Paramount Global, one of the world’s oldest entertainment companies, agreed in July to merge with Skydance—a smaller, newer and more tech-oriented media company.
With the acquisition, century-old Paramount gets a younger owner, much-needed cash and most likely a profitable streaming service.
Hold on and rewind. Is this not something that was already announced? Headlines of a potential deal have gone on for months with fits and starts in a Succession-style saga. David Ellison, the son of software giant Oracle, Larry Ellison, emerged as the auction winner.
Ellison’s relatively small media empire, Skydance, is famous for several Tom Cruise movies. The firm, with its partners, will buy National Amusement for $2.4 billion cash. With National Amusement will come its much-prized controlling stake in Paramount Global.
In the second step of the deal, Skydance will merge with Paramount, offering $4.5 billion in cash or stock to shareholders and providing an extra $1.5 billion to its balance sheet. For the Ellison family, this sets David up to become one of the most influential executives in the industry.
But the deal is much more than yet another passage of hands for a blazoned media company. Paramount Global has controlling stakes in CBS, Nickelodeon, MTV, and of course in Paramount Pictures. Its library of more than 1,000 movies includes blockbusters and Oscar winners such as “The Godfather,” “Titanic” and “Forrest Gump.”
Yet, Paramount continues to falter at the box office and struggles to adapt to the streaming era.
The challenge will be for David Ellison to make Paramount profitable again, above and beyond the already announced cost-cutting plans and sales of non-core assets.
In an interview with the Financial Times, Ellison admitted that Paramount needs to move fast to adapt to the technological shifts that are disrupting Hollywood. “We recognize the transition that the broader industry is going through,” said Ellison. “In order to effectively navigate this transition, what is required for Paramount as a pure-play media company is to transition to becoming a media and technology company.” Paramount, however, is still in a “go shop” period, allowing other bidders such as Apollo, Warner Bros. or IAC chair Barry Diller to attempt a better offer.
