Hollywood has been struggling for years
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With the billion-dollar acquisition of Skydance, a new era dawns for Paramount. Back and forth, the upcoming production company and the traditional Hollywood studio announced their merger on Sunday evening (local time).
As part of the deal, Skydance, the film and TV producer that, among other things, brought out the latest “Mission: Impossible” movie with Tom Cruise, is taking over National Amusements for $2.4 billion in cash. The investment firm holds a majority vote in Paramount. The entertainment group’s remaining shareholders, which include loss-making streaming service Paramount+, received $4.5 billion in cash or stock.
In a presentation to investors, Paramount estimated savings from the merger at $2 billion, half of which would be realized within the first year of the transaction. Restructuring and consolidation costs totaled $1.6 billion.
For Paramount, the merger marked the end of the Redstone era. The late journalist Sumner Redstone built a chain of drive-in theaters into an entertainment conglomerate that, in addition to Paramount, also owns the TV channels CBS, MTV and Comedy Central. “As the industry changes, we want to prepare Paramount for the future while ensuring content is at the forefront,” said National Amusements president Shari Redstone, citing her father Sumner.
Shari Redstone unexpectedly broke off merger talks a few weeks ago, after which Skydance upgraded its offer to National Entertainment. At the same time, rumors swirled about other potential bidders for the Paramount franchise. A merger of Paramount+ with a competitor in the competitive streaming market has also been discussed. The current deal gives Paramount 45 days to find a buyer with a better offer.
Skydance founder David Ellison, son of Oracle co-founder Larry Ellison, will head the combined company. In the future, he will lead a heavily indebted company as revenue from Paramount’s traditional television business disappears faster than it can be absorbed by its promising streaming division. “We are committed to revitalizing the company and strengthening Paramount with cutting-edge technology, new leadership and creative discipline,” Skydance said.
That’s what investors are looking for, said Russ Molt, a financial market expert at brokerage AJ Bell. After all, Paramount’s stock price has been disappointing in recent months. Since spring 2023, the bond’s value has more than halved. On Monday, stocks on Wall Street fell more than five percent, giving up some of their gains from last week.
