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Shari Redstone fought for years to take over her family’s media empire, enduring a bitter succession saga in which her own father was her biggest obstacle. Now, four years after finally taking the reins, the question is how much longer Redstone can hold on to Paramount, whose roots lie in a cinema chain launched by her grandfather in the 1930s.
Paramount’s shares are up more than 25 per cent over the past month as investors speculate that Redstone is weighing up a sale of the company. Last week it emerged that she held discussions about selling a controlling stake in National Amusements, Paramount’s parent company, to a private media group run by David Ellison — son of Oracle founder Larry Ellison — and RedBird Capital.
The talks are at an early stage, but on the surface a deal between Redstone and Ellison’s production company, Skydance, has a made-for-Hollywood quality. Skydance produced Top Gun: Maverick, Paramount’s 2022 blockbuster, along with Mission: Impossible and other films. Ellison has long said that he would love to own the 100-year-old Paramount studio one day, according to associates who have spoken to him.
Like other “legacy” Hollywood studios, Paramount is suffering from an intense post-streaming boom hangover. Yet Redstone’s company faces the toughest obstacles. “Paramount’s current position is untenable,” says Bernstein analyst Laurent Yoon.
Paramount has the highest net debt-to-ebitda ratio among its peers, which include Warner Bros Discovery, Disney, Comcast and Netflix, Yoon notes. It has lost billions on its streaming service, Paramount+, but has only a 4 per cent share of the US streaming market. (Netflix, the market leader, has a 33 per cent share and is profitable.) And its traditional TV business, which includes CBS and MTV, is in steep decline as “cord-cutting” continues.
Ellison is said to want only the Paramount studio, its film library and its iconic lot on Melrose Avenue in Hollywood. This means RedBird would need to find a buyer for Paramount’s TV assets. Then there is the question of what to do with Paramount+, which is still not profitable.
In this regard, Paramount has company. Bob Iger, Disney’s chief executive, says its streaming business will finally turn a profit in late 2024, after sinking more than $11bn into it since 2019. Warner Bros Discovery says its streamer, Max, is making some money, but it also lost 700,000 subscribers in the last quarter. NBCUniversal’s Peacock service is expected to lose $3bn this year.
“Something has to happen with the streamers in 2024,” says a veteran media executive. “You can’t have another year with everybody losing a shitload of money like this. The subscale streamers have to merge.”
Paramount is not the only legacy studio facing the question of what to do with the old-school TV networks. The assumption in Hollywood has been that private equity groups would swoop in and buy their TV assets, which are still throwing off cash. Yet in a high interest rate environment, and amid expectations that TV assets will only become cheaper, no deals have emerged.
There has also been hope in Hollywood that Apple or another technology company would come to the rescue by buying a studio or entering a partnership with a TV network, such as Disney’s ESPN. This has not happened either, leaving the traditional Hollywood studios little choice but to slash costs, manage the decline of television and try to turn streaming into a profitable business on their own. Or in Redstone’s case, to seek a buyer.
For Shari Redstone, who longed for years to run some of the most powerful brands in the entertainment business, this cannot be the outcome she had in mind.
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