Redstone’s Predicament: Whether to Sell or Fix Her Media Empire

The media mogul, who controls Paramount Global through her family holding company National Amusements, is considering whether to sell the company or keep it and find a way to change its fortunes.

In recent weeks, Redstone has met with Skydance Media Chief Executive David Ellison and Activision CEO Bobby Kotick about a potential sale, according to people familiar with those talks.

Meanwhile, Paramount is bracing for further cost cuts. The company has discussed laying off more than 1,000 workers early next year, people with knowledge of the discussions said.

A weaker-than-expected ad-sales market has caused the company to more aggressively cut costs to meet its promise to investors that it would deliver positive earnings growth in 2024. The company has been paring down its head count since earlier this year.

Plus, the company’s carriage deals with two of the biggest cable companies in the country are set to expire in the coming months.

That Redstone is discussing a sale of National Amusements after battling with her late father Sumner Redstone, his girlfriends and senior company executives for control, is a sign of the difficult choices media executives are confronting. Paramount’s once-lucrative cable channels are in structural decline; Hollywood is still recovering from monthslong actor and writers strikes that froze productions; and its flagship Paramount+ streaming business continues to burn cash.

Redstone wants to devote time to non-media pursuits. She has become more involved in organizations that oppose antisemitism since Hamas’s Oct. 7 attacks on Israel, according to people familiar with the situation. She also recently built a house in the Caribbean, where she hopes to spend more time with her family.

She had hoped Paramount’s stock would rebound before entertaining offers. Paramount’s shares were down almost 12% this year to $15 a share Thursday, before a report from newsletter Puck that Skydance was discussing buying National Amusements. The stock closed on Monday at $16.24 per share.

Many of the potential buyers for Paramount, which owns cable networks such as Nickelodeon and BET and broadcast network CBS, are primarily interested in its movie studio. That is a nonstarter for Redstone, who is adamant that Paramount Pictures, the crown jewel of the company and an asset her father insisted on keeping, not be sold on its own.

Adding to the urgency are coming distribution deals for networks such as MTV and Nickelodeon with Comcast and Charter. Paramount’s deal with Comcast expires at the end of this month, while its Charter agreement is set to end this spring, according to some of the people familiar with the situation. Renewing those deals is critical for Paramount to continue to have its TV networks beamed into households across the U.S.

Earlier this year, Disney’s networks, which include ABC and ESPN, went dark for more than a week as a result of a dispute with Charter over their carriage deal. In the end, Charter agreed to pay Disney more for its TV channels in return for being able to provide its streaming services to its cable subscribers. As part of that negotiation, Charter dropped eight Disney networks, including Freeform.

Entertaining suitors

Buyers that have considered a play for National Amusements’ assets include billionaires, studios, streamers and private-equity companies.

Kotick, who is set to step down as CEO of Activision as part of Microsoft’s acquisition of the company at the end of the year, met with Redstone in recent weeks about potentially buying National Amusements, said people familiar with the situation. Discussions haven’t progressed.

Netflix executives have broached the idea of a potential deal for some assets National Amusements controls as recently as this year, though conversations have cooled as the streamer focuses on its efforts to limit password sharing, according to people familiar with the situation. The streamer was particularly interested in Paramount’s movie studio, Paramount Pictures, home to hits such as “Mission Impossible," and “Top Gun," some of the people said.

SkyDance’s Ellison, with its investor RedBird Capital, also expressed interest in Paramount’s movie studio in recent weeks and is open to a deal for all of National Amusements to get it, those people said. Skydance and Paramount have worked together on multiple projects including “Top Gun: Maverick," as well as other hits.

Puck first reported that Skydance and RedBird were discussing acquiring National Amusements.

Then there is Warner Bros. Discovery, whose chief executive David Zaslav has weighed the pros and cons of making a run at Paramount, according to people familiar with his thinking. In addition to its studio, Paramount owns CBS, which carries National Football League games and longtime hits with high ratings such as “NCIS."

Both are appealing to Warner and there could be billions in savings by integrating the companies, but adding more cable networks to the company’s own large stable is a turnoff. Plus, a deal would likely involve adding debt to the company’s already significant load after its merger with Discovery.

Zaslav, who has dinner with Redstone a few times a year, so far hasn’t pursued a deal. The Warner CEO said on a November earnings call that the company could be on the hunt for deals soon.

“We could be really opportunistic over the next 12 to 24 months," Zaslav said.

Future ready

Redstone has tried to keep National Amusements’ finances in check as she plots its future.

Merchant bank BDT & MSD, founded by former Goldman Sachs banker Byron Trott, took a $125 million preferred-equity investment in National Amusements in May to give the company additional liquidity after Paramount cut its dividend for the first time in years, the Journal reported. Dividends are a key source of income for the Redstones.

National Amusements paid down 20% of the roughly $250 million outstanding loan to its creditors in September, the Journal reported. The company is obligated to pay down another 15% in March.

Redstone and Paramount CEO Bob Bakish have so far been keen to only sell noncore assets and keep as much of the company intact as possible. Paramount sold Simon & Schuster earlier this year, and declined offers for other assets, including a $3 billion offer for Showtime last year.

The entertainment company this summer dropped plans to sell a majority stake in BET Media Group, which includes the VH1 and BET cable networks and BET+ streaming service. It had received some offers, but none that in its view would meaningfully deleverage Paramount.

The media firm has also brushed off requests by some investors to spin off its local broadcast stations, according to other people familiar with the situation.

Paramount has focused on partnerships and bundling its Paramount+ streaming service with rivals. The ad-supported version of Paramount+ is available at no cost to members of Walmart’s $98-a-year membership program, to some Verizon customers through a bundle with Netflix, and to Delta SkyMiles members on flights. The company has had discussions with Apple about bundling with its Apple TV+ streaming service, as the Journal previously reported.

Joe Flint contributed to this article.

Write to Jessica Toonkel at jessica.toonkel@wsj.com