Paramount and Skydance are merging – here are 3 questions we have about the deal

There is perhaps no more optimistic and dizzying moment in the media than the one following the announcement of a major deal.

In the case of the $8.4 billion deal that would bring new owners to run Paramount Global, a lot of hopes and dreams are pinned on new CEO David Ellison and how he might reshape a media company that includes everything from Paramount Studios and the CBS broadcast network, to cable channels like MTV and BET and the Paramount+ streaming service.

Moviegoers are hoping that if the new company goes ahead, it will maintain Paramount as an independent brand, combining Ellison’s Skydance Media with a revered 112-year-old film studio based in the heart of Los Angeles (they also hope it means the company won’t be largely sold off for parts or swallowed up by another big company, like Sony).

Media insiders wonder whether Ellison — backed by $6 billion from his family, including his father and Oracle co-founder Larry Ellison — can leverage new technologies and Silicon Valley sensibilities to make the company more successful.

And keen observers of American power are hoping that David Ellison, now a mogul, will serve his family and the company better than former owner (and also a mogul) Shari Redstone, who inherited Paramount’s parent company, National Amusements, after her father, Sumner Redstone, died in 2020. She then saw its value lose billions of dollars amid a changing media landscape, uncertain leadership and fractious sale negotiations.

Yes, this may sound like a bunch of media-nerd nonsense—navel-gazing from an industry known for its self-obsession and myopic vision. But a successful rescue of Paramount could also pave the way for a bright future for an increasingly uncertain media industry, where profits, product, and audience are harder to come by. And failure could mean that the company that houses NCIS, Star TrekMTV and Yellowstone could disappear into media history.

To succeed, Ellison and his supporters must answer a series of pressing questions. Here are the ones that come to mind:

Can the new owners really turn around a company that relies on a media business that is currently in serious decline?

One of the biggest challenges for Paramount Global is that it’s a media company with multiple businesses that are all struggling at once. Cable channels hampered by the cable shutdown. A streaming service that isn’t expected to be profitable until next year. A broadcast network with an aging audience. A regional theater chain facing declining attendance. And, as global financial services firm Moody’s pointed out in a recent statement, Paramount is merging with a smaller media company that doesn’t own or control much of its own intellectual property: Skydance Media.

Ellison and Jeff Shell, the former NBCUniversal CEO who will become chairman of the new company once the deal closes, shared their thoughts with Wall Street analysts on a call Monday morning, saying Paramount+ would likely succeed as part of an “ultimate package” of streaming services, with plans to completely rebuild the platform’s technology. As for their more traditional businesses, like cable TV channels, they talked about managing decline while realizing $2 billion in cost savings.

But I think mid-tier streaming services are struggling to offer enough content to convince customers that they should be prioritized over big players like Netflix and Disney+. Will redesigning the platform and being lumped in with bigger players really help set their business apart?

How will the company be managed until the transaction closes… in 2025?

The acquisition isn’t expected to close until next year. Until then, Paramount Global will likely still be run by the three-man group of co-CEOs who currently run the company. Which means the plan the CEOs announced last month could still go ahead, with $500 million in cost cutting while exploring the sale of some assets. Black-focused cable channel BET has long been the subject of speculation that it could be sold to a mogul like Tyler Perry or Weather Channel owner Byron Allen, for example.

Last month, the online archives of MTV News, CMT News and Comedy Central, which contained decades of pop and country music journalism, were deleted without warning or explanation by the company. Will more surprise cuts occur in the coming months, limiting or eliminating content?

In some ways, it might make sense for Paramount to make more painful cuts now, before the new owners are officially in charge, so that Ellison, Shell and their teams can take over outside the shadow of layoffs or deep budget cuts.

When Ellison and Co. take over, it will mean another Hollywood studio dominated by Silicon Valley money, including Amazon’s purchase of MGM and the rise of big players like Apple TV+ and Netflix. Which brings us to another big question: Will Paramount Global leverage the resources and innovation of the tech world to reinvent a major studio fit for the modern media moment, or have the forces hampering the company progressed too far?

Could another event occur that could cause the deal to fail?

Federal regulators must weigh in. Paramount’s board has 45 days to make a new offer (though it must pay $400 million to Skydance Group). Additionally, shareholders outside the Redstone family who feel aggrieved could sue.

But in the glow of the deal just announced, all those challenges seem to be fading fast in the rearview mirror. A new think tank has emerged, tasked with proving that a midsize media company can survive in the current climate, as the daughter of one business titan hands over the reins of her complex enterprise to the son of another.

Perhaps the bigger question is whether all this can add up to a solution that can save Paramount while helping to cure the ills of modern media on a larger scale.