock price has fallen more than 80% over the past decade, and analysts are forecasting 2024 earnings to be 65% below 2019’s record net income, according to data from FactSet. “The next generation of Paramount has a ‘small margin for error,’ and Redstone’s successor will have to race to win while juggling and trying to lose some weight along the way,” Bernstein analyst Laurent Yoon noted in a note to clients in July.
tangent
Sumner Redstone’s rocky succession plans partly inspired the events of the hit HBO series “Succession,” according to series creator Jesse Armstrong. The ongoing saga of Bronfman and Ellison brings back memories of the “Succession” storyline, in which the fictional media family considered selling its traditional media empire.
Key quote
“Skydance has a hidden asset and likely a hedge: Dad,” Daiwa analyst Jonathan Kees wrote last month about the attractiveness of Skydance’s offering.
