Skydance Nears Summit of Paramount

David Ellison Closes In on Hollywood Prize: Paramount Global
David Ellison, movie producer, tennis fanatic and heir to a technology fortune, is on the verge of adding another title: media mogul.

I'll admit that I was very skeptical of David Ellison in Hollywood for all the obvious "nepo baby" reasons.1 But without question, he has turned Skydance into a powerhouse. Yes, it helps to have the inherent (if not inherited) financial backing he does, but a lot of Hollywood is built upon the same framework, with much worse results. See, for example, Shari Redstone’s Paramount – which Ellison is now closing in on purchasing!

The deal sounds complicated and has to be due to Redstone's control of Paramount through her family's National Amusements shell. There are always lawsuits in M&A deals, but this one may set some kind of record, especially with a counteroffer from Apollo on the table, but apparently not being taken seriously. Oh, an the fact that no less than Warren Buffett is the largest owner of Paramount Global stock (and Vanguard is number two). Anyway, we'll see how all that plays out, quite publicly no doubt, in the coming weeks. But I am now quite interested in the prospects of an Ellison-owned Paramount.

Redstone has come to see Ellison as her best option. Both are scions of billionaires and grew up aiming to prove themselves on their own terms. Ellison wants to own the business – not just parts – and cares about the namesake Paramount studio and its Hollywood legacy. He was also raised around technology luminaries like Steve Jobs and believes the company could thrive if it invests more in technology.

The Jobs connection, of course, is because Ellison's father, Larry, was a good friend and often business partner of Jobs.2 I'm not sure how much that matters other than it highlights that Ellison is quite "tech native" versus much of Hollywood, which is often the opposite. And again Ellison has used this to great effect in building up Skydance, striking deals with Amazon, Apple, and the like for distribution.3 These films haven't always been great, but they're all been smart. And some of his recent content has been very good – including, of course, his long-time passion project, Top Gun: Maverick, which was a massive success for both Skydance and yes, Paramount.

Ellison and his supporters, which include his father, RedBird Capital Partners and KKR & Co., intend to rebuild Paramount and are willing to invest billions of dollars in the business, according to the people. They have also already assessed which assets they want to hold or sell.

Again, sounds promising. And while many investors are fickle, especially when it comes to investments in content, presumably the elder Ellison will not be here.4 The entire industry is in the midst of change and those who invest smartly will likely benefit greatly. This could be that group...

They want to preserve the Paramount+ streaming service and explore merging it with a peer, such as Peacock or Max, although they haven’t yet talked with either of those operators, according to the people. They have also discussed some kind of deal with Amazon Prime Video. Merging two services, which current management has also discussed, would eliminate billions of dollars in costs.

Also makes sense, Paramount+, which seemingly doing surprisingly well on its own cannot ultimately compete with Netflix, Disney+, or Big Tech's streamers (as long as they remain interested in using those services for other purposes beyond making money). Merging with Peacock seems highly unlikely given that the parent company there is Comcast, which owns NBC, while Paramount owns CBS. But Max would seemingly make a lot of sense – even if it doesn't for Warner Bros Discovery to take it over itself right now, thus leading to even more burn.

One more thing: how long would it take for an Ellison-run Paramount to resurrect The Godfather Part IV? Sadly, probably not with Francis Ford Coppola – but maybe?!

1 Mixed with the fact that he apparently wanted to be a movie star at first.

2 They apparently met because of a... peacock -- I kid you not!

3 I'd be curious what, if anything, a Paramount deal means for Skydance's other deals with the likes of Apple and others.

4 Zero surprise here:

Ellison would serve as chief executive officer of the combined company, according to the people, who asked not to be identified due to the sensitive state of the negotiations. His father Larry, the co-founder of Oracle Corp., is one of several names being floated for the role of chairman, they said.