Paramount closed its deal to acquire Warner Bros. Discovery on Tuesday, putting the tech scion David Ellison in control of a vast media empire that oversees many of Hollywood’s most valuable properties. The deal immediately catapults the combined company, now called Skydance, to the front rank of competitors with streaming titans like Netflix and YouTube, just behind giants like Disney and Amazon.
“Today is a historic day, not just for Skydance but for our entire industry,” Mr. Ellison said in a statement on Tuesday. “We couldn’t be more excited to get to work,” he added.
The new company is a hard-fought prize. Mr. Ellison wrested Warner Bros. Discovery from a rival bidder, Netflix, after a monthslong tug of war that prompted him to make nine offers for the company. It was created over the objections of a coalition of state attorneys general who sued to block the deal on antitrust grounds.
That lawsuit was ultimately settled after the attorneys general extracted a series of concessions, including the establishment of an editorial independence board to safeguard the integrity of CNN and a promise from Mr. Ellison to spend an additional $1.5 billion on movies over the next five years. Hundreds of Hollywood insiders said the deal would sharply consolidate corporate power, leading to job losses and further stagnation in Hollywood. Skydance has argued the merger is a necessary counterweight to big tech.
Mr. Ellison now controls:
Movie Studios
-
Paramount Pictures
-
Warner Bros.
-
Skydance
Streaming Services
-
Paramount+
-
HBO Max
-
Pluto TV
News Organizations
-
CBS News
-
CNN
-
TVN24 (One of Poland’s most-popular news channels)
Cable Networks
-
Comedy Central
-
Nickelodeon
-
TNT
-
TBS
-
HBO
-
MTV
-
Food Network
Major Franchises
-
DC Universe (including characters like Batman, Superman and Wonder Woman)
-
The Wizarding World of Harry Potter
-
“Star Trek”
-
“Mission: Impossible”
Now, he just has to manage it all.
The new company is making its debut in an industry navigating profound change. Cable television, one of the biggest cash cows in media, is still profitable but in terminal decline. Streaming still hasn’t replaced those profits. Trust in the news business is in the basement. And tech companies like Amazon and Apple are muscling in on movies, TV shows and sports rights, driving up content costs.
Those challenges will pose a major test for Mr. Ellison, 43, who until last year had never run a public media company. He and his team must convince Wall Street that the new company can manage those challenges while it pays down $82 billion in debt, a staggering sum for a traditional media company. He must also rally tens of thousands of employees at Warner Bros. and Paramount; both companies have made nearly annual layoffs in recent years.
Further complicating the situation is Mr. Ellison’s relationship with President Trump, which has unsettled some employees at CNN. This spring, Mr. Ellison held a dinner “honoring the Trump White House” before the annual White House Correspondents’ Association dinner and later joined Mr. Trump at an Ultimate Fighting Championship bout at the White House. (Paramount holds media rights for the U.F.C.)
Mr. Ellison has assuaged some of those concerns by keeping Mark Thompson, the chairman of CNN, in place. In a memo to employees Monday, Mr. Thompson said that he had spoken to Mr. Ellison and came away convinced that executives at Skydance would support the “independent news that CNN has always stood for.”
Another of Mr. Ellison’s biggest challenges will be winning over Hollywood’s creative class in an era of shrinking box office receipts, artificial intelligence and algorithmic personalization. He has pledged to invest in content, promising to release at least a combined 30 theatrical films annually. After two years, that number would rise to 32 films. He has also promised to overhaul the company’s technological capabilities.
But he must do all of that while delivering $6 billion this year in cost-cutting over the next three years — a target he will likely hit, in part, by eliminating thousands of jobs.
Some of those cuts are likely to come from combining parts of the company that have overlapping functions. CNN and CBS News are possible targets, as are some administrators at Paramount and Warner Bros. That process is already well underway: David Zaslav, the chief executive of Warner Bros. Discovery, opted to leave in the transaction, as did Cindy Holland, Paramount’s top streaming executive.
The post Paramount Closes Deal for Warner Bros. Discovery, Creating Media Behemoth appeared first on New York Times.
