A Plan to Break up Paramount

Paramount bidders have a plan to break up the media giant.Credit…Alex Welsh for The New York Times

Splitting the Paramount empire

Ever since Sony Pictures Entertainment and Apollo Global Management expressed interest in buying Paramount Global, a big question has loomed over the potential $26 billion deal: What would they do with the company?

The answer: Break it up, write The Times’s Ben Mullin and DealBook’s Lauren Hirsch. But that plan could lead to complications.

Sony and Apollo would keep Paramount Pictures. Sony, a Japanese company, has long wanted to acquire the movie studio behind “The Godfather” and “Top Gun.” It approached Paramount about a sale or merger years ago, only to be rebuffed after Paramount signaled it was interested only in a deal for the whole company.

Paramount Pictures would become part of a joint venture controlled by Sony, withApollo taking a minority stake in the new entity that it could eventually sell to Sony or to another buyer. The venture would also keep Paramount’s library of films and TV shows, as well as the rights to characters like the Teenage Mutant Ninja Turtles.

Everything else would be up for sale, including CBS, cable channels such as MTV and Nickelodeon, and the Paramount Plus streaming service. Here’s how that might play out:

• CBS could be sold to a company such as Warner Bros. Discovery, which doesn’t own a broadcast network
• Some of CBS’s owned-and-operated TV stations could be acquired by groups like Nexstar and Tegna.
• Paramount Plus could be sold to a rival platform, like Comcast’s Peacock or Warner Bros. Discovery’s Max. (Sony doesn’t have a general-interest streaming platform, instead licensing movies and TV shows to operators such as Netflix, and would most likely stick to that strategy.)
• The cable networks would probably be the toughest divisions to unload, but they could be attractive to TV programmers looking to scale up to gain leverage in negotiations with big cable companies such as Charter and Comcast.

There are complicating factors. Shari Redstone, Paramount’s controlling shareholder, would prefer not to break up the company that, in some form or another, has been controlled by her family for decades. But it’s not necessarily a deal breaker — if the offer is compelling enough. (The plan hasn’t yet been presented to Paramount or its advisers.)

And investors in Sony are showing some concern about what a Paramount deal might mean for the company’s balance sheet. Shares in the Japanese conglomerate are down 9 percent over the past five days — though asset sales may allay those worries.