The entertainment industry could be on the verge of another seismic shift, as Paramount has formally opened negotiations to sell itself to a bidding group led by the Hollywood studio Sony Pictures Entertainment and the private equity behemoth Apollo Global Management.

The move comes after Paramount’s monthlong period of exclusive talks with the production company Skydance collapsed on Friday night without a deal, according to three people familiar with the discussions. On Saturday, a special committee of Paramount’s board met and decided to engage with Sony and Apollo, which last week submitted a non-binding proposal valuing Paramount at around $26 billion.

If successful, the acquisition would unite two of Hollywood’s most iconic film studios – the makers of blockbuster franchises like “Spider-Man” and “Mission: Impossible” – under one corporate empire. It would also mark a comeback of sorts for Sony in the streaming wars, allowing the Japanese conglomerate to capitalize on Paramount’s popular streaming service, Paramount+.

Yet the potential deal faces considerable hurdles, not least the regulatory scrutiny that major mergers have encountered under President Biden’s administration. There are also complex ownership issues to untangle, given restrictions on foreign companies controlling U.S. broadcast networks like CBS.

Still, Sony and Apollo’s all-cash offer has found support among Paramount shareholders dissatisfied with the prospects of the Skydance deal, which would have combined the two production companies. That transaction stalled amid disagreements over financial terms and concerns that it would unduly enrich Shari Redstone, who controls Paramount’s parent company, National Amusements.

According to people briefed on the new bidders’ strategy, Sony would likely assume a controlling stake in Paramount, with Apollo owning a minority position that it could eventually sell back to its partner. Sony executives have discussed operating the legendary Paramount Pictures studio as a separate division within their entertainment empire.

The finer points, however, remain uncertain. One scenario could see Paramount – which also encompasses broadcast networks like CBS and cable channels like Nickelodeon – placed into a joint venture with Apollo initially retaining partial ownership.

For Paramount, the opening of negotiations caps a tumultuous period. Just last week, the company ousted its chief executive, Bob Bakish, replacing him with a leadership trio from across its divisions. They are now charged with charting a new strategic course, either as an independent entity or under new corporate ownership.

Paramount has also held discussions about a potential streaming joint venture with players like Comcast, underscoring the pressures legacy media giants face in the costly battle for streaming supremacy.

The entry of deep-pocketed suitors like Sony and Apollo could provide a lifeline – or at least an exit ramp – for a fabled Hollywood studio struggling to gain traction in a rapidly evolving entertainment landscape. For Paramount shareholders, it may offer a welcome opportunity to cash out.