Paramount Global’s new owners David Ellison and Jeff Shell laid out their vision on Monday to turn the company from a struggling media conglomerate into a technological leader in the entertainment space.
On a conference call with investors, the pair said they would “rebuild” the Paramount+ platform to increase time spent, offer subscribers improved recommendations and reduce churn.
They also plan to utilize artificial intelligence to “turbocharge content creation capabilities” and lower costs, leverage Skydance Media and Paramount’s combined portfolio of animation and sports content and to explore potential partnerships and content licensing opportunities. And they made clear that asset sales are still on the table.
The Skydance executives emphasized that the industry is going to turn to bundles to solve streaming’s inherent problems with churn and lack of profitability. And they are already evaluating direct-to-consumer partnerships with one or more players.
“We want to make this company the leader in entertainment, and that goes for DTC too,” Shell said. “So we will be evaluating all options to be a winner in DTC, and to be a winner in DTC really means being in the ultimate bundle that’s coming…If you’re in that bundle you’re going to win, and if you’re not in that bundle you’re in real trouble.”
The executives, who would serve as CEO and president of the new company, respectively, said they have identified $2 billion in cost efficiencies and synergies as they look to manage Paramount’s declining linear business. Paramount is expected to reach $3.4 billion in adjusted operating income before depreciation and amortization (OIBDA) and produce $2.8 billion of revenue in 2025. In 2026, it expects $4.1 billion in adjusted OIBDA, $2.5 billion of revenue and a return to investment grade status with all credit rating agencies. They’re also looking to de-leverage from approximately 4.3 times to 2.4 times by 2027 and produce $4.5 billion in adjusted operating income and $33.5 billion in revenue that year.
“The key thesis behind this transaction is our desire to inject Skydance as a pure play content company, to double down on Paramount’s prowess as one of the world class storytelling enterprises and also ensure the company is positioned to be able to expand into a tech hybrid to be able to transition to meet the demands and needs of the evolving marketplace,” Ellison said.
Ellison and Shell’s remarks came after Skydance Media reached an $8 billion cash and stock deal to merge with Paramount and acquire Shari Redstone’s National Amusements, which controlled about 77% of Paramount’s Class A voting stock.
The deal is backed by RedBird Capital Partners and the Ellison family, and includes $2.4 billion for NAI, $4.5 billion for non-NAI shareholders in Paramount and an additional $1.5 billion in new capital to help pay down debt and recapitalize the company’s balance sheet.
During the call, the Skydance executives also stressed their numerous creative partnerships with Paramount.
“It’s been a long time since a creative executive ran one of the big Hollywood companies,” Shell said. “And I think it’s really important when creative is at the core, working with artists is the core of our business, to have somebody like David running the business.”
Under terms of the agreement, new Paramount will have an enterprise value of $28 billion. Skydance is being valued at $4.75 billion, with its equity holders receiving 317 million newly issued Class B shares valued at $15 per share. Paramount’s Class A shareholders will receive $23 per share.
Skydance’s consortium of investors will own 100% of new Paramount’s Class A shares and 69% of outstanding Class B shares, or about 70% of the pro forma shares outstanding. Paramount’s non-NAI Class B shareholders will receive a 48% premium to the price of the stock as of July 1, while Class A shares will receive a 28% premium.
The door is not shut for a possible bidding war but it would come at a steep price. The deal includes a 45-day go shop provision that allows the Paramount board of directors’ independent special committee to actively solicit and evaluate alternative acquisition proposals. In the event of a superior proposal, Paramount would pay Skydance a $400 million breakup fee.
The Skydance-Paramount transaction is expected to close in the third quarter of 2025, subject to regulatory approval and other customary closing conditions.
In the meantime, Paramount is being run by its new co-CEOs Brian Robbins, George Cheeks and Chris McCarthy, who replaced longtime CEO Bob Bakish in April. The trio unveiled a long-term strategy last month that includes streaming partnerships, divesting assets and $500 million in cost cuts in areas including legal and corporate marketing.
Ellison and Shell said the $500 million would be included in the overall $3.4 billion EBITDA figure for 2025.
At an employee town hall last week, the executives said they’ve hired bankers to help with asset sales and were advancing talks with potential partners in international markets that will “significantly transform the scale and economics” of its streaming business, which is currently on track to reach domestic profitability in 2025.
When asked, Shell confirmed that Paramount’s new owners were still interested in selling some of Paramount’s assets.
“There are assets which we think are not strategic to where we’re going, that if we were to get a buyer to pay a price that we thought was compelling, we would absolutely do that,” Shell said.
Paramount, which has $14.6 billion in debt and a market capitalization of $7.87 billion, saw its shares fall nearly 6% during Monday’s trading session following the announcement, though it had recovered by less than a 3% drop by 11 am EST. The stock is down 23% in the past six months, 30% in the past year and 78% in the past five years.
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