Skydance Closes $8 Billion Paramount Deal, Creating “Next-Generation Media and Tech” Giant

Combining entertainment and technology in a new Hollywood giant is paramount for David Ellison. His Skydance Media has closed its takeover, unveiled in July 2024, of Paramount Global to form what the merger partners have called a “next-generation media and technology leader, positioned to win in today’s rapidly transforming media landscape.”

Ellison authored an open letter to shareholders, employees and creative partners, outlining in broad strokes his vision for the company.

That includes investing in growth areas, “anchored by our creative engines and superior storytelling,” and scaling the company’s direct-to-consumer business globally, as well as driving efficiencies.

Tech is a big part of the pitch, with Ellison touting a unified technology stock, merging Paramount+ and Pluto into one platform, and leveraging new technology to boost creatives. “We also want to empower our creative partners with technology that will enable them to tell bigger, more compelling stories fueled by human ingenuity,” Ellison writes.

And he listed “core commitments” to the company, promising consumers that Paramount would become the go-to-place for entertainment, news and sports, reassuring creative partners that it will “align rights, revenue and recognition,” and investors that it would operate in a cost-effective way. He added, however, that the company “will face some hard but necessary decisions to align our team for growth and efficiency.”

Ellison also sought to reassure CBS News staff, telling them that “we recognize it’s been a challenging period and we’re deeply grateful for your resilience, professionalism, and unwavering commitment to the news business. We take immense pride in CBS News’ legacy of impactful journalism and look forward to continuing to foster a newsroom culture where journalists are empowered, trusted, and equipped to do their best work.”

Animation, sports and games are among key drivers that can make the combined company a growth story, Ellison and his team have outlined before. Paramount brings the Paramount film and TV studios, Paramount+, CBS, and such cable channels as Nickelodeon, MTV and Comedy Central to Skydance.

Ellison is chairman and CEO of the new powerhouse, which is set to pursue previously unveiled plans for $2 billion in cost savings, as well as the benefits from a reworked streaming strategy and a core focus on being a creator-friendly entertainment juggernaut. Former NBCUniversal CEO Jeff Shell, who has been working at Gerry Cardinale’s RedBird Capital, will be running the company day-to-day as president alongside Andy Gordon, who will be COO.

The deal allowed Shari Redstone, who has controlled Paramount via the controlling stake held by her National Amusements since her father Sumner Redstone’s death in 2020, to cash out. Paramount co-CEOs Brian Robbins, George Cheeks and Chris McCarthy have been focusing on cost reductions and a healthy content pipeline in the run-up to the Skydance deal close.

“The transaction will strengthen Paramount and enhance its balance sheet flexibility, allowing the company to invest in new initiatives and deliver greater cash flow growth,” the deal partners said previously. “The transaction serves as a catalyst to re-imagine the company’s operating model, transform its technology platform, streamline its organization and accelerate other initiatives already underway. The overriding objective of the repositioned New Paramount platform and properties is to bring stability to the business, protect creative independence and to enable investment in growth initiatives.”

Wall Street analysts will be looking for updates on the company’s strategies for its streaming and linear TV businesses, among other things. “While investors wait for the company to secure its regulatory approval, all the same questions over Paramount’s future remain,” MoffettNathanson analyst Robert Fishman had highlighted in a report at the end of February.

“Starting with Paramount+, there remains the question as to whether it has the scale to sustain itself in the longer term,” the expert wrote. “Could either an outside partnership, which both management and Ellison have expressed openness to, or renewed investment change that?”

Ellison, in his letter, sought to reassure staff, who have been rocked by years of uncertainty.

“We are in the midst of a generational change in our industry—and we understand Paramount has faced its own significant challenges, compounded by the reality of a merger process that stretched out over a considerable time period,” Ellison wrote. But that time of uncertainty is now behind us. Moving forward, we will work with conviction and optimism to transform Paramount into a tech-forward company that blends the creative heart of Hollywood with the innovative spirit of Silicon Valley. By harnessing cutting-edge technologies to serve great storytelling, we will unlock the company’s enormous potential.”