What Will CNN Be?
At media companies, the old saw about news divisions is that they are a small portion of revenue but a big portion of headaches. CNN is no exception.
The news network is profitable (on track to net $650 million this year), but it is also a favorite target of President Trump, who for years has accused CNN of bias and last month barred its journalists from the White House pool. Mr. Ellison moved to avoid a public debate about CNN’s editorial direction by negotiating to keep its current leader, Mark Thompson, in place.
Still, hurdles remain. CNN’s viewership has fallen behind MS NOW, and its digital offerings are still in the infancy phase. (Fox News is ahead of both.) A subscription news service, which Mr. Thompson started, is expanding to Britain and Canada, but the network has shared few details about the number of paying users. Skydance could nurture this subscription model or take a cue from David Zaslav, the former chief executive of Warner Bros. Discovery, who eliminated CNN+ just three weeks after it started.
Skeptics will also be watching to see if Mr. Ellison — who has hosted a dinner for Mr. Trump and has hobnobbed with the president at U.F.C. matches — puts a thumb on the editorial scale. For now, Mr. Ellison has walled off CNN from Bari Weiss, his pick to oversee CBS News, although that is subject to change. Ms. Weiss, a critic of the mainstream media, has been accused by several “60 Minutes” correspondents of meddling with their reports. CBS has denied those claims.
Skydance has yet to reveal the makeup of an independent editorial oversight board that it agreed to create as part of a settlement with the state attorneys general who had sought to block the merger on antitrust grounds. An independent board was installed by Rupert Murdoch when he bought The Wall Street Journal in 2007 to protect the publication’s journalistic integrity; the paper’s editor at the time, Marcus Brauchli, left four months after Mr. Murdoch’s News Corp took over.
“This kind of structure has limited value,” Mr. Brauchli said in an email, because “so much of a modern media company falls into both the editorial and business domains.”
Quotas vs. Quality
Except for news, no part of the combined company will operate within more guardrails than the movie studios. That will make one of Mr. Ellison’s hardest jobs — devising a cohesive film strategy and finding savings — even harder.
Hollywood has a familiar playbook for combining movie studios. Two sets of chairmen become one. Marketing and distribution operations combine. Slates shrink by a dramatic degree.
But Mr. Ellison agreed to release at least 30 movies annually — and after two years, 32 — to push the deal through. This year, Warner Bros. and Paramount are each on track to release 13 films in the United States, for a total of 26. If the combined company cannot meet its target number, it must pay a $30 million penalty for each film below its goal.
Movies take two to three years to reach theaters — and that is if everything goes smoothly. Case in point: In recent months, Warner Bros. pushed “The Batman Part II” and “Gremlins 3” to 2028 from 2027 because filmmakers needed more time. Mr. Ellison’s settlement with the state attorneys general also limits his ability to pad the slate with acquisitions.
“As he scrambles to meet the quotas, he’s going to have a very hard time maintaining quality — and these days, if you don’t have quality, you have almost no chance of getting people into theaters,” said Jason Squire, host of “The Movie Business Podcast” and a professor emeritus at the USC School of Cinematic Arts at the University of Southern California.
Then there is the sheer amount of intellectual property to deploy. The combined company will control top franchises including Batman, Superman, Harry Potter, the Teenage Mutant Ninja Turtles, “Game of Thrones,” “The Lord of the Rings,” “Mission: Impossible,” “Top Gun,” “Star Trek,” the Transformers and SpongeBob SquarePants. That is an enviable arsenal but also an almost certain traffic jam — expensive movies competing internally for production resources, marketing dollars and prime release dates.
Mr. Ellison has already moved to winnow the executive suite. On Friday, Pam Abdy and Michael De Luca, the joined-at-the-hip chief executives and co-chairs of the Warner Bros. Motion Picture Group, learned their services would no longer be needed at the combined company. Mr. Ellison’s handpicked Paramount Pictures co-chairs, Dana Goldberg and Josh Greenstein, will now oversee both studios.
