David Ellison began his pursuit of Paramount World last winter — nearly 30 years after Sumner Redstone and Barry Diller began their long M&A battle for control of one of Hollywood’s founding studios.
An era 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 similarly long and arduous negotiations with Shari Redstone’s Nationwide Amusements Inc. So, assuming the $8 billion transaction goes through, what do they plan to do with the prize?
The new management team, which includes Ellison as chairman-CEO of the merged company and former NBCUniversal CEO Jeff Shell as president, tried to answer that question as it circulated among analysts and reporters after the sale deal closed on July 7. Ellison, 41, drew on his roots as a tech scion to explain how he sees the business challenges ahead.
RELATED CONTENT: Can He Save Paramount? Hollywood Faces a Tough Look at David Ellison’s Mogul Ambitions
“We see this timeframe as being very similar to the transitions that mainstream technology companies have gone through, such as Microsoft and Oracle, where they disrupted their own businesses (only to later) go on to have historic successes,” he said. “And that’s very much where we are at this particular moment in mainstream media. It will be this confluence of art, in the beginning, working hand-in-hand with technology, that will allow Paramount to transition into its brightest days ahead.”
If Ellison sees his deal through, the responsibility for reviving Paramount’s long-term fortunes — succeeding where others have failed — will fall to him. The deal makes a statement about his ambition, a decade and a half after he launched Skydance Media. At that point, the company expanded from financing and producing films with Paramount to producing television, video games and animation.
Ellison’s maneuvers may have many eyes on them. The media industry faces a variety of existential challenges, from audience fragmentation to unstable ad revenue streams to the lure of YouTube influencers. The thought on everyone’s lips these days is “If you can do a better job than me, I’d rather see you struggle.”
Many did, and were found wanting. Upstart media entrepreneurs like Vice’s Shane Smith and Buzzfeed’s Jonah Peretti eventually found themselves unable to prevail in a battle to outdo the mainstream media. Candle Media, the Blackstone-backed group led by former Disney executives Kevin Mayer and Tom Staggs, struggled with debt after snapping up flashy Hollywood assets like Reese Witherspoon’s Good Day Sunshine and the children’s media channel Moonbug Entertainment.
Now Ellison has to show that he could make the transition from a newcomer to managing legacy media issues. And he has to show tangible results from his goal of marrying new technologies and improvements with Paramount’s content creation operations.
The climb ahead is steep by any measure.
“We expect the combined company to have leading alternatives for content production and distribution, but the challenges of competing in today’s disruptive film and entertainment marketplace remain,” Kenneth Leon, director of equity research at CFRA Analysis, wrote after Skydance revealed its plans to investors. CFRA downgraded its rating on Paramount stock to “hold” from “buy.”
The plans outlined by Paramount’s likely new management trio in the first round of formal interviews did not include any groundbreaking initiatives — which is understandable, given that the deal will likely face more than a year of regulatory review.
Impairment? Check. Reviewing the strategy behind struggling streamer Paramount+? Sure. Seeking sales of non-core operating assets? Absolutely. However, these are all initiatives being undertaken by Paramount’s current management.
If Ellison, Shell and Cardinale have radical new concepts, they are keeping them close to the vest. Within the short time frame, the group faces an uphill battle of securing approvals for the transaction from the Department of Justice and the Federal Communications Commission. And the deal includes a 45-day window during which Paramount World can consider different offers.
“It ain’t over ’til it’s over,” says Mario Gabelli, president and CEO of Gamco Traders and a distinguished Paramount shareholder. However, he gives his thumbs up to what he’s heard from Staff Ellison thus far.
“I’m very impressed with what they’ve mentioned,” says Gabelli, who adds that he expects Paramount to look for synergies in content production and global distribution, as well as potential streaming joint ventures.
Ellison’s vision for Paramount is to increase its digital acumen.
“There are a lot of technology companies that are rapidly transforming into media companies, and we think it’s important for Paramount to have the ability to grow its technology capabilities,” Ellison said.
However, most of the plans articulated so far involve Skydance locking content into Paramount’s current verticals. Skydance Animation could help Nickelodeon, he argued, while the company’s expansion into sports documentaries is perhaps a boon for CBS Sports.
Ultimately, Shell may have a responsibility to translate Ellison’s imaginative and prescient vision into reality. He mentioned that about $2 billion in costs could come out of the company’s linear TV operations, which he believes still have a long life ahead of them.
“I personally assume that the linear enterprise” can be robust for years to come, he said. “We don’t assume it’s going to get worse, but we also don’t assume it’s going to get better.” He was blunt about CBS facing stricter price controls.
“We’ll probably approach it a little bit more aggressively for cash movement, which means doing some more durable selections in time durations… which is what you need to do when you have a declining business,” Shell said.
Skydance says it can scale the mountain of leisure. But all of Hollywood is aware of how rocky the climb can be.
When will the deal close?
Skydance’s forecast is for September 2025, until another competitor appears with a higher-offering corporate partner for the streamer.
What’s next for Paramount+?
Skydance staff endorsed efforts of current Paramount regime
to discover a three-way partnership partner for the streamer
Will CBS be put on the market?
Skydance leaders say they intend to keep the company largely intact, but efforts to sell smaller assets such as BET Networks and global platforms are underway.
Will the new owners of the house sell the Paramount studio land?
There is no official phrase that encompasses both approaches, but that does not seem to be a priority at this time.