San Francisco: Baidu Inc considered participating in a bid for a stake in Viacom Inc’s Paramount Pictures, though it’s not currently in negotiations, people familiar with the matter said.
The search engine giant had contemplated working with DMG Entertainment & Media Co., a Chinese company that has co-produced films such as “Iron Man 3” and is seeking a larger role in Hollywood, said the people, who asked not to be identified discussing private information. The effort ended in late May when it became clear that Viacom’s controlling shareholders, the Redstone family, opposed the sale, the people said.
Viacom’s attempts to sell a minority stake in the studio have been complicated by the power struggle at the media company. The Wall Street Journal reported this week that Dalian Wanda Group Co. is in talks to buy 49 per cent of Paramount, citing unnamed sources, though on Friday Sumner Redstone and his family reiterated their opposition to such a deal. A Wanda transaction would value Paramount at $8 billion to $10 billion, the Journal said.
Representatives for Baidu, Wanda and Viacom declined to comment. A DMG spokesman wasn’t reachable outside normal business hours.
Baidu owns video-streaming site Iqiyi.com, which has lost money due to spending on programming and may be hived off to form a separate company. An investment in Hollywood could open the door to new partnerships for content. DMG Entertainment is a global entertainment and media company with offices in Culver City, California, Beijing and Shanghai and a entity listed on the Shenzhen stock exchange.
Viacom’s Class B shares fell 1.2 per cent to $44.25 at 2:10pm in New York. The stock has fallen 28 per cent in the past year.
Wanda, controlled by billionaire Wang Jianlin, has been on a buying spree after agreeing to acquire Legendary Entertainment earlier this year. The company’s AMC Entertainment Holdings Inc unit, one of the biggest US movie-theatre chains, is in talks to acquire Carmike Cinemas Inc and announced a pact to buy UK chain Odeon & UCI Cinemas Group earlier this week.
The Paramount stake is a tougher target for either party because Viacom is locked in a three-state legal battle for control of the company that pits Chief Executive Officer Philippe Dauman against his former mentor, Sumner Redstone, who could potentially veto any deal. Under a Delaware court ruling, Viacom must give Redstone five days’ written notice before making any moves involving Paramount.
In court filings and in public statements to the press, Redstone and his daughter Shari Redstone have said they’ve been denied information about the Paramount sale process.
“Any short-term benefits that might result from a Paramount transaction would be outweighed by the severe negative impact on Viacom’s future strategic flexibility to best capitalise on this important asset,” National Amusements Inc, the Redstones’ company that controls Viacom, said Friday in a statement.
Sumner Redstone, 93, is trying to remove Dauman and George Abrams, another former confidant, from a family trust that will one day oversee his affairs. He’s also sought to eject them from the board of National Amusements and from their roles at Viacom, which also owns MTV and Comedy Central.
National Amusements controls almost 80 per cent of the voting stock at Viacom and has a similar stake in CBS Corp
Dauman contends Sumner Redstone is no longer mentally competent to make such decisions and alleges he’s being improperly influenced by Shari. Dauman is suing in Massachusetts, where the Redstone trust was executed, and fighting him in Viacom’s corporate domicile of Delaware. Redstone is seeking to have the Massachusetts litigation take place in California, where he lives.
