Skydance merger will ‘inject new life’ into Paramount as streaming wars heat up, pros say

Skydance’s buying consortium, which includes the Ellison family, KKR and RedBird Capital Partners, will pay $2.4bn in cash to acquire National Amusements, which owns a controlling stake in Paramount. Minority Class A and Class B Paramount stockholders will receive $4.5bn in stock, valued at $15 per (non-voting) share.

Skydance Media founder David Ellison – son of Oracle co-founder Larry Ellison – will helm the new company as chairman and CEO. Former NBCUniversal CEO Jeff Shell, meanwhile, will serve as president.

The merger puts the valuation of the newly formed company at around $28bn.

The deal comes after months of intense negotiations and multiple buyout proposals. Skydance Media initially expressed interest in acquiring National Amusements in January of this year, but faced hiccups along the road after Paramount Global CEO Bob Bakish left the company and was replaced by an interim ‘Office of the CEO’ that included three execs. Talks reportedly came to a halt a few weeks ago, but the two parties seem to have ironed out their disagreements to reach the new deal.

The agreement includes a 45-day ‘go-shop’ period that allows Paramount’s board to seek out alternative proposals. However, pending regulatory approval, the merger is expected to go through in September 2025.

The deal arrives at a pivotal moment for Paramount. The company has experienced a significant decline in market value in recent years. Under the leadership of Shari Redstone, the company reconsolidated Viacom and CBS in 2019 – which had already undergone a handful of mergers and separations over the years. The recombination of the two organizations in 2019 eventually formed the rebranded Paramount Global in 2022. But along the way, the company lost some $17bn in valuation, according to Reuters.

All the while, Paramount has faced stiff competition in the streaming sector. Its streaming offering, Paramount+, has struggled to gain traction against industry giants like Netflix, Amazon Prime Video, Warner Bros. Discovery’s Max and Disney+. Despite growing its subscriber base to 71 million globally, the streamer remains unprofitable and lags behind its largest rivals.

A new lease on life for a legacy player

This merger could revitalize Paramount, introducing Skydance Media’s production and multimedia capabilities to bolster the organization’s offerings as the entertainment and media landscape grows more competitive.

“Skydance’s David Ellison will inject new life into Paramount by bringing it from the old-school entertainment world into the contemporary universe of Silicon Valley technology,” says Stanlei Bellan, chief strategy officer at omnichannel advertising platform Juice Media.

Skydance’s in-house capabilities and relationships across media and technology – which include a deal with Chinese tech giant Tencent and Ellison’s familial ties to Oracle – “have already catapulted Skydance to the forefront of multiple initiatives, like games, software, sports and animation,” Bellan says. Combined with Paramount’s legacy entertainment offerings and established streaming service, new technological prowess will take the organization “to the next level,” Bellan predicts.

It’s a prediction shared by other experts in media and entertainment. “There is absolutely a market opportunity for a content-first media player to marry great content with the technology needed to succeed in today’s supercharged media environment,” says Ian Morris, CEO at Likewise, a consumer entertainment platform that offers content recommendations across TV, film, podcasts and more.

“One thing that hasn’t changed are audiences’ demands for great content,” he says, “and marrying Paramount’s world class content with investments in personalization and natural language AI to aid discovery and a consumer experience that really knows its users, can make Paramount a formidable and reinvigorated player.”

A sign of the (streamed) times

Many industry players see the merger as symbolic of the larger direction of the media ecosystem. There’s a sea change underway, many predict – and it starts with streaming.

“We’re squarely in the messy middle of entertainment’s massive shift to an eventual all-streaming future,” says Mike Proulx, vice-president, research director at Forrester. He suggests that Paramount’s merger with Skydance is the natural manifestation of a need for change “in order to effectively compete with content scale and financial profitability as the underlying economics of entertainment portend a new playbook.”

It’s worth noting that we’re still in the midst of the mass shift away from traditional cable and broadcast TV consumption and toward streaming formats. And media and entertainment organizations – just like consumers – are still figuring it all out.

“We are not at peak streaming adoption yet and there is still a lot of growth ahead of us,” says Tony Marlow, chief marketing officer at LG Ad Solutions. Audiences today are still split about 50-50 between linear and streaming TV, according to research from LG Ad Solutions, and, Marlow says, “we need to remember that broadcasters like Paramount are also in the middle of navigating this transition to streaming.”

Marlow predicts that Paramount will benefit from the merger with Skydance by gaining the tools to get more value from its content and establish stronger connections with audiences.

And a reinvigorated, technologically-driven approach to streaming and audience development won’t just attract more eyeballs. It’s also likely to strengthen Paramount’s advertising business.

“The future of streaming is ad-supported, and brands are hungry for more targeted opportunities to display high-impact commercial messages within premium programming,” says Aaron Goldman, chief marketing officer at Mediaocean. “Merging Paramount and Skydance should afford economies of scale for the combined entity. Customers and advertisers alike will benefit from more content and, presumably, renewed technology investment.”

The steady transition from linear to streaming isn’t the only change in consumer habits. Another factor informing the direction of entertainment today is the rise of short-form video, pioneered by TikTok, Instagram Reels and YouTube Shorts.

“There’s a reason why TikTok is so popular, and it’s because the entrenched media giants are no longer providing experiences that younger audiences seek. As such, this merger is less about righting the ship and more about rearranging the deck chairs,” says Brad Altfest, managing director of media and entertainment at engagement platform Agora. As short-form video continues to take over social media, Paramount would do well to take note, Altfest says.

Considering that a quarter of marketers plan to invest more in short-form video than any other format in 2024, according to recent research from HubSpot, Paramount’s investments in short-form video could drastically impact its advertising-generated revenues.

Paramount’s long-term success, Altfest suggests, will require “more than free ad-supported streaming TV channels.”

Of course, making the most of the opportunities presented by the merger will depend, in large part, on the decision-making of Ellison and other leaders – and how they communicate their vision.

“To capitalize on this moment, leaders must first align on a clear strategic vision,” says Will Bosanko, managing partner at brand consultancy Brandpie. And as “a merger rooted in the art of storytelling,” he says, “success hinges on delivering a cohesive story in this moment that unites both entities – aligning internal teams, establishing competitive advantage and instilling much-needed shareholder confidence.”

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