Paramount Global owner National Amusements Inc. is getting a $125 million cash infusion that the Redstone family holding company says will help shore up its ownership of the entertainment firm.
The strategic preferred equity investment, from BDT & MSD Partners, will be used to pay down its debt and pay back loans that had been secured by shares of Paramount. BDT & MSD is a merchant bank that specializes in working with the owners and founders of businesses.
“Upon termination of those facilities, NAI shares of Paramount Global which had been pledged to support those loans will be released back to NAI, and obligations to make future pledges under these facilities will be eliminated,” the company adds.
“Our expanded partnership with BDT & MSD reflects our strong belief in Paramount’s ability to deliver value to all shareholders,” said Shari Redstone, chair, CEO and president of NAI, in a statement. “Paramount has the best assets in the media industry, with an incredible content library and IP spanning all genres and demographics, as well as the #1 broadcast network, the leading free ad-supported streaming television service and the fastest-growing pay streaming platform in the U.S.”
“NAI has conviction in Paramount’s strategy and execution, and we remain committed to supporting Paramount as it takes the necessary steps to build on its success and capitalize on the strategic opportunities in our industry,” Redstone added.
While NAI’s most valuable asset is Paramount, it also owns a number of movie theaters, primarily in the northeast.
The investment is expected to close next week.
“We are pleased to partner with National Amusements in a transaction that supports its stewardship of Paramount Global,” said Byron Trott, chairman and co-CEO of BDT & MSD Partners. “Paramount has an incredible legacy, underpinned by its industry-leading content and media assets. We believe strongly in the value creation opportunities ahead for the company and its shareholders.”
Paramount has been under pressure in recent months as streaming losses have grown. Its share price is down 17.5% year to date, and the company has been undergoing significant cost-cutting measures, including a merger of Paramount+ and Showtime.
While Redstone effectively controls Paramount through NAI’s controlling stake, the company’s largest outside investor is Warren Buffett, who has himself expressed skepticism of the streaming business model.