Skydance Paramount Merger: All You Need to Know
Following months of negotiations, Paramount, the American multinational entertainment conglomerate, has agreed to a merger with Skydance Media, an American production company founded by David Ellison.
The newly merged company is valued at approximately $28billion after much discussion and many proposed agreements.
David Ellison will lead both Skydance and Paramount as the CEO of the new combined company. Jeff Shell, the former CEO of NBCUniversal, will serve as president of what he has described as “the new Paramount” – more on him to come.
The merger is still subject to regulatory approval, but is expected to close in September 2025. Expect to see the so-called New Face of Paramount in the coming years.
Background
The merger has been in discussion for a very long time but was only formally announced on the 7th of July 2024 when Skydance declared its intent to acquire Paramount’s shareholder National Amusements with an $8billion transaction in order to perform an all-stock merger.
Tencent, a Chinese multinational technology conglomerate, bought a 5-10 % minority stake in Skydance in January 2018, which may signify the growth of an interesting non-American influence in Hollywood.
What Does the Merger Mean
The merger combines Paramount, known for classic films like Chinatown and Breakfast at Tiffany’s, with Skydance, which has been its financial partner on recent successes Top Gun: Maverick and Mission Impossible: Dead Reckoning, to name a few.
This is certainly not the first time we have seen a big merger in the film industry – the recent one between Disney and Fox is perhaps the most pertinent example – but it is widely believed that this merger will allow Paramount to continue as a film studio. A proposal from Sony, a long-term partner of Paramount, was rejected on the grounds that they would dissolve the company into the wider Sony Pictures banner.
The Terms of the Deal
The terms of the merger state that David Ellison will remain as both CEO and chairman, taking on the role at the head of the new combined company made up of Skydance and the New Paramount. It is also reported that Jeff Shell will be serving as president, but other than that there is not much guidance on the leadership of the new company.
It was disclosed that this merger will produce $2billion in run-rate savings with an expected rise of 2% in revenues by 2027, according to current predictions. As per regulations, the deal also allows Paramount 45 days to potentially find a better offer, in which case the company would have to pay a $400million break-up fee.
Positives for Films Fans
As highlighted by Shell in one of his statements, something key that is coming out of this merger is the leadership of the new combined studio, which will be headlined by a creative executive, something that seems to be largely missing in the big Hollywood studios of the 21st century.
Moreover, Paramount Plus, the flagship streaming platform of Paramount Studios, is still struggling to generate profits. The new approach to business brought about by Skydance might bring about a new model for the revenue system of both the studio and streaming platform as the new CEO is determined to change the approach to Paramount Plus while maintaining the streaming platform.
Negative for Film Fans
According to declarations from Ellison and Shell, the so-called New Paramount will be positioned as a new tech hybrid, “able to transition to meet demands of the evolving marketplace.” While this is not inherently bad news, it might mean that Paramount’s focus on cinema could suffer.
It is too early to speculate on what the merger may look like in the future but the deal also puts an end to the Redstone era at Paramount as the Redstone family had been in charge of the studio for many years and transformed the family’s drive-in movie theatre chain into the entertainment company audiences now know and love.
It is widely believed that $2billion of savings in operation costs will come at the cost of employees.
Previous Potential Buyers
Although the merger ultimately went ahead between Skydance and Paramount, it was not only Skydance Media that was interested in a merger with Paramount.
Reportedly, there were competing offers from Apollo Global Management, a leading provider of alternative asset management and retirement solutions, and Sony Pictures, another big player in the entertainment industry.
In early May, both companies expressed their interest in a merger with Paramount for around $26billion. A merger between Paramount and Sony could have been particularly interesting as Sony and Paramount are two very important companies in today’s film industry.
Sexual Misconduct Allegations
Jeff Shell will play a big role in the future of the recently combined Paramount and Skydance.
Shell served as the CEO of NBCUniversal from January 2020, when he first assumed the role, until the end of April 2023. The circumstances around Shell leaving his previous workplace are worth noting, especially now that he is about to obtain another high-profile role in the industry.
He was fired from NBCUniversal as a result of an investigation into sexual harassment as a female employee had previously filed a complaint against him. The complaint was later corroborated by the law firm Gibson Dunn after reviewing email communication between Shell and the woman he was alleged to have been having an extramarital affair with.
Shell was dismissed from his workplace and did not receive any severance pay.
The Future of Paramount
Skydance have proven to be enthusiastic about the future of Paramount’s streaming platform Paramount Plus. As such, we can expect Paramount Plus to survive the merger. According to recent reports, Skydance is interested in looking at the content available on Paramount Plus, and how much money it is generating, in order to explore new partnerships as well as rebuild the tech stack to power Paramount’s streaming services.
Similarly, Paramount will be kept on as a studio, something that might have not been possible if Sony – or any of the other potential buyers – had proceeded with acquiring Paramount according to various investors.
Source: Paramount
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