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“Global” is in the name above the door, and industry observers are assessing the international ramifications of Skydance’s $8 billion investment in Paramount.
Paramount Global executives have said it will be business as usual until the deal closes, but international analysts are already speculating about what happens next, given the company’s core free-to-air TV operations in Argentina, Australia, Chile and the United Kingdom, cable networks around the world, FAST service Pluto TV and local iterations of Paramount+.
Not to mention SkyShowtime, a joint venture streamer operated with Comcast, and a long-established program sales business that offers shows like NCIS And CSI franchises around the world.
Acquisitions naturally raise concerns among employees. The presentation that followed the announcement touted more than $2 billion in “efficiencies.” Skydance, however, doesn’t have the same global footprint or employee count as Paramount, meaning there’s no room to eliminate duplication in global offices, as there was with Warner Bros. and Discovery.
RedBird founder Gerry Cardinale said on the conference call that the deal was based on the idea of ”keeping all assets intact” and was “not based on any restructuring.”
Richard Broughton, executive director of data and analytics firm Ampere Analysis, said it could be an international growth story. “Skydance’s story is one of investment and rapid expansion,” he told Deadline. “Its private equity backers KKR and Redbird have previously referenced sports investments, and investors Tencent and CJ ENM have ambitions in interactive entertainment.”
“With the economic recovery underway in most major markets and the resumption of production activity, particularly internationally, there is likely to be an opportunity to renew investment in Paramount’s two core business areas, as well as in the diversification of the media portfolio.”
Advantage of the FAST mover?
CBS is joined by Network Ten in Australia, Telefe in Argentina, Chilevision in Chile and Channel 5 in Britain. The latter, which started as a commercial channel in the UK, is now an established player, vying with Channel 4 for market position.
Paramount has already combined some of the broadcaster’s streaming properties with the FAST Pluto TV service. “The advertising market is a game of scale, and in a complex market, simplifying the customer proposition and ensuring as many brands as possible are available in one place should be the priority of the new entity,” Broughton said.
FAST is on its way to becoming a massive company. “In 2021, just seven years after we founded the company, we managed to become a billion-dollar (revenue) advertising company,” Olivier Jollet, Pluto’s executive vice president and general manager, said during a panel moderated by Deadline during the Cannes Film Festival.
Skydance has expressed interest in the technology and Paramount offers both paid and free streaming services. “The major streaming players will compete to offer a wide range of products and services, and Paramount can certainly claim to cover all areas with its SVOD brands and Pluto TV for AVOD/FAST,” said Tony Gunnarsson, principal analyst at Omdia.
In cable, Paramount owns a slew of marquee cable channels, including MTV and Nickelodeon, which remain staples of pay-TV services around the world. Former CEO Bob Bakish rose through the international ranks at Viacom, ensuring distribution of those pay channels worldwide.
Partnerships+?
It was also Bakish who presided over the removal of international original programming from Paramount+, which removed much of its original programming from its service to refocus on Hollywood content. The move caused consternation among subscribers and damaged the service’s reputation with international producers.
Gunnarsson describes the challenge of international streaming. “Paramount+ is doing relatively well domestically – Omdia estimates it will have over 40 million paid subscriptions in the US by the end of 2024,” he said. “Internationally, it’s a different story. While Paramount has over 70 million D2C subscriptions in Q1 2024 (including SkyShowtime), in most international markets its market share lags far behind major services Netflix, Amazon, Disney and WBD/HBO/Max.”
Paramount+ is bundled with other paid and streaming services in several territories. On Sky in the UK, Paramount+ is free for Sky Cinema subscribers, in France it is included with other streaming services on a Canal+ package, and in South Korea it is bundled with the SVOD service TVing.
Consolidation, partnerships or teaming up with another streamer are all possibilities. “The new management team has highlighted that a joint venture could be an option for Paramount+, which, with the right partner, could increase the scale and appeal of the offering,” said Ampere’s Broughton. “Paramount already works with NBC Universal on SkyShowtime in Europe, so it has a model for a joint venture approach in the streaming world. In Korea, it is also working with CJ ENM on a local TV streaming service.”
Balancing long-standing revenue streams from program sales with proprietary D2C services such as Paramount+ will be another challenge.
Jack Davison, executive vice president at global content consultancy 3Vision, said: “It has become increasingly clear to many studios that they are not going to be able to grow D2C and need to target content sales revenue and create a hybrid future, and this is particularly true for Paramount. They have clearly decided that they have over-emphasized D2C with Paramount+ and need to find more revenue from their library and pipeline.”
Some market observers are not convinced that Paramount+ has a D2C future outside the United States. “Internationally, Paramount+ does not have the scale to grow profitably, and the merger with Skydance does not change that,” said Francois Godard, senior media and telecom analyst at Enders Analysis. “The new owners need to think seriously about the only viable option: returning to a wholesale model where they sell their content to third-party platforms and forgoing direct-to-consumer retail.”
The trend already appears to be shifting toward selling programming and launching branded blocks rather than full-fledged Paramount+ services around the world. Lisa Kramer, president of International TV Licensing, exclusively told Deadline earlier this year that the question now is: “Do we continue to roll out these very large flagship Paramount+ services, or do we look at markets outside of that geography and take a different strategy?”
“Without partnerships, Paramount+ has no future,” said 3Visions’ Davison. “Even with them, they need to be stronger and go further. Paramount is at a level in the streaming ecosystem that means they can’t go it alone and need to be supported by local partners.”