David Ellison started his pursuit of Paramount Global last winter — 30 years nearly to the month after Sumner Redstone and Barry Diller began their long M&A fight for control of one of Hollywood’s foundational studios.
A generation later, Ellison’s Skydance Media and Gerry Cardinale’s RedBird Capital are poised to add a new chapter to the history of Paramount, CBS and more, after an equally protracted and hard-fought negotiations with Shari Redstone’s National Amusements Inc. So, assuming the $8 billion transaction is completed, what do they plan to do with their prize?
The new leadership team, which includes Ellison as chairman-CEO of the merged company and former NBCUniversal CEO Jeff Shell as president, sought to answer that question as it made the rounds with analysts and reporters after clinching the sale agreement on July 7. Ellison, 41, leaned on his roots as a scion of the tech sector to explain how he sees the business challenges ahead.
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“We view this time period as being pretty similar to some of the transitions that some of the traditional tech companies went through, such as Microsoft and Oracle, where they disrupted their own businesses [only to later] have all-time highs,” he said. “And that’s very much how we’re looking at this particular moment in traditional media. It’s going to be that confluence of art, first and foremost, working hand in hand with technology, that is going to enable Paramount to transition to its brightest days ahead.”
If Ellison gets his deal to the finish line, the responsibility for reviving Paramount’s long-term fortunes — to succeed where others have failed — will land at his feet. The deal makes a statement about his ambition, a decade and a half after he launched Skydance Media. In that time, the company has expanded from financing and moviemaking with Paramount to TV production, video games and animation.
Ellison’s maneuvers will have many eyes upon them. The media sector faces any number of existential challenges ranging from fragmenting audiences to shaky flows of ad revenue to the pull of YouTube influencers. The thought on everyone’s lips these days is “If you can do a better job than I can, I’d like to see you try.”
Many have, and been found wanting. Upstart media entrepreneurs like Vice’s Shane Smith and Buzzfeed’s Jonah Peretti ultimately found themselves unable to last in a battle to out-do traditional media. Candle Media, the Blackstone-backed group led by former Disney executives Kevin Mayer and Tom Staggs, has grappled with debt after snapping up glitzy Hollywood assets like Reese Witherspoon’s Hello Sunshine and the kids-media outlet Moonbug Entertainment.
Now Ellison has to show that he can make the move from being an upstart to managing legacy media headaches. And he has to demonstrate tangible results from his goal of marrying new technologies and innovations with Paramount’s content-creation operations.
The climb ahead is steep by any measure.
“We think the new company has major opportunities for content production and distribution, but the challenges of competing in today’s disruptive movies and entertainment industry remain,” wrote Kenneth Leon, director of equity research at CFRA Research, after Skydance unveiled its plans to investors. CFRA downgraded its rating on Paramount stock to “hold” from “buy.”
The plans outlined by Paramount’s presumptive new leadership trio in the first round of formal interviews didn’t include any head-turning moves — perhaps understandable given that the deal faces possibly more than a year of regulatory review.
Cost cutting? Check. Overhauling the strategy behind struggling streamer Paramount+? Yes. Pursuing asset sales of non-core operations? For sure. But these are all initiatives being undertaken by Paramount’s current managers.
If Ellison, Shell and Cardinale have radical new ideas, they’re holding them close to the vest. In the short term, the group faces an arduous road of securing approvals for the transaction from the Justice Department and the Federal Communications Commission. And the deal includes a 45-day period during which Paramount Global can field other offers.
“It ain’t over till it’s over,” says Mario Gabelli, chairman and CEO of Gamco Investors and a prominent shareholder in Paramount. But he gives his thumbs-up to what he’s heard from Team Ellison so far.
“I’m very impressed with what they said,” says Gabelli, who adds that he expects Paramount to pursue synergies in content production and global distribution as well as potential streaming joint ventures.
Ellison’s stated vision for Paramount includes boosting its digital acumen.
“There are a lot of technology companies that are rapidly expanding into media companies, and we believe it is essential for Paramount to be able to expand its technological prowess,” Ellison said.
Still, the bulk of the plans articulated to date involve bolting Skydance content onto existing Paramount verticals. Skydance Animation could help Nickelodeon, he argued, while the company’s expansion into sports documentaries might be a benefit to CBS Sports.
Ultimately, Shell will have the task of translating Ellison’s vision into reality. He has said that some $2 billion in costs can come out of the company’s linear TV operations, which he thinks still have a long life ahead of them.
“I personally think the linear business” will be strong for years to come, he said. “We don’t think it’s going to worsen, but we don’t think it’s going to get better either.” He was blunt about CBS confronting tighter cost controls.
“We’re going to probably manage it a bit more aggressively for cash flow, meaning making some harder decisions on time periods … which you have to do when you have a declining business,” Shell said.
Skydance says its ready to scale the mountain of entertainment. Yet all of Hollywood knows how rocky the climb can be.
Burning Questions
When will the deal close?
Skydance predicts by September 2025, unless another bidder swoops in with a better offer venture partner for the streamer.
What’s next for Paramount+?
Team Skydance has endorsed the current Paramount regime’s efforts
to find a joint venture partner for the streamer
Will CBS be put up for sale?
Skydance leaders say they intend to keep the company largely intact, but sale efforts for smaller assets such as BET Networks and international platforms are in the works.
Will the new owners sell the Paramount studio lot?
There’s no official word either way, but it doesn’t seem to be a front-burner priority at this stage.
