cc Tuesday, February 23, 2016 latimes.com/news

Viacom exploring sale of minority stake in Paramount Pictures

By MEG JAMES AND RYAN FAUGHNDER TIMES STAFF WRITER iacom Inc. is exploring a V sale of a minority stake in its Los Angeles movie studio Para- mount Pictures, opening the door to a possible break up of the media giant. The announcement made Tues- day by Viacom Chief Executive Philippe Dauman comes as Via- com has been under mounting pressure to reverse its flagging fortunes. Viacom's signature TV chan- nels, including Comedy Central, Viacom is exploring a possible sale of a minority interest in Paramount Pictures, the MTV and Nickelodeon, have famed Los Angeles movie studio. (Nick Ut / Associated Press) stumbled in the ratings and Para- mount Pictures lags well behind its rivals. to analysts and investors. Some Some investors have agitated for Cash-rich investors, such as analysts have suggested the studio dramatic action. Chinese e-commerce giant Aliba- could be valued at as much as $10 “Philippe knows how to read ba, could give Viacom a much- billion if Viacom was able to make the tea leaves,” Mario Gabelli, needed infusion of capital to help a deal with an investor eager for a Viacom's second-largest voting expand the studio's film and TV trophy like Paramount, one of the shareholder, said in an interview slate, pay down debt or buy other original Hollywood studios. with The Times. assets, analysts said. The move could pave the way Viacom's shares closed up “It's very rare for one of the for Viacom, controlled by the ail- Tuesday 15 cents, or 0.4%, to majors to become available for ing 92-year-old Sumner Redstone, $37.01. purchase, and Viacom is strug- to be sold piecemeal. Under a frugal strategy em- gling and under great pressure to Viacom's stock value has fallen ployed by Paramount CEO Brad make some bold moves,” said more than 50% in the last two Grey, the studio has stumbled with Stanley Rosen, a USC political years as investors have grown in- thin movie slates in recent years science professor. creasingly impatient with Viaco- and high-profile misses, such as Hollywood-based Paramount is m's lackluster performance and its this month's “Zoolander 2.” Even worth about $4 billion, according leadership, including Dauman. Dauman has acknowledged the studio hasn't produced enough golden opportunity,” said Lindsay Hollywood. Online retailer Ama- movies to support its operations. Conner, an entertainment industry zon.com Inc. has been ramping up Last year it ranked last among lawyer and partner in Manatt, its slate of original TV shows, the six major studios in terms of Phelps & Phillips. while Apple Inc. is looking at domestic box-office market share. Although Dauman did not name ways to create its own online se- Paramount also has been a con- any specific possible investors, ries for streaming. sistent drag on the company's bot- Alibaba Group, the Chinese e- Paramount's rich library of tom line. Paramount posted an op- commerce giant run by billionaire blockbusters would provide much erating loss of $146 million in the Jack Ma, is considered a leading of the value to a strategic partner, quarter ended Dec. 31. candidate. analysts said. Dauman on Tuesday stressed Last year, Alibaba Pictures in- “They have a fantastic library, that Viacom intended to retain vested in and helped promote Para- but if you had a different team control of the century-old film stu- mount's summer release “Mission: with a different approach you dio that is known for the Impossible – Rogue Nation.” That might be able to create more val- “Transformers” and “Mission: Im- deal came after Ma met with exec- ue,” Gabelli said. “Everyone is fo- possible” franchises. utives from several studios, includ- cused on content creation, and Par- He said the company would en- ing Paramount, in the fall of 2014 amount doesn't have good TV se- gage in “discussions with a select to discuss possible partnerships. ries creation capabilities.” group of potential investors” after Dalian Wanda Group, which Paramount relinquished its TV fielding inquiries from several po- owns the U.S. cinema chain AMC library in the 2006 corporate break tential partners. Theatres, also has been expanding -up with CBS Corp., which took “The contours of our industry its profile in the U.S. Last month, over rights to old Paramount tele- continue to shift, which means we the real estate and media conglom- vision shows, including “Cheers.” must evolve, innovate and make erate, which is headed by China's The studio's real estate, which the organizational and strategic richest man, Wang Jianlin, bought encompasses the historic lot on changes necessary to ensure our Burbank production company Leg- Melrose Ave. in the heart of Holly- future success,” Dauman said endary Entertainment for $3.5 bil- wood, could be worth as much as Tuesday in an email to employees. lion. $1 billion, analysts have said. The process is expected to take “Alibaba would of course love Selling a piece of Paramount several months. to trump Wang Jianlin and Wanda represents a retreat for Viacom, Some investors would likely by purchasing a [significant] share which paid more than $10 billion demand an option to eventually of Paramount,” Rosen said. for the studio in 1994 after a drawn take full ownership of the film stu- Other potential bidders could -out battle with Barry Diller for dio, triggering a long-anticipated include Japanese telecommunica- control. Redstone wanted to own consolidation of the major movie tions firm Softbank Group and In- the studio behind such classics as studios. dian conglomerate Reliance Anil “The Godfather,” “Sunset Boule- “This is an asset that has signif- Dhirubhai Ambani Group, which vard,” “African Queen” and icant value, and strategic value, to previously backed Steven Spiel- “Saturday Night Fever.” a number of potential investors,” berg's DreamWorks Studios. “Sumner was dead set against Gabelli said. Media companies including ever selling Paramount, but those Paramount is expected to attract John Malone's Liberty Media days are waning,” said Lloyd interest from foreign buyers — Corp., Sony Corp., 21st Century Greif, chief executive of down- particularly from China. Fox and Time Warner Inc. might town L.A. investment bank Greif “Chinese companies are very also have an interest in Paramount. & Co. “This is, no question, hang- interested in Hollywood as the Even tech giants could enter the ing a big for-sale sign on the com- center of the global entertainment fray as they look to compete with pany.” industry, and this represents a