Topline
It’s a battle of the billionaire scions for the wavering Paramount media empire, with gin heir Edgar Bronfman Jr. reportedly throwing in his own multibillion-dollar bid for media heiress Shari Redstone’s stake in the CBS parent company, competing with an agreed-upon offer from David Ellison, the son of tech billionaire and the world’s fifth-richest person, Larry Ellison.
Edgar Bronfman, Jr speaks at a 2019 conference.
Key Facts
Several outlets reported Bronfman made an approximately $4.3 billion bid for Redstone’s National Amusements holding company, which owns a majority voting stake in Paramount.
Bronfman’s offer includes $1.75 billion in equity for National Amusements, a $1.5 billion injection into debt-laden Paramount, a further $650 million in debt for National Amusements and $400 million for a breakup fee Paramount would owe David Ellison’s Skydance, according to the Wall Street Journal.
The 69-year-old Bronfman, the former Warner Music Group chief executive and son of late Seagram spirits billionaire Edgar Bronfman Sr., is now in direct competition with the 41-year-old Ellison, whose Skydance Media agreed on terms July 8 with Redstone for a deal worth about $8.4 billion to take control of Paramount.
The complicated deal structure helps explain why Bronfman’s bid may be more attractive to Paramount shareholders despite ponying up half the value on paper, as his offer would not dilute existing Paramount shares in the same manner as Skydance’s.
News of Bronfman’s bid comes shortly before Wednesday’s closure of the 45-day “go-shop period” in which Paramount’s board of directors could explore rival bids to Skydance’s.
Both Bronfman and Ellison have long careers in media tracing back to family capital: Bronfman oversaw Seagram’s later maligned acquisition of Universal’s film and music studios, while Ellison’s media production giant Skydance has produced blockbusters like Top Gun: Maverick.
Forbes Valuations
None of Bronfman, Ellison and Redstone are on Forbes’ billionaires list, but all of their dads 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 2020 death. Ellison’s father Larry Ellison was worth more than $171 billion on Tuesday, thanks to his stake in the cloud computing giant Oracle which he cofounded in 1977.
Key Background
Redstone’s National Amusements owns 77.4% of Class A voting shares in Paramount and about 5.1% of Paramount’s Class B common shares, meaning that Redstone’s company has majority say on the direction of Paramount while owning a fraction of Paramount’s equity, further complicating the structure of any merger or acquisition. Paramount’s assets include the CBS television network and the eponymous Paramount Pictures movie studio and Paramount+ streaming service. Paramount is mired in an extended slump as the media industry broadly teeters, recently announcing it will lay off 15% of its workforce and writing down the value of its cable television networks by $6 billion. Its share price is down more than 80% over the last decade and analysts forecast 2024 profits to come in 65% below 2019’s record net income, according to FactSet data. The next iteration of Paramount has a “small margin of error” and Redstone’s successor will be running a race to win while juggling and trying to lose some weight along the way,” remarked Bernstein analyst Laurent Yoon in a July note to clients.
Tangent
The rocky succession plans of Sumner Redstone partially inspired the events of the hit HBO show “Succession,” according to show creator Jesse Armstrong. The ongoing saga involving Bronfman and Ellison evokes memories of the “Succession” storyline in which the fictional media family explored a sale of its legacy media empire.
Crucial Quote
“Skydance has a hidden asset and probable backstop: Dad,” wrote Daiwa analyst Jonathan Kees last month about the attractiveness of Skydance’s bid.
Trump Media to the Saudi Arabian influence on golf and what real-life billionaires think of ” Succession.” Send tips to dsaul@forbes.com. Follow Saul for analysis on the biggest daily economic and stock market happenings, ranging from inflation data to tech earnings to deep-dives on hot button assets.
“>
