Paramount-Skydance merger—ad experts react to company’s big plans

Paramount’s new leaders laid out grandiose plans after the legacy media company reached a merger agreement with Skydance Media on Monday, leaving some ad industry experts wondering whether the entity will be able to compete in the ever-evolving TV landscape. 40 under 40 entries are open The final deadline for nominations is Aug. 2 Enter here Skydance Founder David Ellison said that New Paramount, as it’s being called, is seeking to become a “media and technology enterprise.” It aims to expand major franchises such as “Top Gun,” rebuild Paramount+’s technology stack, double down on NFL and kids’ programming, revitalize cable brands including MTV and Comedy Central, develop a video game practice and potentially explore getting into the theme park arena. The merger announcement comes as the TV industry is in a state of transition, and advertisers are caught in the middle of legacy TV companies fighting to retain their historical share of ad dollars while tech giants push further into the video ad market. Paramount’s prospective leaders want to stake their claim in the middle, but doing so will require fulfilling advertisers’ lengthy checklists. The agreement comes after a multi-month saga, which has resulted in a complex deal giving Skydance Consortium control over Paramount. The consortium—led by Ellison, whose father Larry founded Oracle, and RedBird Capital—will invest $8 billion as part of the proposed deal, which includes full control of Paramount Global and the acquisition of the Redstone family’s National Amusements Inc. The deal is expected to close in September 2025 pending regulatory approval. There is also a 45-day period in which Paramount can accept higher bids for a $400 million break-up fee. Below, ad experts outline what they’d like to see from the new entity. Next-gen media Industry insiders agree that the next-generation tech-media company Ellison envisions for New Paramount must go beyond just linear and streaming TV. “TV as it’s been historically defined is never going to grow again, outside of unusual events like the Olympics or the Super Bowl,” said Brian Wieser, industry analyst and creator of Madison and Wall consultancy. “The underlying trajectory of TV is negative and there’s really nothing that anyone can do about it if they’re defining TV as it’s historically been defined.” As evidenced in this year’s upfront marketplace, advertisers prioritize the companies that possess the largest and most diverse portfolios. Of the legacy networks groups, Disney and NBCU have topped the list, according to a media buyer who spoke on condition of anonymity, because “they have so much stuff” and have been aggressive in pitching their tech investments to the market at showcase events throughout the year. But Google and Amazon are keeping pace because they “bring together the massive scale of traditional TV audiences with digital precision in the delivery of ads with certain degrees of accountability measurement of those ads,” said Dave Morgan, founder and chairman of TV ad tech platform Simulmedia. Wieser added that Amazon and Google’s merging of digital and video media is key in appealing to modern advertisers. On Monday’s investor call following the announcement, Skydance’s leadership proposed additional businesses to build out New Paramount’s scale, such as incorporating Skydance Gaming with Paramount’s franchises and potentially expanding to theme parks. But Wieser and Morgan both noted it would be an uphill battle scaling these businesses to the heights of competitors. “All competition for advertising going forward is at a platform level—if you’re only selling TV-based inventory, you’re really not very competitive,” said Wieser. “So the question from an advertiser perspective is what [is Paramount] doing to make a bigger platform? If you want to keep narrowly focusing on a historical concept of television, then you really need to increase your investment in content and programming, so at least you can take share inside of a declining business.” While Skydance brings new investment to Paramount with the merger, primarily in paying down its existing debt, the prospective leadership also promised $2 billion in cost-cutting, half of which would be done in the first year. Paramount declined to comment for this story. How to win streaming The initial proposal for New Paramount focused largely on content and franchises that would be the product of bringing together Paramount and Skydance’s TV and film studios. Ellison, who founded Skydance in 2010 and will become CEO and chairman of the new entity if the deal closes, and Jeff Shell, former NBCUniversal CEO and prospective president in the new venture, outlined their intentions to balance in-house content production with a robust licensing model. In keeping with