That could be a major obstacle to Paramount parent Viacom Inc., which is not looking for a synergistic partner but rather investors to provide an infusion of cash. Both Skydance and Fox would be looking to have a controlling voice in Paramount’s operations, and would each prefer to acquire the Hollywood studio outright, according to individuals brief on the situation.
Viacom’s interest in attracting a passive investor to buy a minority stake of 20%-40%, is supposedly drawing interest from more than three dozen parties, including DMG Entertainment.
Skydance, backed by producer David Ellison, has had a long-term pact with Paramount, having backed many of the studio’s films including “True Grit,” last summer’s “Mission: Impossible – Rogue Nation” and the upcoming “Star Trek Beyond.” Earlier this week, the company announced it had raised $700 million in new financing.
There are also some concerns related to Paramount’s valuation. People with knowledge of the discussions speculate that the studio will be valued at between $4 billion to $5 billion and the minority position would be valued at between $1.6 billion to $2 billion. Some of the interested investors believe that the studio’s EBITDA, which has declined in recent years as it has made fewer films, does not justify that price.
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In February, Viacom chairman Philippe Dauman said proceeds from the sale of a Paramount stake would be used to pay down debt and grow the studio. At an investor conference earlier this month, he predicted that a deal would be done by the end of the next financial quarter.
Media analysts have speculated that deep-pocketed Chinese investors such as Alibaba or Tencent might be interested in buying a position in Paramount. DreamWorks Animation chief Jeffrey Katzenberg also publicly mused that while he isn’t interested in buying a minority stake in Paramount Pictures, he would be attracted to the idea of bringing on a financial partner and merging the two studios.
Viacom declined to comment.