NEW YORK (AP) — Entertainment giant Paramount will merge with Skydance, ending the Redstone family’s decades-long run in Hollywood and injecting desperately needed cash into a storied studio that has struggled to adapt to a changing entertainment landscape.
It also signals the emergence of a powerful new player, David Ellison, founder of Skydance and son of billionaire Larry Ellison, founder of software company Oracle.
Shari Redstone’s National Amusements owns more than three-quarters of Paramount’s Class A voting stock through her late father’s estate, Sumner Red StoneShe fought to maintain control of the company that owns CBS, the maker of hit films such as “Top Gun” and “The Godfather.”
Just a few weeks later refuse a similar agreement However, with Skydance, Redstone agreed to a deal whose terms didn’t change much.
“Given the changes in the industry, we want to strengthen Paramount for the future while ensuring that content remains king,” said Redstone, chairman of Paramount Global.
The combined company is valued at approximately $28 billion. Under the proposed transaction, which is expected to close in September 2025 subject to regulatory approval, a consortium led by the Ellison family and RedBird Capital will invest $8 billion.
Skydance, based in Santa Monica, Calif., has helped produce some of Paramount’s biggest hits in recent years, including Tom Cruise films like “Top Gun: Maverick” and episodes of the “Mission Impossible” series.
Skydance was founded in 2010 by David Ellison and quickly formed a production partnership with Paramount that same year. If the deal is approved, Ellison will become chairman and CEO of what will be called New Paramount.
Ellison outlined New Paramount’s vision Monday during a conference call about the deal. In addition to doubling down on its core competencies, including a “creative-first” approach, he stressed that the company must evolve into a “technology hybrid” to remain competitive in today’s evolving media landscape.
“You’ve seen incredibly powerful technology companies move into the media industry and do it very successfully,” Ellison said. He added that it’s “critical” for New Paramount to follow a similar path going forward.
That includes plans to “rebuild” the Paramount+ streaming service, Ellison noted, pointing to broader goals for growing the direct-to-consumer business, such as increasing engagement time on the platform and reducing user churn. He also said the company aims to move to more cloud-based production and continue to use generative artificial intelligence to increase efficiency.
Executives also outlined new restructuring plans for New Paramount during Monday’s conference call, with RedBird Sports and Media Chairman Jeff Shell noting they had identified about $2 billion in cost savings and synergies that they “will try to realize fairly quickly.”
Shell and others have addressed the issue of declining linear TV growth. Linear TV flagship brands will continue to be a significant part of the company’s business, but learning how to manage that part of the business differently will be critical, he said.
The merger, which has been years in the making, comes at a difficult time for Paramount, which has been struggling for years to find its footing and whose cable business is in crisis. At its annual shareholder meeting in early June, the company also presented a restructuring plan that included significant cost cuts.
Leadership at Paramount was also unstable earlier this year after its CEO Bob Bakish, following several conflicts with Redstone, was replaced with a “CEO office,” led by three executives. Four directors of the company were also replaced.
Paramount is one of Hollywood’s oldest studios, having been founded as a distributor since 1914. Throughout its storied history, Paramount has been involved in the release of films ranging from “Sunset Boulevard” and “The Godfather” to “Raiders of the Lost Ark” and “Titanic.”
The studio also distributed several early Marvel Cinematic Universe films, including “Iron Man” and “Thor,” before the Disney acquisition. In addition to “Mission: Impossible” and “Top Gun,” Paramount’s current franchises include “Transformers,” “Star Trek” and “Jackass.”
Although Paramount hasn’t topped the annual domestic box office charts in more than a decade, the runaway success of 2022’s “Top Gun: Maverick” (nearly $1.5 billion worldwide) has been a major boon to theaters and the industry’s recovery from the pandemic.
However, its film production has declined somewhat in recent years. Last year, the country released only eight new films and ranked fifth at the box office with about $2 billion in revenue, behind Universal (24 films), Disney (17 films), Warner Bros. and Sony.
This year’s release schedule is similarly modest, due in part to the absence of “Mission Impossible 8,” which was pushed back to 2025 due to strikes. The studio has had some successes, with “Bob Marley: One Love” and “A Quiet Place: Day One,” and the sequel to Ridley Scott’s “Gladiator” is still to come.
The National Association of Theatre Owners, a trade organization that represents more than 35,000 screens in the United States, said in a statement Monday that it plans to closely examine the details of the merger to determine whether it will produce more or fewer theatrical releases.
“We are encouraged by the commitment that David Ellison and the Skydance Media team have shown in the past to theatrical exhibition,” said Michael O’Leary, president and CEO of the National Association of Theatre Owners. “A merger that results in fewer films being produced would not only hurt consumers and lead to lower revenues, but would also negatively impact the people who work in all areas of this great industry – creation, distribution and exhibition.”
Sumner Red Stone He used National Amusements, the family’s movie theater chain, to build a vast media empire that included CBS and Viacom, which merged and split several times over the years. Most recently, the companies joined forces in 2019, undoing the split consummated in 2006. The company, ViacomCBS, changed its name to Paramount Global in 2022.
Under Sumner Redstone, Viacom became one of the nation’s media titans, home to pay-TV channels MTV and Comedy Central and film studio Paramount Pictures.
It’s a company with a rich history, as well as a deep bank of media assets, and Skydance wasn’t alone in its interest in acquiring Paramount in recent months: Apollo Global Management and Sony Pictures also made competing offers.
Late last year, Warner Bros. Discovery also made headlines for exploring a potential merger with Paramount. But by February, Warner had apparently interrupted these talks.
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AP film writer Lindsey Bahr contributed to this report.