Rafael Henrique/SOPA Images/LightRocket via Getty Images
Paramount Global is “deep in the marketing process” for publisher Simon & Schuster and could see a deal closing this year, CFO Naveen Chopra said today, setting the first timeline for the sale.
It is a “major transaction” and “very competitive” with strong interest from strategic and financial buyers, he said at a Gabelli Funds media conference in New York. The company targeted the book business as non-strategic and initially closed a deal to sell it to Bertelsmann’s Penguin Random House for $2.2 billion. That was dropped after the Justice Department sued to block the merger and a federal judge upheld the government’s position.
The company is looking at selling a majority stake in BET, with a number of potential buyers, including Tyler Perry and Byron Allen, stepping up. He sold real estate, selling the headquarters of CBS Black Rock in NYC and Television City in LA, and the CBS Broadcast Center in Far West 57th The street could be next. The cash flow from asset sales helps reduce leverage — a goal for Paramount and other media companies — at a time of heavy investment in a complex landscape.
Asked about the wider M&A potential, he said: “it’s probably not wise to bet against consolidation” and Par is trying to be “thoughtful” about the opportunities. “Whether Paramount is an asset seller or an asset consolidator, we’ll have to see. But we remain very open to those possibilities.” However, as evidenced by the broken publishing deal, the regulatory climate in the US is currently quite difficult, he noted on the sidelines of the conference.
Despite the stock drop, he said Par is working on major investments and expansion in streaming toward turning a profit and free cash flow in 2024. One big step on that path is the new Paramount+ With Showtime that will debut later this month, in tandem with price increases for the combined and rebranded service. The move will save the company at least $700 million a year.
As it rebuilds, Paramount is having trouble gaining traction on Wall Street. Its shares remain near 52-week lows. The market was caught off guard when Paramount announced a dividend cut last month. Its quarterly payouts are down to 5 cents, or 20 cents, a year—a big drop from about 24 cents a quarter, or nearly a dollar a year. The move is said to save $500 million a year.
The current weak ad market doesn’t help. But Chopra reiterated today that advertising is cyclical and will improve. “I think it’s important to think about our balance sheet in the context of what we’re doing in the business of building the 21st network.st century.”
