Skydance Takes Over Paramount, and a New Era Begins
The merger catapults new power players to the top of Hollywood and ends a tortuous process that has lasted well over a year.
For the last decade, Paramount has been outgunned in the streaming wars, trying to keep up as tens of millions of people migrated from movie theaters and cable television and toward on-demand entertainment via the internet.
Now the company, which owns CBS, Comedy Central, MTV and the movie studio behind “The Godfather” and “Top Gun,” will finally get much-needed reinforcements.
The $8 billion merger of Paramount and the media company Skydance closed early Thursday morning, catapulting new power players to the top of Hollywood and ending a tortuous process that had lasted well over a year. Gone are the Redstones, whose family controlled CBS and Paramount Pictures for decades. In are the Ellisons. Skydance is controlled by David Ellison, a movie producer and the founder of the company who is the son of Larry Ellison, the tech titan and one of the world’s richest men.
The new owners give Paramount stronger financial wherewithal, and have ushered in set of new executives to call the shots. The result, if Skydance has its way, will be a reinvigorated competitor in an entertainment landscape that has mostly settled into place — Netflix and YouTube at the top, Disney and Amazon in the second tier, and everybody else scrambling for steady profitability, relevance or survival.
It could also usher in a new period of deal making, including future corporate mergers or streaming bundles.
The challenges, however, for the newly combined company, officially called Paramount, a Skydance Corporation, are significant. Paramount derives much of its revenue from its cable networks, which are in free fall. The company’s new leaders have already said they want to find $2 billion in cost savings, a considerable challenge given that the company has gone through numerous rounds of job cuts and budget reductions. And the coming disruption from artificial intelligence raises a new series of challenges.
There is also a morale issue. Last month, Paramount agreed to pay President Trump $16 million to settle a lawsuit over an interview on “60 Minutes,” sending many CBS News employees reeling. And there are still lingering questions about whether the recent decision to cancel “The Late Show With Stephen Colbert” was inspired by political considerations, not just financial reasons as the company has insisted. Some of Paramount’s key talent, like the “Daily Show” host Jon Stewart and the creators of “South Park,” have publicly derided many of the moves made during the closing process.
Still, much of the entertainment industry is breathing a sigh of relief that the merger is finished. Paramount will remain a stand-alone studio, and the Ellisons could potentially offer the promise of greater investment in a period when production has slowed sharply and the Peak TV era is long gone.
The changing of the guard at the company mirrors many of the changes in the media world over the last decade. The Redstone family built its fortune from brick-and-mortar movie theaters and cable television, and has been badly battered by the shift to digital technologies that Larry Ellison helped usher in.
The younger Mr. Ellison, 42, has vowed to bring digital know-how to the company, promising that “technology will transform every single aspect of this company.” His supporters strongly agree.
“David’s a really good executive who knows how to handle talent, and knows how to weave together culture and technology to create a great company,” said Ari Emanuel, a Hollywood power broker and the executive chairman of the WME Group, who has done business with Mr. Ellison. “He’s definitely going to make it better than it was.”
Mr. Ellison has brought along a group of seasoned media executives, some of whom are scheduled to meet with the news media early Thursday afternoon. Jeff Shell, a former chief executive of NBCUniversal, is the president of the new company. Cindy Holland, one of the key architects of Netflix’s content strategy, will take over the streaming division. And George Cheeks, a departing co-chief executive of Paramount, will stay on as chair of the company’s television business.
There are also many notable departures. Chris McCarthy, Paramount’s top cable executive, has left the company, and Brian Robbins, who oversaw Paramount Pictures and Nickelodeon, is gone as well. Shari Redstone, the controlling shareholder of Paramount in recent years, turned down an offer to have a seat on the company’s board and is stepping away from the company entirely.
Ms. Redstone fought hard to keep intact the media company that her father, Sumner, built, and the considerable resources of the Ellisons were a major reason she chose them to take over. Just last week, in her final earnings call with investors, Ms. Redstone invoked her father’s catchphrase — “content is king” — and implored her successors to embrace that longtime “core business philosophy.”
“That is a reality that Skydance surely understands,” she said. “I am confident that with their vision for the business and the technology and resources they can bring to bear, they can build on Paramount‘s legacy and position it for long-term success.”
Still, investors and the media industry have questions — many of them.
First and foremost: What will they do with its paid streaming service, Paramount+? The Paramount+ app has increased its subscriber count to 77 million, but that lags far behind Netflix, which has more than 300 million. The company said last week that its direct-to-consumer business, which includes Paramount+ and the Pluto TV free streaming service, generated $157 million of adjusted profit in the last quarter — a promising total, but still a fraction of the earnings from its faded TV business.
There are plenty of other questions, too: Will the new executives increase Paramount’s investment in content? Will they spin off or sell their rapidly declining cable assets? How will the company confront potential negotiations with the most-watched property in media, the National Football League? And how would CBS News, the vaunted home of Walter Cronkite, potentially mesh with The Free Press, a brash news site that has been an acquisition target for Skydance?
“There are a lot of existential strategic questions that still need to be answered here,” said Robert Fishman, a media analyst at MoffettNathanson. “They need to answer those sooner rather than later for investors to have an understanding as to the direction of the future of this company.”
John Koblin covers the television industry for The Times.
Benjamin Mullin reports for The Times on the major companies behind news and entertainment. Contact him securely on Signal at +1 530-961-3223 or at benjamin.mullin@nytimes.com.
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