Apollo Valued Paramount at $26 Billion in Overture That Was Ignored

As Paramount, the media company that’s the home of the “Top Gun” franchise and Nickelodeon, was preparing to enter exclusive talks to sell itself to the media company Skydance, another suitor emerged.

Apollo Global Management, the investment firm, told Paramount over the weekend that it was interested in acquiring the entire company for more than $26 billion, including the value of Paramount’s debt, according to two people with knowledge of the matter. It had previously submitted an $11 billion offer to acquire just the Paramount movie studio. (Paramount also owns CBS as well as other cable networks.)

Paramount decided not to engage with Apollo’s overture, the people said, with one person explaining that doing so could have derailed its advancing negotiations with Skydance, which became exclusive this week.

Apollo’s bid would have been subject to due diligence, which would take time, one person said. Apollo said in a letter to Paramount that it was interested in buying out all the company’s shareholders in cash, which could be enticing as the board seeks to strike a deal that not only pleases Shari Redstone, who controls Paramount, but also the company’s common shareholders.

The Wall Street Journal earlier reported on Apollo’s interest in Paramount.

The deal currently being discussed with Skydance would involve Skydance’s buying National Amusements, the company that holds Ms. Redstone’s voting stock in Paramount, and merging with Paramount. Though Ms. Redstone is eager to reach a deal, it hinges on approval from Paramount’s board, which has for weeks been weighing its options with the help of advisers.

Late last month, David Ellison, the tech scion who founded Skydance, met with Paramount’s board committee to discuss his vision for a deal, according to the two people with knowledge of the talks. Paramount’s stock has fallen 18 percent since the start of the year amid headwinds for the media industry. It has a market value of about $9.4 billion, and around $15 billion in long-term debt outstanding.

The company is trading at a steep discount to the combined value of Viacom and CBS, which merged to form Paramount in 2019. Paramount+ is still losing money, but its losses have slowed and it continues to add subscribers.

The ratings agency S&P Global downgraded Paramount’s debt to junk last week, citing “accelerating declines” in its traditional television business and continued uncertainty in its push toward streaming. Some analysts said that downgrade might make Paramount easier to acquire, since it could circumnavigate a provision that would require a buyer to immediately pay the company’s debt.