Paramount Skydance Deal Appears to be Dead, Shari Redstone Cool on Sony and Apollo Bid
Sony Pictures and Apollo Global Management’s $26 billion offer declined by controlling shareholder Shari Redstone
The Skydance Media deal for National Amusements appears to be dead, with the company declining to extend its exclusive negotiating window, and sources tell The Hollywood Reporter that controlling shareholder Shari Redstone is cool on the $26 billion offer from Sony Pictures and Apollo Global Management — a deal that would lead to the breakup of the empire her father built. While it is possible that Paramount’s independent board committee believes that regulatory concerns presented by the Apollo-Sony offer can be overlooked and recommends that deal, it looks like an increasingly challenged proposition.
Paramount’s Board Declares the Trio of CBS Chief, Paramount Pictures’ Chief, and Head of Showtime/MTV Entertainment Studios In Charge
For the foreseeable future, Paramount appears to be in the hands of the three-man committee made up of CBS chief George Cheeks, Paramount Pictures’ Brian Robbins and Chris McCarthy, head of Showtime/MTV Entertainment Studios and Paramount Media Networks. Paramount stock dropped 7 percent to $12.89 at the close in the wake of the news. For now, Paramount’s board named McCarthy “interim principal executive officer,” though it added that it was doing so “for purposes of the rules and regulations of the Securities Exchange Commission,” per a securities filing. A Paramount source stresses that the trio are co-CEOs.
Speculation on the Next Moves: Combining Paramount+ and Peacock?
As to next moves, speculation is that Paramount might attempt some kind combination of its streaming service with Peacock. “It makes sense,” says a source with knowledge of the situation. “These are the two services that are going to fall outside the bundle because on their own they don’t have enough EBITA.” But when it gets into details, this executive added, “I don’t understand how that’s going to work. Is it Paramount+ with Showtime, Peacock plus Paramount+? I don’t know what that structure would look like.”
Paramount+ and Peacock’s Subscale Streaming Services
Paramount+ and Peacock are both subscale streaming services with about 100 million subscribers combined (71 million of which are Paramount+, 34 million for Peacock). Compare that with Netflix, which has about 270 million subscribers, and Disney+, which has more than 111 million (not to mention the nearly 50 million Hulu subscribers or nearly 40 million Disney+ Hotstar subscribers that Disney also has).
Combining Paramount and Universal’s Films, and the Yellowstone and Dick Wolf Universes
On the library front, the combination of Paramount and Universal’s films would make a combined service formidable when it comes to features, while a deal would also unite the Yellowstone and Dick Wolf cinematic universes. While the Yellowstone spinoffs and other Taylor Sheridan shows stream on Paramount+, the original hit is on Peacock, thanks to a deal cut by former CEO Bob Bakish before the company went all-in on streaming. Meanwhile, NBC and Peacock are the home to Dick Wolf’s Law & Order and Chicago franchises, while his FBI franchise lives on CBS and Paramount+.
Concerns and Uncertainties on Paramount’s Three Top Executives
Mist Algolia sources express skepticism about leaving the company in the hands of three top executives. “It’s such a bad idea,” says a top executive at another studio. “When has that ever worked? I can see partnering Brian and George together but–ai yi yi yi yi.”
At the May 2 CBS upfront briefing, George Cheeks replied, “Divisional clarity will continue. In other words, I have no involvement in Paramount Pictures greenlights and Brian has no involvement in CBS show greenlights.”
Co-CEOs Face Uncertainties and Concerns
Co-CEOs are a rare occurrence among large corporations, and many that tried the idea have since abandoned it. The software provider Salesforce briefly had founder Marc Benioff joined by Bret Taylor atop the company, a co-CEO relationship that lasted only 18 months. But there are success stories, and one of Paramount’s biggest competitors is one of them. In July 2020, Netflix elevated Ted Sarandos to be co-CEO alongside founder Reed Hastings. “This change makes formal what was already informal — that Ted and I share the leadership of Netflix,” Hastings said at the time.
That arrangement, however, was part of Hastings’ long-term succession planning. Paramount’s current leadership set-up did not have that extended runway. And there is another critical difference between Netflix’s C-suite and Paramount’s: Netflix gave clear lines of oversight to respective leaders, with Netflix’ co-CEOs overseeing content, marketing, product, gaming, and ads.
It is yet to be clear how the three Paramount executives will divide oversight of non-content business lines like operations, streaming, advertising, and licensing.
Beyond the questions, Paramount shares are set to be volatile until there are more definitive answers on who’s making strategic decisions, the timing/terms of a potential sale, and the strategic direction of the company.
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