Paramount drama heightens as Edgar Bronfman Jr. submits bid

Former top Seagram and Warner Music executive Edgar Bronfman Jr. has entered the fray to acquire Paramount Global, throwing an 11th-hour curveball in an already chaotic auction of the storied Hollywood entertainment company.

Bronfman submitted a bid Monday to take control of the media conglomerate that owns CBS, MTV, Comedy Central and the Paramount film studio by acquiring the Redstone family holding company, National Amusements Inc., said three sources familiar with the matter who were not authorized to comment publicly. Bronfman’s bid is valued at about $4.3 billion.

The offer comes a month after Shari Redstone and Paramount’s other board members approved a bid from tech scion David Ellison’s Skydance Media to buy Paramount in a multipronged transaction valued at $8.4 billion.

Bronfman is leading an investor group that includes longtime media executives Jon Miller, Steven Paul and John Martin.

“We believe there is significant upside in the Paramount business and in the value of Paramount’s shares,” Bronfman wrote said in a letter to Paramount’s lead independent director, Charles Phillips, which was viewed by The Times.

Bronfman’s offer lands just two days before Paramount’s window to accept alternative bids to Skydance’s proposal closes. Paramount’s special board committee, led by Phillips, must now weigh the two offers for the struggling media company.

Skydance’s deal allowed for a 45-day window during which Paramount could consider competing offers.

A Paramount spokesperson declined to comment on the bid, which was first reported by the Wall Street Journal.

It’s not clear that Bronfman’s play for Paramount will be successful.

Shari Redstone has long preferred Ellison’s bid over other those of potential suitors, believing the 41-year-old entrepreneur possesses the ambition, experience and financial heft to lift Paramount from its doldrums.

His father, Oracle Corp. co-founder Larry Ellison, also is backing his son’s effort to build a larger media empire by merging Skydance and Paramount.

Under terms of the proposed deal, Skydance and its financial partners RedBird Capital Partners and private equity firm KKR have agreed to provide a $1.5-billion cash infusion to help Paramount pay down debt. Their deal sets aside $4.5 billion to buy shares of Paramount’s Class B shareholders who are eager to exit.

Non-Redstone Class A shareholders would receive $23 a share to exit. Investors could maintain their shares in the new entity.

But some shareholders have bristled over Ellison’s proposal, alleging that it places an inflated value on Skydance, which has co-produced some of Paramount’s biggest blockbuster movies, including “Top Gun: Maverick.” The subsequent all-stock merger of Skydance into Paramount values Ellison’s firm at $4.75 billion.

Bronfman is seeking to capitalize on controversy over that component of the deal.

“Our proposal eliminates the risks, uncertainties and costs of combining Paramount with Skydance,” Bronfman wrote. “We believe Paramount is most valuable as a standalone business.”

Paramount executives have initiated a deep round of cost-cutting, including eliminating about 2,000 job cuts to achieve $500 million in annual savings. The company suffered a credit downgrade earlier this year.

Bronfman’s group believes it could slash another $3 billion in permanent costs by achieving greater profits in the streaming division, employing artificial intelligence in business functions and “right sizing the bloated corporate structure,” according to their letter.

Under both scenarios, the Redstone family would receive $1.75 billion for National Amusements — a company that holds the family’s Paramount shares and a regional movie theater chain founded during the Great Depression — after the firm’s considerable debts are paid off.

Bronfman’s group said they would pay non-Redstone A-Class shareholders $24.53 a share — more than what’s envisioned in the Skydance deal. Non-voting B-Class shareholders could cash out at $16 a share.

Paramount shares traded at $10.86 Tuesday morning, falling about 2%.

The late Sumner Redstone’s National Amusements was once valued at nearly $10 billion, but pandemic-related theater closures, last year’s Hollywood labor strikes and a heavy debt burden sent its fortunes spiraling. In the last five years, the New York-based company has lost two-thirds of its value.

Paramount has agreed to pay a $400-million breakup fee to Skydance if the deal doesn’t close.

Bronfman’s bid would cover that $400-million breakup fee, the Wall Street Journal reported.