Skydance’s existing partnerships, New Paramount would be a supplier of content to Prime Video, Netflix and Apple TV+, while at the same time creating new content for Paramount+ at a pace to maintain subscribers. “We’re going to take a look at how much money we’re generating from our content and what content belongs where and what content we should license to ourselves and what content we should license to others,” said Shell on Monday’s investor call. “I’m a big believer in windowing strategy, and I think there’s maybe a more efficient way to maximize the value of our content.” Media companies within streaming have so far had trouble balancing the need to maintain exclusive content to keep subscribers with the desire to generate additional revenue by licensing content to competitive platforms. “The arms dealer concept is a valid strategy—the idea that you primarily focus on supplying content to anyone and everyone—but that would probably have the effect of devaluing the streamer,” said Wieser. By going this route, “you don’t build the value of your streaming service, you don’t create a habit among consumers to subscribe and stay subscribed and it adds to confusion based on where your content exists. It’s a net negative for the streamer.” Ellison intends to “rebuild” Paramount+ to address consumer churn with better content recommendation algorithms and user interfaces as well as “optimize ad-tech to improve buy-side transparency and audience reach / measurement,” according to a presentation to investors. The media buyer said Paramount’s ad tech is already highly competitive and that an attempt to rebuild the system could slow the company’s continued innovation while Disney and NBCU charge forward. “Do they have a chance for Paramount+ to beat Amazon Prime Video, YouTube, Netflix or Hulu? Because those companies are not standing still,” added Morgan. “You can’t out-invest them and you can’t out-innovate them.” What about all that cable? “Obviously a big chunk of the company is in the linear world, and we know that linear is challenged and declining,” said Shell on Monday’s investor call (linear TV makes up over half of Paramount Global’s revenue, per its 2023 financial report). “We like these businesses, particularly CBS. We think it is a very, very, very strong business with more reach than any other [Paramount] business … A lot of us in the business know we’ve got to run these businesses in a different way as they decline." Sports, particularly the NFL, remain a major driver for ad demand in TV, and CBS’s NFL rights alongside Skydance’s partnership with the league to create documentary and entertainment content could create new opportunities for advertisers. (CBS, which broadcast the 2024 Super Bowl, is slated to air the Big Game in 2028.) But the future of Paramount cable brands MTV, Comedy Central and Nickelodeon are less certain. Shell said the cable assets face challenges, but that the new leadership hopes to “bring a fresh approach” to those brands, particularly in a cross-platform manner. One cable asset, BET, is already said to be up for sale. As cable viewership declines, ad investment has followed suit. GroupM predicts fewer than half of U.S. households will possess cable subscriptions by the end of 2024, and a second media buyer said upfront budgets for cable are drastically down “and it’s not a good story for them.” “[Cable] is in systemic structural decline—we’ve never had a situation where you’ve had viewership go down, subscribers go down, ad sales go down, carriage revenue go down, and that money is supposed to pay for the whole ecosystem,” said the first buyer. The buyer, however, said there is still a contingent of older audiences that exist in cable and are meaningful to some advertiser categories such as pharmaceuticals. The buyer said that should New Paramount defy the odds and revitalize its cable channels, there could be a resurgence of ad demand as advertisers seek more high-impact, low-cost media channels. “Within three or four years, that could be an amazing rebirth story,” said the buyer. “There’s just so much competition for eyeballs now, they would have more challenges than opportunities.” But the future of Paramount remains uncertain, especially as it awaits federal approval. And New Paramount’s prospective leadership has posed many more questions than answers about how to create its proposed next-gen media-technology hybrid. “It’s not like someone wakes up in the morning and says, ‘Oh my God … I could create a better advertiser experience out of these assets than anybody else has,’” said Morgan. “That is not what’s happening because … nobody has punched above their weight in the premium video ad world as Paramount has over the last few years.”

Paramount-Skydance merger—ad experts react to company’s big plans

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