Paramount sells Viacom18 stake to Reliance Industries

Paramount Global (PARA) is selling its 13% stake in Indian broadcasting unit Viacom18 to Reliance Industries (RELIANCE.NS)

Yahoo Finance Entertainment Reporter Alexandra Canal details the M&A outlook for Paramount and its place in the streaming space.

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Editor's note: This article was written by Luke Carberry Mogan.

Video transcript

SEANA SMITH: Paramount is selling its 13% stake in its Indian business to Reliance for more than $500 million. Now, this coming just two weeks after Disney and Reliance Industries announced an $8.5 billion joint venture that combined their Indian TV and streaming businesses. For more on this story, we have Yahoo Finance senior reporter Alexandra Canal.

ALEXANDRA CANAL: Hi, Seana. Yeah. So we know paramount has been a top name when it comes to M&A, especially as the company works to delever its balance sheet. And this Viacom18 deal is really an example of those efforts. As you mentioned, reliance is going to acquire Paramount's entire 13% stake for approximately $517 million.

And that's a heck of a lot of money for a company that's really struggling with its balance sheet and wants to improve its financials. Paramount is going to continue to license content to Viacom18 after completion of the transaction. We know licensing has become a really popular option for a lot of these streaming and media companies, especially when we think about profitability and the future of, you know, the viability of these businesses.

But India is a very tough market to really excel in. We've seen Disney retreat from the country, and now Paramount. And Paramount has said it will be leaning on lower investment models in markets where it's not yet launched Paramount Plus in order to really grow local scale and make the most of its TV and movie business.

So I think a positive for Paramount when it comes to the financial returns, but the company still has a lot of work cut out for it. M&A mill, the rumor mill, it's not slowing down anytime soon. Even our parent company Apollo has now been thrown into the mix there. And Bob Bakish, the CEO of Paramount has said that the company is open to deals. And ultimately, they want to create shareholder value. So we'll see where this goes. But we're starting to see little signs of them offloading.

SEANA SMITH: We are. It's about two years ago when the analysts started predicting that we were going to see even more M&A activity within the streaming space. And we started to see some signs of it last year. But the rumor mill, certainly like you're saying, Allie, picking up a lot this year. And you would think they would need to make those type of acquisitions even to be able to compete with the larger players.

ALEXANDRA CANAL: I think it's inevitable that we're going to see something happen with this company. I think it all comes down to timing. It really hasn't been an attractive M&A environment with interest rates so high. But everyone has said 2024 could be the year. So we'll see.

SEANA SMITH: We will see.

ALEXANDRA CANAL: Still a lot of time left.

SEANA SMITH: 2 and 1/2 months in. All right. Allie, thanks so much.