Hollywood giant Paramount Global prepares to enter new era as bidders turn | Media

For more than a century, Paramount Pictures has established itself in the heart of Hollywood, producing hundreds of films, from Sunset Boulevard to Titanic. But the future of the studios, rather than its past, is currently the talk of the town.

Paramount, founded when films were silent and confined to theaters, is struggling, like its rivals, to adapt to an era where streaming reigns supreme. And as the billionaire media mogul behind it all seeks blockbuster deal, production giant could soon enter into a whole a new era of its own.

Shari Redstone, chairman of Paramount Global, has spent months mulling potential buyouts, with two key suitors, Skydance Media, led by David Ellison, son of Oracle founder Larry Ellison; and Sony Pictures, with private equity group Apollo as part.

Redstone considers whether to end his family's decades-long domination of media and cinema. His father, the individualist Sumner Redstone, died in 2020 at the age of 97 after transforming National Amusements, a Boston company founded by his own father in 1936, into an empire that eventually controlled the American network CBS, the publisher Simon & Schuster, a cinema chain and, from 1993, Paramount.

Like many giant corporations, Paramount has gone through multiple structural changes, leaving the family at the top, nominally in charge and with more than its fair share of corporate drama. Shari Redstone was initially named her father's successor, but spent years in an acrimonious battle with Sumner before landing the role.

National Amusements still owns the majority of voting shares in Paramounts, and Redstone reportedly favored the approach of Skydance, producer of films including Top Gun: Maverick, released via Paramount, over the Sony-Apollo partnership.

While Sony and Apollo would have abandoned an initial plan to make a $26 billion cash offer for Paramount, instead focusing on the company's key assets, paving the way for Skydance to return with another merger offer last week, Redstone would have been dissatisfied.

David Ellison reduced what he intended to pay Redstones National Amusements to provide additional cash to other Paramounts shareholders, Reuters reported Tuesday, citing sources familiar with the matter, leaving Redstone unhappy.

After a series of chaotic twists and turns, this months-long dance has so far failed to produce a deal, but it did lead to the abrupt departure of longtime Paramount CEO Bob Bakish and the exit of four directors from the board of directors and a large number of shareholders. complaints.

At the center of this tumult is Paramounts Prime, a 65-acre, 30-stage property, Hollywood's oldest operating studio complex that has survived the Depression, the television era and the boom streaming.

Entertainment is a company, and Paramount is struggling with some $14.6 billion in debt. But it was also on the Paramount lot that Billy Wilder directed Gloria Swanson in Sunset Boulevard; where Orson Welles created Citizen Kane; and where hundreds of other films, including The Godfather and Indiana Jones, were filmed.

Media properties always have an aura and mystery that continues to play out, said Bob Thompson, a media professor at Syracuse University. There is something different about a company like Paramount or Disney, compared to a company that can have more profits and be run more efficiently, because they are the ones who connect the world to tens of millions of people .

Analysts have estimated the value of the lots at more than $1.5 billion, either as a studio or as land for development. Ellison, with the backing of private equity groups RedBird Capital and KKR, would like the company to continue operating as a studio.

There are a number of good owners in Hollywood, but when a single owner takes over, cultural artifacts go elsewhere, said Brian Curran, president of Hollywood Heritage, told Bloomberg last month. This is a real risk we take, as people working in the historic preservation field. It would be a disappearing monument.

The future Paramount, and any megaproject aimed at controlling it, relies, like so many other vast multinationals, on personal and often complex emotional networks.

Unlike Succession, the hit HBO series inspired by dynastic intrigues and heritage battles between families and businesses, as with the Murdochs and Fox Corp, and the Arnaults and LVMH in this case, only one heir counts. Shari Redstone takes the lead.

Some investors, whose hands are tied by the company's shareholder voting structure, suggested they likely would have benefited more from the Sony-Apollo bid and threatened legal action if the tide broke in Skydance's favor.

As Redstone considers his options, the tension has already sparked upheaval within Paramount Global. Bakish, one of America's top media executives and a company veteran, abruptly left the group in April. In its place, the company is run by three executives within a CEO office.

Paramount Global is a struggling company, whose market value has fallen by two-thirds over the past three years. When it finally sold Simon & Schuster last year to private equity firm KKR for $1.6 billion, the company said the move would strengthen its finances.

He needed a helping hand. The costs of running a streaming platform, for example from acquiring customers and retaining them to storing data, are high. But ignoring the on-demand, at-home digital revolution is no longer an option.

Apart from rare exceptions like Top Gun: Maverick, Barbie and Oppenheimer, cinema attendance has never returned to its pre-pandemic level, falling 8% since 2019 in the United States, and more in international markets.

Paramount ventures into the streaming war, Paramount+, now has around 71 million subscribers worldwide, compared to 269.6 million for Netflix and 153.6 million for Disney+.

Paramount executives once reportedly hoped that a tech giant like Apple, which has amassed about 44 million subscribers for its own streaming service, would come forward with an offer. No such offer materialized.

At the company's annual shareholder meeting on Tuesday, its trio of executives announced a Redstone-approved restructuring plan that included $500 million in annualized cost reductions, potential asset sales and a possible joint venture. for Paramount+.

Analysts at LightShed Partners said they believed National Amusements saw too many legal problems with the Skydance deal, but did not want to see a breakup of the company under Sony and Apollo.

So why is Redstone even considering ending her family's history with Paramount? She is would have build a vacation home in the Turks and Caicos Islands and motivated to dedicate more time to fighting anti-Semitism.

The idea of ​​generational leadership spanning decades, where the only continuity is lineage, doesn't always make sense in a media environment where constant change is the norm, according to Thompson.

It's not clear what Shari Redstone did, he said. We cannot categorically state that the father's achievements cannot be managed by the offspring, because one must consider the competence of the offspring.

Augustus Caesar took over this empire with reasonable success, but I think we can say with certainty that Shari is not Augustus Caesar.