Jeffrey Katzenberg On Paramount Drama – “Don’t Count David Ellison Out”

Another big Hollywood name rooting for a Paramount-Skydance deal is Jeffrey Katzenberg, who says that outcome would be “a great win for Paramount and for people in the industry.”

Speaking a the Axios BFD Talks: LA this evening, the DreamWorks co-founder and former Walt Disney Studios head acknowledged that the situation is complicated. “There’s a reason why the David Ellison deal did not fly, which I think is unfortunate. Because I think David is a phenomenal entrepreneur, and he is super ambitious, and loves the movie business, the studio business. I think that would have been a great win for Paramount and for people in the industry.”

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“The economic complexity of how this has sort of played out, over decades, by the way, makes it really hard to get to a successful outcome. But not impossible. And I would say don’t count Ellison out,” said Katzenberg whose last venture was the fleeting 2020 mobile app Quibi for short form video, financed by his venture capital firm WndrCo..

Paramount, in fact, is still talking with Ellison even though an exclusive negotiating window ended, and even though it is also engaging with a rival bidding team of Sony and Apollo. The latter deal has more money for shareholders but faces regulatory risks.

“Clearly, that [Sony-Apollo offer] can create an exit for shareholders and investors who have been with this company for a very long time, and it’s been a real roller coaster ride. [But] I wouldn’t say that’s it has straight path forward.”

Sony can’t own broadcast assets and the idea is that Apollo would take them on. But “to assume that the FCC is going to allow a private equity firm to take that license? I mean, just think about that. This is the license to operate the number-one broadcast network in America, and the FCC has an absolute right to approve this. They’re going to say that there’s a benefit for that being in the hands of private equity? I don’t know. That’s a high bar, particularly in the regulatory environment that we’re in right now,” Katzenberg said

There’s a third option, Paramount’s controlling shareholders Shari Redstone just decides to sit tight, not do either deal, and take a run at it in another year or two.”

Ellison and backers Larry Ellison and RedBird Capital would buy out Redstone’s stake with a bit of sweetener to common shareholders but not nearly enough to make them happy. The company would stay together and stay public. Hollywood likes this deal.

Sony and Apollo are offering $26 billion, including the assumption of Paramount’s debt, to acquire the whole company and take it private. A special committee of Par’s board decided yesterday to engage with both. Shareholders like this one.

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