Viacom (VIAB) , in the midst of a management change after a months-long struggle for control between CEO Philippe Dauman and the family of majority owner Sumner Redstone, has little alternative but to sell off its ailing Paramount studio, according to one analyst.
The studio, suffering through a brutal summer in which its films Teenage Mutant Ninja Turtles: Out of the Shadows and Star Trek Beyond have performed below expectations, likely will lose as much as $560 million through 2017, estimated Michael Nathanson, a media analyst and partner with MoffettNathanson.
"The problem at Paramount is truly shocking," Nathanson wrote in a report Friday. "Viacom needs to sell the studio now to either a strategic buyer who can take out massive costs or find some 'easy' money, which always seems to be available."A company spokesman did not immediately return a request for comment. Viacom's stock was up 1.4% on Friday afternoon, to $43.42, on news that the end is in sight for its management war.
At least two buyers have circled Paramount in the months since Dauman -- now reportedly on the way out with a severance package of up to $72 million -- said the company was willing to part with as much as 49% of the studio.
In July, Chinese real estate and entertainment conglomerate Dalian Wanda Group was in advanced talks, according to reports. Dalian Wanda bought independent film producer Legendary Entertainment for $3.5 billion in January and controls the AMC Entertainment (AMC) theater chain.