Since they took over Paramount Pictures last year, Ms. Goldberg and Mr. Greenstein, have nearly doubled the number of movies in the studio’s pipeline, partly by going on a talent-recruitment spree to land the likes of James Mangold (“Logan”) and Jon M. Chu (“Wicked”).
Mr. Ellison’s cost cutters will have more slashing and burning through the employee ranks to do, Mr. Squire said. And those who remain will be expected to do more with less.
“It will be a very sad, even tragic, whittling away at the number of people working at these studios,” he said.
Taming an Expanded Streaming Universe
Step one is already taken care of before the deal closes on Tuesday: Mr. Ellison elected to prioritize “HBO stability,” as Cindy Holland, Paramount’s outgoing streaming chief, put it to colleagues when she announced her abrupt resignation last week.
That cleared the field for Casey Bloys to take the top programming streaming position for a company that will soon control Paramount+, HBO Max, Pluto and Discovery+.
Mr. Bloys will confront a far bigger remit than he has tended to at HBO Max, which is part of the Warner Bros. Discovery universe. He will be in charge of Paramount+ standbys like the Taylor Sheridan universe of series — shows including “Landman,” “Tulsa King” and “Lioness” — as well as the “Star Trek” franchise. Mr. Sheridan is leaving for NBCUniversal in 2029, but Mr. Bloys still has to manage that relationship, as well as tend to the Duffer brothers, the “Stranger Things” creators who signed a big contract with Paramount last year.
Can it all mesh? Mr. Ellison said this year that “we’re absolutely going to put the services together.” That could take many months or more than a year, though. At a Bloomberg conference on Thursday, Mr. Bloys strongly suggested that HBO Max and Paramount+ would initially be brought together as a bundle, similar to how HBO Max is currently sold in a bundled package with Disney+ and Hulu.
“That would make a lot of sense,” he said.
HBO Max, of course, merged with Discovery+ in 2023, christening the bulked-up streaming service Max. It did not work. Last year, Warner Bros. executives admitted defeat, renamed the app HBO Max yet again, and began de-emphasizing Discovery’s large swath of unscripted series.
Mr. Bloys said on Thursday that executives had learned that “you have to give subscribers what they want, not what you own.” He suggested that content on Paramount+ was more complementary to HBO Max content. He also recalled that when HBO Max initially debuted in 2020, some people thought network fare from the Warner Bros. library — like “Friends,” “ER” or “The Big Bang Theory” — would never be able to coexist alongside HBO content, a concern that he said was overblown. He said he was now hearing similar skepticism about whether Mr. Sheridan’s suite of shows will fit alongside HBO series. Paramount+ also features a large number of CBS programs, though Mr. Bloys will not oversee that programming (that belongs to George Cheeks, Paramount’s chair of TV media).
Mr. Ellison will also need to confront how to handle his TV studio business. The Paramount chairman will be in control of three television studios with three separate leaders. He already has CBS’s studios — which pumps out a lot programming for the CBS broadcast network, including popular series like “Fire Country” and “Matlock” — and a smaller Paramount studio.
He will now be inheriting Warner Bros, one of the biggest studios in the business. It has some major producers on its roster — including John Wells (“The Pitt”), Chuck Lorre (“The Big Bang Theory”), Bill Lawrence (“Shrinking”) and Greg Berlanti (“Riverdale”) — and a veteran leader, Channing Dungey, a former top ABC and Netflix executive who has run the studio since 2021.
How Mr. Ellison decides to organize the studios and its leadership will have major implications in what writers and producers he keeps or scares off.
Keeping the N.F.L. Happy
When it comes to attracting viewers, nothing beats live sports, one of the last bastions of appointment viewing. And in the sports world, nothing draws viewers like the N.F.L.
That makes maintaining the relationship between CBS Sports and the most popular league one of the most important tasks facing Mr. Ellison. N.F.L. games attract the largest audiences on television, which helps CBS maintain the fees it charges to its affiliates and cable and satellite companies, as well as to advertisers.
