New chapter
It’s finally happening. More than a year after agreeing to a merger, Paramount Global (PARA) has finally gotten the necessary clearance to combine with David Ellison’s Skydance Media. The hope here is to resurrect a Hollywood icon that has shed much of its market value, which had also been sought after by Sony Pictures (SONY), Apollo (APO) and IAC Chair Barry Diller. PARA +2.5% premarket.
Snapshot: It’s been a tough environment out there for legacy media. Streaming giants like Netflix (NFLX), Amazon (AMZN) and Disney (DIS) have upended the production and distribution landscapes, while YouTube (GOOGL), Instagram (META) and TikTok (BDNCE) have also captured much of the screentime of the next generation. The new merger is aimed at competing in this “rapidly changing environment,” with a “clear strategic vision and the resources to take it to its next stage of growth.”
The upcoming $8.4B tie-up will bring together old and new Hollywood, with the end of the road for the Redstone dynasty and the rise of the Ellison era after big hits like Top Gun: Maverick and Reacher. Paramount and Skydance have even worked together in the past, co-producing films in the Terminator, Transformers, and Mission: Impossible franchises. Once the deal closes, Ellison will become CEO of the new Paramount, while former NBCUniversal CEO Jeff Shell (who works at Skydance investor RedBird Capital) will run the day-to-day as president.
The optics? The last step to secure the combination was approval from the Federal Communications Commission. Clearance dragged on for more than 250 days, and the green light only happened after Paramount (PARA), the owner of CBS, agreed to a $16M settlement with President Trump (Stephen Colbert’s show was subsequently canceled). FCC Chair Brendan Carr also required that Skydance make commitments on “programming from across the political and ideological spectrum” and measures that can “root out bias,” as well as promises of “fair, unbiased and fact-based” reporting at CBS, and not to establish “diversity, equity and inclusion policies” at New Paramount.
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