Skydance seals $8 bn deal to take over Paramount, ending Redstone era

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.