If you designed a company from scratch with no goals other than to confuse people and make them fight each other, you’d structure your business a lot like Paramount Global. The legacy media company with the huge film studio is a publicly traded business worth around $8 billion right now. Most of Paramount is owned by financial institutions and regular shareholders who trade stock from their kitchen tables. But it is controlled by Shari Redstone, the daughter of the media mogul who bought it in the 1990s. There are two classes of shares, and via a holding company, Redstone has 77 percent of the voting shares through her holding firm National Amusements.
This dynamic becomes a big problem if, for example, the company should fall into disrepair and go looking for a deal. Paramount’s stock has mostly been losing value for years. In March, a rating agency assessed its debt as “junk,” making the company an even more obvious deal target. Its first-quarter net losses were $563 million. Redstone ousted CEO Bob Bakish at the end of April and replaced him with a trio of caretaker CEOs. Paramount has been a company ripe to get sold off, but how? What should Redstone’s extra-fancy shares be worth? What do the other shareholders get?
After months of speculation, Paramount finally has a deal. The buyer is Skydance Media, the production company founded by Oracle billionaire Larry Ellison’s son, David, who will take control of National Amusements, and thus Paramount, and combine Skydance and Paramount. The younger Ellison has vast sums of family money and the backing of private equity firms RedBird Capital and KKR. Redstone will get $1.75 billion, a healthy chunk of change for her limited ownership of a company worth only $8 billion. The lesser shareholders will have the option to take $15 in cash per noncontrolling share. Paramount hopes that’s cool with them, given that their stock trades for about $11 right now. This slow-motion corporate saga, which has had many stops and starts, ends with Ellison replacing Redstone as the rich kid at the heart of an iconic brand. (At least as long as Paramount doesn’t find a better deal in the next 45 days, triggering more chaos.)
Usually, a private-equity takeover of one of the most established brands in media would not be cause for relief. But Skydance’s getting Paramount is an unusual circumstance. Paramount was plummeting into the abyss. Four paths have revealed themselves at different points over the past few months. One, the company could continue its spiral and hope to somehow stanch the bleeding later. Two, it could come to an arrangement with Ellison. Three, it could go to a partnership between Sony Entertainment and another faceless financial giant, Apollo Global Management. Or, four, it could land with other investors who might strip it for parts. The deal Paramount got is likely to be the best outcome for those who aren’t Paramount shareholders but would like American entertainment to stay entertaining.
Not being a Paramount shareholder is very good. The company has done badly, and the Skydance deal is best summed up as being utterly fantastic for Redstone and, ehhh, maybe fine for everyone else. The lawsuits are definitely coming, and who will pay to defend them had been a negotiation sticking point. But another reason it’s nice not to own Paramount stock is that it frees up a person to not care about shareholder value and focus instead on something more relatable: What is going to happen to Paramount’s movie studio, which made The Godfather and Titanic and Forrest Gump?
On that key question, the Skydance deal averts a bad scenario. Hollywood used to have as many as eight major film studios, along with a bunch of smaller production companies that have gradually gotten rolled up by the big guys. When Disney bought most of Fox’s media catalog in 2019, it absorbed 20th Century Fox and brought the count down to five major film studios. That deal went through over the vociferous objections of the Writers Guild of America, which worried about the market power of a combined Disney-Fox. (Along with many Slate writers, I am a WGA member, though I work in neither film nor TV.) But the Trump administration didn’t stop the deal. Now there’s one fewer bidder for good movie ideas and scripts and one fewer studio that might take a crack at a movie that isn’t the seventh installment of a franchise.
The Sony-Apollo bid ostensibly would’ve done more of that, putting Sony and Paramount under the same umbrella and leaving only Warner Bros., Disney, and Universal as competitors of similar scope. Although the involved companies surely have many fine attorneys who would have made the case that the move wasn’t an enormous antitrust breach, it’s unclear why anyone else should’ve been happy about it—least of all the monopoly hawks who currently populate the Justice Department and Federal Trade Commission.
Remember, it was Paramount that tried to shrink the Big Five book publishers into a Big Four in a blocked effort to sell Simon & Schuster to Penguin Random House not even two years ago. The feds’ theory of that case was that more consolidation among the biggest handful of players in book publishing would hurt authors’ bargaining power and consumers’ range of books to read. Then, as now, private equity (and specifically KKR) wound up with the company. Publishing industry workers are still feeling it out. These days, their film industry counterparts have reason to be awkwardly glad that private equity has swooped in.
That doesn’t mean all will be well. David Ellison may or may not be a responsible steward of the company. He may or may not be committed in his bones to breathing new life into Paramount and maintaining its status as a producer of huge movies no matter the cost. Skydance’s work on various Tom Cruise blockbusters, including Top Gun: Maverick, suggests that the Skydance people may indeed be cinephiles. But Ellison’s financial backers don’t like losing money, and Paramount has a million problems even now that its ownership future has been clarified. The arrival of a new leadership team won’t change that Paramount owns a bunch of cable TV channels (like MTV, BET, and Nickelodeon) as cable fades or that it loses hundreds of millions of dollars every quarter on streaming. Ellison’s plans are a bit murky. “The first thing we need to do is to double down on the core competency of storytelling across mediums,” he says. OK, then!
It demonstrates nothing good about the state of American art that the best hope for a legacy studio is that its acquirer has so much money that he won’t let it fail or that his private equity partners won’t find innovative ways to shred the company. It would be hopelessly naïve to believe that Paramount will thrive because its new owner loves movies and has a dad with his own Hawaiian island. But feeling calm over this outcome requires only a belief that five big studios in the movie business are more than four.