Sony Pictures Entertainment and private equity heavyweight Apollo Global Management have their sights set on breaking up Paramount Global, should their $26 billion bid succeed - reported by the New York Times.

Insiders reveal plans to auction off CBS, MTV, and the Paramount Plus streaming service. However, the iconic Paramount Pictures studio, known for hits like “The Godfather” and “Mission: Impossible,” would be absorbed into Sony’s operations.

Library and Character Rights Retention

The acquisition strategy includes retaining Paramount's extensive film and TV library and rights to blockbuster characters like the Teenage Mutant Ninja Turtles and SpongeBob SquarePants. Not yet made public to Paramount or its advisors, this move could radically alter the entertainment landscape, a domain the Redstone family has dominated for decades through strategic acquisitions and mergers.

Structural and Regulatory Considerations

Currently, Sony and Apollo are discussing next steps with Paramount’s financial advisors, although formal steps like nondisclosure agreements and due diligence are pending. The envisioned joint venture would see Sony taking the helm with a controlling interest, while Apollo might eventually exit its stake.

This transformative deal could mark a significant shift for Paramount, contrasting sharply with its current model of streaming content via Paramount+. In contrast, Sony licenses its content to platforms like Netflix and Disney and might look to align Paramount+ with another major service.

Potential Buyers and Future of Divested Assets

The proposal faces potential regulatory scrutiny, especially concerning foreign ownership of U.S. broadcast licenses, a hurdle for Tokyo-based Sony Group. However, strategic divestitures or alternative licensing through Apollo are being considered to navigate these challenges.

The scenario suggests that if the deal proceeds, Warner Bros. Discovery and various TV station groups could be prospective buyers for the divested assets, which include some of Paramount's cable networks like MTV and Nickelodeon.