Why Paramount Really Can Refuse an Offer for ‘The Godfather,’ Other Movie Classics

Suitors are circling the film studio looking for a minority stake, but its very unlikely its 4,000-film library will be spun off

Paramount Pictures’ impressive 4,000-film library, which includes “The Godfather” movies, “Breakfast at Tiffany’s” and “Chinatown,” stands out as one of the most attractive components as a range of suitors consider making a bid for a minority stake in the studio.

Philippe Dauman, CEO and chairman of the studio’s corporate parent Viacom, indicated this week that he was entertaining offers on the studio and it’s clear that his intent is to sell a portion of the entire operation. It’s logical to think a spinoff of some units could be considered, however, as he seeks to turn around a malaise that has seen the company’s stock lose 46 percent of its value over the past year.

It’s difficult to put a price on the archive, but the last time Paramount sold a library was in 2006, when George Soros’ investment firm paid $900 million for the 59-film DreamWorks archive. The vast Paramount library would be worth considerably more.

Studio executive weren’t talking Thursday, but Paramount is very unlikely to let go of the rights to its classic movies to Amazon, China’s Alibaba, Lionsgate or any other buyer, insiders told TheWrap. That’s because as valuable as it is, it’s almost surely worth more to Paramount than to any potential buyer, because it is the foundation upon which the studio’s emerging TV division is built.

The value of archives, especially those with well-known titles, has risen because the proliferation of digital platforms and streaming providers has produced unprecedented global demand for content. But rather than market its titles, Paramount has chosen take advantage of them via its own Paramount Television, which launched in 2014. So far, it’s working.

Landing “Minority Report” (a drama based on Steven Spielberg‘s 2002 Tom Cruise sci-fi tale) on Fox’s schedule was an early victory for new unit. A live presentation of “Grease” featuring Vanessa Hudgens was a ratings hit for Fox in January, and a musical based on the 2003 movie hit “School of Rock” will premiere on Viacom network Nickelodeon in March.

Projects based on other Paramount film hits (including “Urban Cowboy,” “American Gigolo” and “Jack Ryan”) are in early development as well.

It’s an opportune, efficient and financially smart strategy.industry observers say.

“Paramount’s library had been underutilized in recent years, sort of like their feature-film operation,” Seth Willenson, an analyst specializing in library valuation, told TheWrap. “And don’t forget, it basically starts in 1950, because all of the movies before that are under the control of Universal.”

Paramount’s classics from the 1930s and 1940s were acquired by Universal’s forebear MCA in 1958. And the studio relinquished its TV library in the 2006 corporate split with CBS Corp., which took over rights to Paramount television shows, including “Cheers.”

Epix TV, a cable network launched in 2008 by Paramount’s parent Viacom, MGM and Lionsgate, currently serves as the primary platform for the studio’s classic films around the world. It also launched a YouTube channel in 2014 that offers roughly 100 of the studio’s films free of charge.

Some rival studios have been even more aggressive. Warner Bros., for example, offers 2,300 titles on its own video streaming service for $9.99 per month. Sony launched its own cable channel to market its archival films, and Fox is making 100 of its remastered classics available for high-definition streaming as part of its 100-year anniversary celebrations.