Sony Pictures Entertainment and Apollo Global Management have made significant progress in their legal battle against Paramount, three people familiar with the matter said Friday.
Both companies have signed a non-disclosure agreement with Paramount that gives them access to Paramount's non-public financial information, said the people, who asked not to be identified discussing active negotiations. Paramount had previously shared material with another suitor, Hollywood studio Skydance.
Earlier this month, Sony and Apollo sent Paramount a non-binding letter of intent to acquire the company for $26 billion. The companies had acquired Paramount Studios and then sought to sell other parts of the empire, including cable channels such as CBS and MTV, and the streaming service Paramount Plus.
But Sony shareholders are concerned about the potential deal, given the potential cost of acquiring Paramount and the headwinds facing its subscription streaming business. Sony and Apollo are currently considering various approaches to acquiring the company's assets, but have backed away from plans to make an all-cash $26 billion takeover offer for Paramount, two people familiar with the matter said. It is said that they are doing so.
Sony's new vision for acquisitions could change the dynamics of Paramount's efforts to sell itself or merge with another company. Paramount had previously rejected Sony's offer to buy just the studio, and Paramount's controlling shareholder Shari Redstone has long sought to buy the entire company.
A person familiar with Ms. Redstone's thinking said that depending on the terms, splitting the company would not be a deal-breaker, but that she would like to keep Paramount afloat.
Mr. Redstone celebrated the agreement to sell Paramount's parent company, National Amusements, to Skydance, but Skydance's proposed takeover of the entire company faces significant opposition from Paramount's common stockholders.
Paramount let its exclusive negotiation period with Skydance expire in recent weeks, but the two sides are still in talks and Skydance remains interested in a deal.
The deal negotiations come at a tumultuous time for Paramount. The company's CEO, Bob Bakish, stepped down last month after more than a quarter-century with the company. He was replaced by three executives who will run the CEO's Office on an interim basis. George Cheeks, CEO of CBS. Chris McCarthy, Chairman of Showtime and MTV Entertainment Studios. and Brian Robbins, CEO of Paramount Pictures.