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The entertainment giant Paramount will merge with Skydance, closing out a decades-long run by the Redstone family in Hollywood and injecting desperately needed cash into a legacy studio that has struggled to adapt to a shifting entertainment landscape.<\/p>\n
It also signals the rise of a new power player, David Ellison<\/a>, the founder of Skydance and son of billionaire Larry Ellison, the founder of the software company Oracle<\/a>.<\/p>\n Shari Redstone\u2019s National Amusements has owned more than three-quarters of Paramount\u2019s Class A voting shares through the estate of her late father,\u00a0Sumner Redstone<\/a>. She had battled to maintain control of the company that owns CBS, which is behind blockbuster films such as \u201cTop Gun\u201d and \u201cThe Godfather.\u201d<\/p>\n Just weeks after\u00a0turning down a similar agreement<\/a>\u00a0with Skydance, however, Redstone agreed to a deal on terms that had not changed much.<\/p>\n \u201cGiven the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king,\u201d said Redstone, who is chair of Paramount Global<\/a>.<\/p>\n The new combined company is valued at around $28 billion. In connection with the proposed transaction, which is expected to close in September 2025 pending regulatory approval, a consortium led by the Ellison family and RedBird Capital will be investing $8 billion.<\/p>\n Skydance, based in Santa Monica, California, has helped produce some major Paramount hits in recent years, including Tom Cruise films like \u201cTop Gun: Maverick\u201d and installments of the \u201cMission Impossible\u201d series.<\/p>\n Skydance was founded in 2010 by David Ellison and it quickly formed a production partnership with Paramount that same year. If the deal is approved, Ellison will become chairman and chief executive officer of what\u2019s being called New Paramount.<\/p>\n Ellison outlined the vision for New Paramount on a conference call about the transaction Monday. In addition to doubling down on core competencies, notably with a \u201ccreative first\u201d approach, he stressed that the company needs to transition into a \u201ctech hybrid\u201d to stay competitive in today\u2019s evolving media landscape.<\/p>\n \u201cYou\u2019ve watched some incredibly powerful technology companies move into the \u2026 media space and do so very successfully,\u201d Ellison said. He added that it was \u201cessential\u201d for New Paramount to chart a similar course going forward.<\/p>\n That includes plans to \u201crebuild\u201d the Paramount+ streaming service, Ellison noted \u2014 pointing to wider goals to expand direct-to-consumer business, such as increasing engagement time on the platform and reducing user churn. He also said that the company aims to transition to more cloud-based production and continue the use of generative artificial intelligence to boost efficiency.<\/p>\n Executives also outlined further restructuring plans for New Paramount on Monday\u2019s conference call, with chairman of RedBird Sports and Media Jeff Shell<\/a> noting that they had identified some $2 billion in cost efficiencies and synergies that they\u2019ll \u201cattempt to deliver pretty rapidly.\u201d<\/p>\n Shell and others addressed the declining growth of linear TV. Flagship linear brands will continue to represent a big chunk of the company\u2019s operations, but learning how to run this portion of business differently will be key, he said.<\/p>\n The on-again, off-again merger arrives at tumultuous time for Paramount, which has struggled to find its footing for years and its cable business has been hemorrhaging. In an annual shareholder meeting in early June, the company also laid out a restructuring plan that included major cost cuts.<\/p>\n Leadership at Paramount was also volatile earlier this year after its\u00a0CEO Bob Bakish, following a number of disputes with Redstone, was replaced with an \u201coffice of the C.E.O,\u201d<\/a>\u00a0run by three executives. Four company directors were also replaced.<\/p>\n Paramount is one of Hollywood\u2019s oldest studios, dating back its founding in 1914 as a distributor. Throughout its rich history, Paramount has had a hand in releasing films \u2014 from \u201cSunset Boulevard\u201d and \u201cThe Godfather,\u201d to \u201cRaiders of the Lost Ark\u201d and \u201cTitanic.\u201d<\/p>\n The studio also distributed several early Marvel Cinematic Universe films, including \u201cIron Man\u201d and \u201cThor,\u201d before the Disney<\/a> acquisition. In addition to \u201cMission: Impossible\u201d and \u201cTop Gun,\u201d Paramount\u2019s current franchises include \u201cTransformers,\u201d \u201cStar Trek\u201d and \u201cJackass.\u201d<\/p>\n While Paramount has not topped the annual domestic box office charts for over a decade, the wild box office success of \u201cTop Gun: Maverick\u201d in 2022 (nearly $1.5 billion worldwide) was an important boon to both movie theaters and the industry\u2019s pandemic recovery.<\/p>\n Still, its theatrical output has declined somewhat in recent years. Last year it released only eight new movies and came in fifth place for overall box office at around $2 billion \u2014 behind Universal<\/a> (24 films), Disney (17 films), Warner Bros. and Sony<\/a>.<\/p>\n This year the release calendar is similarly modest, especially with the absence of \u201cMission: Impossible 8,\u201d which was pushed to 2025 amid the strikes. The studio has had some successes, with \u201cBob Marley: One Love\u201d and \u201cA Quiet Place: Day One,\u201d and still to come is Ridley Scott\u2019s \u201cGladiator\u201d sequel.<\/p>\n The National Association of Theatre Owners, a trade organization that represents over 35,000 screens in the U.S., said in a statement Monday that it plans to look closely at the details of the merger with an eye towards whether it will produce more or less theatrical releases.<\/p>\n \u201cWe are encouraged by the commitment that David Ellison and the Skydance Media team have shown to theatrical exhibition in the past,\u201d said Michael O\u2019Leary, president and CEO of the National Association of Theatre Owners. \u201cA merger that results in fewer movies being produced will not only hurt consumers and result in less revenue, but negatively impact people who work in all sectors of this great industry \u2013 creative, distribution and exhibition.\u201d<\/p>\n Sumner Redstone<\/a>\u00a0used National Amusements, his family\u2019s movie theater chain, to build a vast media empire that included CBS and Viacom, which have merged and separated a number of times over the years. Most recently, the companies re-joined forces in 2019, undoing the split consummated in 2006. The company, ViacomCBS, changed its name to Paramount Global in 2022.<\/p>\n Under Sumner Redstone\u2019s leadership, Viacom became one of the nation\u2019s media titans, home to pay TV channels MTV and Comedy Central and movie studio Paramount Pictures.<\/p>\n It is a company with a rich history, as well as a deep bank of media assets, and Skydance wasn\u2019t the only one to gun for Paramount in recent months \u2014 Apollo Global Management<\/a> and Sony Pictures also made competing offers.<\/p>\n Late last year, Warner Bros. Discovery<\/a> also made headlines for exploring a potential merger with Paramount. But by February, Warner had\u00a0reportedly<\/a>\u00a0halted those talks.<\/p>\n<\/div>\n