One of Hollywood’s oldest companies, the entertainment giant Paramount Global, has agreed to merge with independent film studio Skydance Media, creating a group worth $28 billion, says Peter Hoskins on the BBC.
As part of the “complex” deal, Skydance will pay $2.4 billion for National Amusements, owned by non-executive chair Shari Redstone. It holds just 10% of Paramount Group’s shares, but accounts for almost 80% of voting rights. It is the “end of an era” for the Redstone family, which “transformed a chain of drive-in cinemas into a vast media empire”.
No wonder Redstone is throwing in the towel, says AJ Bell’s Russ Mould. The stock has fallen by 78% in five years, while rival Netflix has gained 85%. The problem was Paramount’s “big gamble” on the streaming sector, with its Paramount+ platform “failing to gain the kind of traction enjoyed by Netflix, Amazon Prime Video and Disney+”.
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With streaming platform owners now focusing on making a profit on their services, rather than just building up market share, Skydance “will have to think long and hard about Paramount Plus’s future” if it wants to bring a sense of “sparkle” to the company.
Given that Paramount+ is “haemorrhaging money while reaching approximately a quarter of Netflix’s 270 million subscribers”, says Jennifer Saba on Breakingviews, completely ditching the “subscale, expensive direct-to-consumer strategy should be on the table”.
The focus should be on partnerships, with Paramount and “much-better-equipped Goliath” Comcast already in talks about streaming jointly. Selling content to other streaming services should also be explored.
The deal highlights that the post-Netflix era has been a “costly bust for the stragglers of media, like fellow family-controlled pipsqueak AMC Networks or even Warner Bros. Discovery”.
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