Shares of Paramount Global (PARA) are soaring on a report from Deadline that Skydance Media and RedBird Capital have shown interest in taking a stake in the company by acquiring National Amusements' voting shares.

Yahoo Finance Entertainment Reporter Alexandra Canal breaks down the report.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JOSH LIPTON: And shares of Paramount Global, they are soaring today. Up more than 12%, as reports continue to swirl regarding potential M&A deals for the media giant, that's according to Deadline. Private investment firm Redbird Capital and production company Skydance Media are looking to acquire the voting shares of National Amusements.

National Amusements is the holding company, which controls Paramount through its class A shares that's headed by Shari Redstone. Yahoo Finance's very own Alexandra Canal has more. Allie.

ALEXANDRA CANAL: Hi, Josh. Yeah, a really interesting deal if this were to come to fruition because acquiring those National Amusements shares would essentially allow both Redbird and Skydance to control the company without having the need to purchase the company. And that'd be beneficial because it's likely that both Redbird and Skydance, they're not interested in cable. They're not interested in the legacy media aspects of Paramount.

They're interested in the studios. They're interested in the IP. So this could allow them to offload some of those undesirable assets or perhaps find a strategic partner.

Again, just a report at this point. Both Paramount and National Amusements declined to comment to Yahoo Finance. We have not heard yet from Skydance and Redbird. But National Amusements, as a holding company, is interesting since it owns approximately 10% of Paramount's equity capital value, but maintains 77% of those voting shares. And that's valued at around $1 billion although analysts have said that does not account for what could be, quote, "meaningful control premium," so the potential for those shares to be valued even higher.

We heard from Wells Fargo analyst Steve [? Cahall ?] who laid out several options that we could see if this deal were to come to fruition. One could be the combination of Skydance with Paramount's existing studios. We could possibly see the shutdown of streaming service, Paramount Plus, and again the possible spinoffs of some of those assets like Pluto and those linear TV legacy elements there. So whenever you hear paramount and a potential breakup, you see the share price rise because this is a company that's really been in the news about this for a while.

JULIE HYMAN: Exactly, so you would think people would, kind of, learn their lesson and maybe not bid up.

ALEXANDRA CANAL: It doesn't happen. It's every time.

JULIE HYMAN: --you know, OK. So we have overall though, seen it's been kind of slow in the M&A space for media. So any glimmers or is this a signal that there's going to be a pickup next year?

ALEXANDRA CANAL: There's certainly a lot more chatter than there has been. And experts that I've spoken with have said 2024, particularly the back half of 2024, you might see a little bit more of media M&A. And that's due to a few factors. One, the fact that consolidation just needs to happen. The consumer is even telling us that it needs to happen.

The strikes, the resolution of both of those strikes is also a sign that we have more clarity when it comes to the economics here, when it comes to overall strategy. Of course, there are interest rates being high. But by and large, 2024 is looked at as the year of more media M&A. There's a lot of capital on the sidelines, especially from the private equity space that could be deployed.

And when we think about Paramount in particular, its prime target for M&A due to its small size. I mean, $11 billion in market cap, you compare that to Disney's $170 billion. Netflix has $199 billion. It's a company that you could really see sell off a lot of those parts.

There have been those rumors about Showtime BET. They did offload that Simon and Schuster publishing business. So we haven't seen a ton of activity there with Paramount probably because of Shari Redstone not wanting to do that. This could be a way that maybe we see some of that come to fruition, but we'll have to see next year.

JULIE HYMAN: Sounds like you're going to be busy.

ALEXANDRA CANAL: Yeah, I'm going to be busy.

JULIE HYMAN: Thanks, Allie.