A PYMNTS Company

Apollo, Sony Bid to Acquire Paramount Faces Regulatory Hurdles

 |  May 7, 2024

In a bid to acquire Paramount Global, Apollo Global Management and Sony have encountered significant obstacles as Democratic-led federal regulators express antitrust concerns, sources familiar with the matter have informed The New York Post.

Paramount Global, which recently terminated exclusive merger discussions with Skydance Media, holds a substantial media portfolio, including the CBS network, its Hollywood studio and 28 local stations, including 17 CBS affiliates in major markets like New York, Chicago, and Los Angeles.

The joint $26 billion all-cash bid from Apollo and Sony, aimed at acquiring the media conglomerate controlled by Shari Redstone, faces resistance in navigating the Federal Communications Commission’s (FCC) regulations, particularly concerning the cap on the reach by local affiliates, according to multiple sources cited by The Post.

One key challenge arises from Apollo’s existing ownership in TV channels, which currently reaches 11% of U.S. households through its stake in Cox Media Group, as noted by a media investment banker consulted by The Post.

Related: Paramount CEO Bob Bakish Steps Down as Merger Inches Closer

Paramount’s extensive local stations contribute to a 39% reach, surpassing the FCC’s threshold. Adonis Hoffman, a former senior legal advisor and chief of staff at the FCC, highlighted the potential regulatory concerns, stating, “Competitors may point out that Apollo’s ownership will exceed the 39% national ownership cap, which in itself is a regulatory anachronism but is nevertheless a real thing at the FCC.”

However, Apollo is reportedly pinning its hopes on an obscure FCC loophole known as the “UHF Discount.” This loophole reduces by half the percentage of households counted by stations operating within the UHF bandwidth, potentially allowing the combined company to reach below the ownership cap, according to a source familiar with Apollo’s strategy.

Source: New York Post