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The merger of Paramount and Skydance marks the end of a family rule in Hollywood and the rise of a new power

NEW YORK — Entertainment giant Paramount will merge with Skydance, closing the Redstone family’s decades-old business in Hollywood and injecting much-needed cash into the legacy studio that has struggled to keep up with a changing entertainment landscape.

The merger of Paramount and Skydance marks the end of a family reign in Hollywood and the rise of a new power

It also signals the rise of a new powerful player, David Ellison, the son of billionaire Larry Ellison, the founder of Skydance and founder of software company Oracle.

Shari Redstone’s National Amusements owns more than three-quarters of Paramount’s Class A voting shares through the estate of her late father, Sumner Redstone. She had fought to retain control of the CBS-owned company, which is behind blockbusters such as “Top Gun” and “The Godfather.”

However, just weeks after rejecting a similar deal with Skydance, Redstone agreed to a deal on terms that had not changed much.

“As we reflect changes in the industry, we want to strengthen Paramount for the future while also ensuring content remains paramount,” said Redstone, chairman of Paramount Global.

The new combined company is valued at approximately $28 billion. In connection with the proposed transaction, which is expected to be completed in September 2025 subject to regulatory approval, a consortium led by the Ellison family and RedBird Capital will invest $8 billion.

Skydance, based in Santa Monica, California, has helped produce some major Paramount hits in recent years, including the Tom Cruise movies “Top Gun: Maverick” and some of the films in the “Mission Impossible” series.

Skydance was founded in 2010 by David Ellison and formed a production partnership with Paramount that same year. If the deal is approved, Ellison will become chairman and CEO of the new Paramount.

Ellison outlined the vision for the New Paramount on a conference call about the transaction on Monday. In addition to doubling down on core competencies, particularly with a “creative first” approach, he stressed that the company needs to transition into a “tech hybrid” to remain competitive in today’s evolving media landscape.

“You’ve seen some incredibly powerful technology companies move into the media space and do so very successfully,” Ellison said, adding that it was “essential” for New Paramount to follow a similar path moving forward.

This includes plans to “rebuild” the Paramount streaming service, Ellison said — pointing to broader goals of expanding the direct-to-consumer business, such as increasing engagement time on the platform and reducing user churn. He also said the company aims to shift to more cloud-based production and continue using generative artificial intelligence to increase efficiency.

Executives also outlined further restructuring plans for New Paramount in Monday’s conference call, with RedBird Sports & Media President Jeff Shell saying they have identified about $2 billion in cost efficiencies and synergies that they will “attempt to accomplish fairly expeditiously.”

Shell and others spoke about the declining growth of linear TV. They said flagship linear brands will remain a big part of the company’s operations, but learning to run this part of the business differently will be important.

The merger is on the line and comes at a tumultuous time for Paramount, which has struggled to consolidate its position for years and its cable business has continued to decline. At an annual shareholder meeting in early June, the company also unveiled a restructuring plan that included major cost cuts.

Leadership at Paramount also was volatile earlier this year, when its CEO Bob Bakish was replaced by an “Office of the CEO” run by three executives after a series of disputes with Redstone. The company’s four directors were also replaced.

Paramount is one of Hollywood’s oldest studios, founded as a distributor in 1914. Throughout its rich history, Paramount has played a key role in releasing films – from “Sunset Boulevard” and “The Godfather” to “Raiders of the Lost Ark” and “Titanic.”

The studio also distributed several early Marvel Cinematic Universe films, including “Iron Man” and “Thor,” before the Disney acquisition. In addition to “Mission: Impossible” and “Top Gun,” Paramount’s current franchises include “Transformers,” “Star Trek” and “Jackass.”

While Paramount hasn’t topped the annual domestic box office charts in more than a decade, the smash box office success of “Top Gun: Maverick” in 2022 was a significant boon to movie theaters and the industry’s recovery from the pandemic.

Still, its theatrical output has slowed somewhat in recent years. Last year it released just eight new films and came in fifth overall with nearly $2 billion in box office revenue — behind Universal, Disney, Warner Bros. and Sony.

The release calendar is similarly modest this year, particularly with the absence of “Mission: Impossible 8,” which was delayed until 2025 because of the strikes. The studio has had some successes with “Bob Marley: One Love” and “A Quiet Place: Day One,” and there’s still Ridley Scott’s “Gladiator” sequel on the way.

The National Association of Theatre Owners, a trade organization representing more than 35,000 screens in the U.S., said in a statement Monday that it plans to look closely at the details of the merger to see whether it will result in more or fewer theatrical releases.

“We are encouraged by the commitment that David Ellison and the Skydance Media team have shown to theatrical exhibition in the past,” said Michael O’Leary, president and CEO of the National Association of Theatre Owners. “A merger that results in fewer films being produced will not only harm consumers and result in lower revenues, but will also negatively impact the people who work in all areas of this great industry – creative, distribution and exhibition.”

Sumner Redstone used his family’s movie theater chain National Amusements to build a massive media empire that included CBS and Viacom, which merged and separated several times over the years. Most recently, the two companies reunited in 2019, ending a 2006 split. The company, ViacomCBS, changed its name to Paramount Global in 2022.

Under Sumner Redstone’s leadership, Viacom became one of the nation’s media giants, home to the pay TV channels MTV and Comedy Central and the film studio Paramount Pictures.

It’s a company with a rich history, as well as a vast arsenal of media assets, and Skydance wasn’t the only company in pursuit of Paramount in recent months – Apollo Global Management and Sony Pictures also made competing offers.

Late last year, Warner Bros. Discovery also made headlines for exploring a potential merger with Paramount. But by February, Warner had reportedly put those talks on hold.

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Film writer Lindsey Bahr contributed to this report.

This article is generated from an automated news agency feed without any modifications to the text.

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