Sony in talks to team with Apollo to bid for Paramount

Sony Pictures Entertainment is in talks to join Apollo Global Management in its $26 billion bid for Paramount Global — a partnership that would boost the private equity firm's efforts to wrangle the prize.

While the talks are preliminary, the two sides have been hashing out the contours of a deal that would have the Culver City, California-based Sony film and television studio take the lead in the partnership.

If a deal were consummated, Sony would control a significant majority stake in Paramount, according to two people familiar with the discussions but who were not authorized to speak publicly.

Sony and Apollo haven't formally made a bid for Paramount. Instead, they are on the sidelines during an exclusive 30-day negotiation period that Paramount's independent board of directors has extended to entrepreneur David Ellison, who heads Skydance Media, the producer of "Top Gun: Maverick" and other Hollywood blockbusters.

That negotiation period expires in early May.

Ellison has teamed up with investment firms RedBird Capital and KKR in its takeover of Shari Redstone's family holding company National Amusements, which would be followed by a merger of Skydance with Paramount. Ellison and former NBCUniversal Chief Executive Jeff Shell, who's now an executive with RedBird, would likely run the company.

The two-step structure of that proposed deal, which may not come to fruition, has complicated the auction process.

Redstone, Paramount's controlling shareholder, has long preferred the Ellison deal because she doesn't want the company, which her father Sumner Redstone built over two decades, to be broken into pieces. But the Ellison proposal has generated a strong backlash by Paramount investors who contend the deal would benefit Redstone and not regular shareholders.

Should the Sony-Apollo deal eventually be accepted and approved by regulators, Sony Pictures Entertainment Chief Executive Tony Vinciquerra would likely run the operation. Sony has previously expressed interest in taking over the Melrose Avenue film studio, but was rebuffed because Paramount's bankers have said they want to sell the company whole.

Spokespeople for Sony and Paramount declined to comment Thursday night.

The New York Times first reported the news of the Sony and Apollo talks.

Earlier this year, Apollo sent a letter to Paramount's board, offering to purchase its film and TV studio operations for $11 billion. When that didn't fly, Apollo raised the price to $26 billion, which would include taking on Paramount's $15 billion in debt. The cash component for the entire company is still around $11 billion, knowledgeable people say.

Apollo was the latest to make a play for Paramount, getting in line behind Ellison's Skydance, David Zaslav's Warner Bros. Discovery, and Byron Allen's Allen Media Group.

Warner Bros. Discovery's pursuit of a deal with Paramount was short-lived, not progressing beyond preliminary high-level talks, while Allen Media Group is said to still be interested.

A proposed Sony-Apollo combination would likely trigger regulatory concerns because it would result in eliminating one of the remaining film studios in Hollywood. Sony would combine the Melrose Avenue Paramount Pictures with its Culver City operations.

In addition, Federal Communications Commission rules restrict foreign ownership of broadcast TV stations and so the CBS station group would have to be sold or licensed to Apollo. Apollo already has TV stations, however, through its control of Atlanta-based Cox Media Group.