Viacom Pursues Sale of Paramount

Viacom executives are pressing ahead with plans to sell a stake in the Paramount Pictures movie studio despite resistance from controlling shareholder Sumner Redstone, potentially inflaming an already incendiary boardroom battle at the media giant.

China's Dalian Wanda Group Co. is in talks with Viacom about buying 49% of the studio, according to people familiar with the discussions. Another, undisclosed, suitor is also on the hunt for Paramount, one of the people said.

Executives, including Chairman and Chief Executive Philippe Dauman, have advocated selling a piece of Paramount to bring in much-needed cash. A deal with Wanda would give the company a powerful strategic partner in Asia. Viacom is seeking a deal that would value Paramount at between $8 billion and $10 billion, one of the people said.

But any agreement would face hurdles.

National Amusements, the holding company of the ailing Mr. Redstone, has signaled opposition to the idea of selling a stake in Paramount and recently changed the company's bylaws to require a unanimous board vote to approve such a transaction.

That means it would need the support of Mr. Redstone -- who has cited the 1994 acquisition of Paramount as a crowning achievement in his career -- and his daughter Shari Redstone, who is National Amusements' president and Viacom's vice chair.

Representatives for Mr. Redstone, National Amusements and Ms. Redstone declined to comment. Attempts to reach Wanda for comment outside of business hours in China were unsuccessful.

Wanda, a conglomerate run by run by Chinese billionaire Wang Jianlin, is known in the country primarily as a commercial property developer. But in recent years the company has become an aggressive buyer of entertainment assets overseas -- from movie theaters to studios to sporting events. Acquiring a piece of Paramount, a storied Hollywood studio, would be a major step in those efforts.

Reuters earlier reported that Wanda has held talks with Viacom about acquiring a minority stake in Paramount.

The Paramount spat is only one part of a much wider boardroom battle at Viacom, which has played out as Mr. Redstone's health declines and Viacom's business struggles. The company -- owner of cable TV networks like MTV, Comedy Central and Nickelodeon -- has suffered a stock-market slide from ratings declines at its major networks and lackluster performance by Paramount.

Mr. Redstone's National Amusements has pushed to remove five board members, including Mr. Dauman, his confidant of nearly three decades. Viacom's lead independent director filed suit in Delaware court to block that move and the case is pending.

Meanwhile, Mr. Redstone dismissed Mr. Dauman and Viacom director George Abrams from the trust that will govern his media assets when he dies or is declared incapacitated. The two executives have sued in Massachusetts court to be reinstated. Mr. Redstone has nearly 80% voting stakes in Viacom and broadcaster CBS Corp.

Some analysts and media executives thought Viacom would press the brakes on the Paramount sale process after it emerged earlier this year that National Amusements wasn't eager to do a deal and the litigation made the leadership clash public.

By continuing conversations, Viacom executives risk further alienating their controlling shareholder. But they are betting that if they can engineer a good deal with a relatively rich valuation for Paramount, there would be pressure on the Redstone family to allow it to go through. Much will depend on how investors react.

In a sign of how messy the process has become for would-be buyers, Viacom hired one investment bank to advise on Paramount, and National Amusements retained its own adviser.

The legal brawl is happening as the two sides argue over whether Mr. Redstone remains mentally competent enough to make business decisions.

Wanda has been busy on the deal-making front. In January, the company agreed to acquire production and finance company Legendary Entertainment, the studio behind "Warcraft" and "Godzilla," for $3.5 billion in cash.

Wanda also owns control of AMC Entertainment Holdings Inc., the second-largest cinema chain in the U.S. This week, AMC Entertainment said it is offering to acquire Europe's largest movie theater chain Odeon & UCI Cinemas Group, for GBP500 million ($650 million). AMC is awaiting a shareholder vote this week on a separate deal to buy U.S. rival Carmike Cinemas Inc., but that deal faces resistance from major Carmike investors.

Last year, Wanda also acquired the Ironman triathlon series of races for about $650 million plus debt from U.S. private-equity firm Providence Equity Partners.

Investing in Paramount comes with risks. The studio has suffered years of declines in revenue and operating income, and it is trying to rebuild a slate.

This year it has had several box-office disappointments such as "Zoolander 2," "Whiskey Tango Foxtrot" and "Teenage Mutant Ninja Turtles: Out of the Shadows," the latter of which was co-financed by Wanda.

So far this year, Paramount is ranked fifth among Hollywood's six major studios in total domestic box office.

Write to Rick Carew at rick.carew@wsj.com, Amol Sharma at amol.sharma@wsj.com and Ben Fritz at ben.fritz@wsj.com