WHEN: Today, Monday, April 29, 2024
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of breaking news from CNBC's David Faber on "Squawk on the Street" (M-F, 9AM-11AM ET) today, Monday, April 29. Video will be available on CNBC.com.
All references must be sourced to CNBC.
DAVID FABER: Alright, let's talk some Paramount shall we. Going through my endless number of notes here much of which had not actually the reporting which has not made air but you know, this morning instead of going through the, we've already been through sort of the substance of the Ellison Skydance offer in terms of how potentially it would work but let me bring you up to date at least based based on what I know having spoken to any number of people who are around this process both on the special committee side, the company side, on the on the Ellison group side, and there, you take a look at Paramount shares which are up. By the way, waiting for the the stepping down of Bob Bakish CEO that, not going to happen this morning but very much anticipated after the close, believe the company also reporting after the close so we're waiting for that. As for the process under which this company may have a change in control, that is certainly a focus for many shareholders who have been less than enthused with the idea of control shareholder Shari Redstone for National Amusements getting a large premium for her shares, while they got nothing except the promise of a higher stock price based on a merger with the Paramount Studio and Skydance itself. What I can tell you is they have moved along here in terms of this exclusive negotiation that's been going on between the special committee and the Ellison group to the point where it is my understanding at least that they've gotten to basically kind of what they would call a expect to be a final offer from Skydance. Now, things can always change. You can always tweak things. It doesn't appear that they're going to have a deal in hand as of the end of exclusivity on Friday. But perhaps they will get very close to at least having something that is is close to that deal that could be signed up, brought to the control shareholder namely that being Shari Redstone. It does include, is my understanding and this is an important component here and one that the special committee has been pushing for, what is essentially a premium that would be paid at least to B shareholders for some percentage of their shares. Meaning, yes, you merge in Skydance through buying Skydance, a roughly a $5 billion value. Then, as I've been reporting for weeks now, there would be a large issuance of stock, primary shares from the company that would be bought by Larry Ellison, by RedBird, by KKR, which also owns part of Skydance right now and potentially some other investors, but what would also be bought at a premium is some percentage of B holders ownings. Can't imagine it's a large percent. I don't know what the number is. Would it be 10% Who knows? But that is apparently part of what is essentially their sort of the offer that they have made to try to meet the objections of or at least the worries of the special committee that feels like hey, we have to offer some form of liquidity to the B holders so they feel like they've gotten something out of this other than of course, the merits of the transaction themselves, which again, as I've reported in the past include de-levering, include what they believe would be a significant amount of cost savings to the tune of at least a billion perhaps $2 billion and to the prospect of having Larry Ellison as your essentially controlling shareholder in many ways, which wouldn't be a bad thing. Certainly he has very deep pockets. All of that, of course, is something the special committee Jim has to figure out as they weigh whether to sign this up, whether to see if they can get something out of Apollo and Sony this real, yes, I hear Sony would love to be there in some fashion, would love to own the studio as so many others would. Nothing has come in yet. Even though there's exclusivity, nothing stops a Sony from sending a letter in with some granularity and detail under what I'm hearing at least the plan would be with Apollo and Sony teamed up, Sony would be the majority owner they would merge obviously Paramount and Sony together. They would throw Legendary in which is controlled by Apollo but all these things have a lot of regulatory risk. Sony does, and by the way, I brought up the idea of the Japanese whether they would be there for Sony USA in the end in terms of signing off on a deal that would require a lot of cash from them but regulatory wise it's like I mean Apollo owns stations, what do you do with the station, but you have to get rid of that too. So really, you're just buying the studio there because asset sales are a huge part of that potential transaction, if it were to even come to the fore and again, nothing has been sent into the special committee of any level of granularity, let alone at all from Sony is what I'm understanding at this point. And then, if you are the Ellison group, Jim, you've got an FCC review, it's going to take some time, you've committed to a deal in which you're buying stock at a premium by the way over the current price. You're gonna sit out there for nine months while your capital is at risk, as the cash flow goes down as you're dealing with an over levered company that has yet to do that carriage agreement with Charter which could end up in a not particularly good place. It's got a lot of risks to it.