Antitrust Alarm: Apollo & Sony Eyeing Paramount Sparks Concern

Antitrust Alarm: Apollo & Sony Eyeing Paramount Sparks Concern

Apollo Global Management, alongside Sony, has set their sights on acquiring Paramount Global, but their ambitious bid is encountering obstacles as it navigates through Democratic-led federal regulators concerned about antitrust issues. Paramount, a media powerhouse, recently concluded talks with Skydance Media and holds CBS network, a Hollywood studio, and a network of local stations, including key CBS affiliates in major markets like New York and Los Angeles.

The $26 billion all-cash bid made by Apollo and Sony for the Shari Redstone-controlled conglomerate is facing resistance due to the FCC’s strict 39% cap on the reach by local affiliates post-merger approval. This limitation poses a challenge for the merging entities, as revealed by insider sources.

Apollo’s Head, Marc Rowan, remains optimistic about the potential Paramount merger despite regulatory roadblocks. The investment giant currently owns TV channels serving 11% of US households through its involvement with Cox Media Group. In contrast, Paramount’s local stations alone already reach the 39% stipulated by the FCC, potentially pushing the combined company’s reach beyond permissible levels.

One contentious issue is the ‘UHF Discount,’ an FCC provision that could mitigate Apollo’s ownership exceeding the national cap. This discount, operationalized in 1985, was reinstated in 2017 under Ajit Pai’s leadership before being questioned for its relevance by current FCC Chair Jessica Rosenworcel.

Rosenworcel’s skepticism regarding outdated FCC regulations, paired with her concerns about media ownership concentration, could complicate matters for the Apollo-Sony bid. Analysts suggest that if the UHF Discount is discarded, the FCC might mandate divestitures to ensure compliance rather than entirely block the merger.

Moreover, external factors could further complicate the deal, including scrutiny from the Committee on Foreign Investment in the US (CFIUS), apprehensive about Japanese ownership of CBS. The Federal Trade Commission also looms as a potential hindrance, wary of Sony acquiring a second movie studio in addition to its existing film division.

Citing historical precedents and industry dynamics, experts caution that gaining FCC approval for such a high-profile merger involving private equity firms like Apollo requires surpassing a ‘high bar.’ Regulatory authorities, including the FCC and FTC, have recently showcased a stringent stance on media ownership, as illustrated by past dealings with broadcast station owners like Tegna.

Despite the financial prowess behind the bid, led by Apollo under the stewardship of Marc Rowan, the road to merging with Paramount appears fraught with obstacles. The evolving regulatory landscape and public scrutiny underscore the challenges faced by major players in the media industry seeking consolidation amid shifting market dynamics.

As the fate of the Apollo-Sony bid unfolds, industry watchers remain intrigued by the interplay between regulatory oversight and corporate ambitions shaping the future of media conglomerates in an era defined by technological disruptions and regulatory vigilance.


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