“The N.F.L. is core to much of what Paramount-Warner will do going forward, live sports and streaming,” said Marc Ganis, a media adviser to sports teams and leagues.
But N.F.L. rights are some of the most expensive in sports. CBS Sports’ current deal with the N.F.L., which costs about $2.1 billion a year, expires at the end of the 2033 season. But because CBS Sports changed control when Mr. Ellison bought Paramount last year, the N.F.L. can reopen negotiations up until August. The N.F.L. could also opt out of their deal at the end of the 2029 season.
The N.F.L. has not exercised its change-of-control option. But some industry analysts say the league could seek $1 billion more per year from CBS Sports. In return, the N.F.L. would drop its opt-out option in 2029, giving CBS Sports certainty into the next decade.
Although it is difficult for analysts to precisely determine whether CBS turns a profit on its N.F.L. rights deal, it is clear the network needs the league to help promote its other programming and attract and retain streaming customers.
Mr. Ellison and Skydance also need to figure out how to reshape coverage of the college basketball “March Madness” tournaments. Currently, CBS Sports and Warner share the broadcast rights. The merger will solidify their venture, which runs through 2032. But the size of the tournament could change if the N.C.A.A. expands the number of play-in games or creates an even larger bracket.
CBS Sports will hang on to many of its marquee rights, including the Masters, PGA Championship and PGA TOUR, which offer the company a chance to entertain clients. Paramount has the rights to UEFA Champions League, and it may seek other soccer rights, analysts said. Paramount is in the midst of a seven-year, $7.7 billion deal to show U.F.C. fights, which has helped boost streaming subscriptions.
Analysts also expect the combined company to expand its portfolio of sports broadcast rights, even at the expense of entertainment programming.
“Sports is a huge driver of the entire ecosystem,” said Robert Fishman, a media analyst at MoffettNathanson, a research firm.
A Mountain of Debt
Though Mr. Ellison is now a king in Hollywood, his crown did not come cheap.
To win Warner Bros. Discovery, Mr. Ellison made an escalating series of bids to knock out Netflix. By the time it was all over, the price tag was $111 billion, over $30 billion more than the initial offer.
For Mr. Ellison, the central challenge will be the same one his predecessor at Warner Bros. Discovery, David Zaslav, faced. He will need to replace the profits from cable TV, a still profitable but declining industry, while building a streaming business to rival those of Netflix and Amazon. And he will have to do it while servicing a titanic pile of debt — $82.5 billion, according to CreditSights.
Mr. Ellison has pledged to find $6 billion in cost savings over the next three years — which will most likely result in layoffs to the company’s combined work force of around 50,000 people. Servicing the debt will cost about $6 billion annually, according to CreditSights — money the company will not be able to invest in new acquisitions.
“It’s like doing maintenance on a moving vehicle,” said Jeff Bewkes, who ran Time Warner for a decade before selling it to AT&T in 2018, where it was renamed WarnerMedia. (In 2022, Mr. Zaslav engineered the merging of his media company, Discovery, with WarnerMedia to create Warner Bros. Discovery.)
Last quarter, Paramount made $41 million on $6.9 billion in revenue, while Warner Bros. Discovery earned $149 million on $8.7 billion in revenue. For both companies, a major share of that revenue and profit came from traditional TV, a business that is ebbing.
Mr. Ellison needs that cash from the networks to help pay down the company’s debt, and Paramount is betting that content from the cable channels can be recycled to bolster the company’s streaming services.
Even if Mr. Ellison pulls that off, other challenges loom. It will need to find tens of millions of new subscribers to catch up to Netflix, Amazon and Disney in the streaming wars.
Mr. Bewkes likened the competition to the development of the American auto industry. “General Motors, Ford and Chrysler may have been called the Big Three, but it mattered which one of those you were,” he said. “The bigger one has better economics.”
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