Paramount Skydance Has 6 Key Questions to Answer Now That Deal’s Done

After many twists and turns, the $8 billion tie-up of Skydance and Paramount Global is finally happening. So what’s next?

Oracle billionaire Larry Ellison and his son, David, are taking control of Paramount Global from Shari Redstone with a plan to revive the storied entertainment company by giving it a tech infusion. The epic drama has played out as the media industry faces disruption from the rise of streaming — and now a president who’s used his power to influence critics in the media and beyond.

We know this much: David Ellison, who will be chairman and CEO of the new combined company, has named his new leadership slate, sweeping out most of the old Paramount execs except for George Cheeks, previously co-CEO of Paramount; while expanding the power of execs like Dana Goldberg, who was chief creative officer at his (much smaller) Skydance Media.

Big changes are ahead for the home of CBS, MTV Networks, Paramount Pictures, and more, where Ellison has promised cost cuts of $2 billion. The company is also expected to invest $1.5 billion to help pay down debt.

The deal’s backers, the Ellisons and RedBird Capital Partners, have deep pockets that could fund additional, transformative deals in areas like tech or gaming, said Jonathan Miller, CEO of Integrated Media Co., which invests in digital media and is not an investor in Paramount Skydance. “There’s a lot of money surrounding Paramount right now,” he said. “They can think big.”

Many questions lie ahead, including how its streaming strategy will play out, what the company might keep and buy, and how it’ll navigate potential political headwinds.

Paramount is attractive for its new senior management that’s well-liked, massive pool of capital, and willingness to look at different structures for the streaming business, Raymond James wrote in a July 31 investor note. “Still, Paramount faces significant exposure to the declining linear TV business, high leverage, and for now a sub-scale, not yet globally profitable streaming business.”

Paramount didn’t immediately respond to requests for comment for this story.

Here are some of the key questions and challenges facing the new Paramount Skydance.

Can tech save Paramount?

Ellison made a tech-heavy pitch for combining Skydance and Paramount, invoking Steve Jobs as he explained how he sees technology and the arts working hand in hand. Describing the combined company as equally a tech and media enterprise, he talked about upgrading the Paramount+ algorithm to give users better recommendations and using AI to improve content creation. He also described how Skydance worked with his father’s company, Oracle, to create a cloud-based animation studio, which it used to produce part of “Spellbound,” a 2024 animated film, increasing efficiency and cutting costs.

But changing user behavior takes time, and Paramount+ needs more than better recommendations to make it a must-have for entertainment seekers, starting with more must-see shows. Hollywood is gradually embracing AI, especially to lower production costs. The tech and its adoption are still relatively new, making it hard to precisely quantify how much it could actually cut expenses (or make movies better, as the glass-half-full people like to say).

How can Paramount+ compete?

Paramount+ counts 78 million subscribers, helped by the NFL, CBS shows such as “NCIS” and favorites like “Star Trek” and the “Yellowstone” universe. And Paramount has started turning a profit. But Paramount+ ranks fourth among the major paid streamers by subscriptions and accounts for just 2% of TV streaming viewership, according to Nielsen.

In addition to the aforementioned tech enhancements, Paramount+ needs more must-see shows to drive subscriptions. LightShed has noted that Skydance struck deals to make movies for Netflix and Apple, so those won’t be available to Paramount for a while. But in a sign it means business, Paramount just did a $1.5 billion deal for the global streaming rights for “South Park,” and will look to Cindy Holland, hailed as the architect of Netflix’s original content business, to give its streamer a shot in the arm.

Hollywood insiders are excited for Holland to get going and for Paramount to kick-start the marketplace for new shows, which has slowed since the end of Peak-TV.

One agent said talent is saving pitches for shows that they think could be a fit for Paramount, confident it’ll soon be a big customer again.

A second agent said industry chatter is that Paramount will ramp up its movie output. “What it means is a very healthy new buyer,” the person said, referring to Ellison’s deep pockets compared to the former cash-strapped company. He also expects Ellison will be looking for high-minded fare in addition to the broadly appealing titles Skydance is known for, like the “Top Gun” and “Mission: Impossible” movies.

How will Paramount solve the linear TV problem?

The old linear TV business is going away in favor of streaming, especially as companies put more of their live sports on streaming platforms, taking fans with them.

Growing the streaming arm while managing a declining linear business can go two ways: Paramount can continue to milk its linear channels for the income they’re still generating, or spin them off to generate cash. Lately, companies like Comcast and Warner Bros. Discovery have chosen the latter strategy.

Christopher Vollmer, managing director at ad industry consultancy MediaLink, thinks Paramount will take a similar route. “They’ll do as much as they can to raise cash,” he said. “If you’re committed to building a streaming business, you have to put as much firepower behind them as you can.”

It’s not necessarily an all-or-nothing game, as he sees it. “They’ll want to keep CBS to keep their leverage with the distribution world, and with the NFL, the consumer value the network brings is really important.” Others, like BET and Showtime — that Paramount tried to sell before — could go.

What about Trump?

Anxieties have been running high for some people in and outside CBS’s news division, with President Donald Trump repeatedly targeting the news media. Paramount agreed to a $16 million settlement over a lawsuit filed by Trump over routine editing of a “60 Minutes” segment that many legal experts said was meritless — a settlement that was lambasted in journalism and political circles as a concession to get the Skydance deal through.

Paramount has disputed this, saying the settlement was “completely separate from, and unrelated to, the Skydance transaction.” Skydance went on to agree to conditions to get the merger done, including having an ombudsman and committing to an “unbiased” editorial direction. CBS also canceled the late-night show of Trump critic Stephen Colbert, drawing scrutiny for its timing ahead of the FCC approving the deal. (Paramount has said the move was “purely a financial decision against a challenging backdrop in late night.”)

Ellison hasn’t given a lot of clues about his politics. His father is close to Trump and also has looked at buying Bari Weiss’s right-leaning outlet, The Free Press, The New York Times reported. So some insiders are on edge about what role Ellison could play with the news.

It might not take long to find out. Trump just this week ripped CBS News star Gayle King as having “no talent” and questioned her future at the network. For now, “60 Minutes'” recent appointment of an insider, Tanya Simon, to lead the newsmagazine has raised hope for some.

“I have no doubt that she and the excellent corps of correspondents will keep ’60’ on a strong and sure and independent footing, and I think the new corporate bosses are smart enough to know that’s the right call,” former producer Rome Hartman said.

Politics aside, it’s also not hard to imagine Paramount using CBS News to help get to its $2 billion in cost cuts, given it’s already trailing the other news networks.

Could games jump-start Paramount?

Skydance has two video game studios, and Ellison sees games as one of the ways Skydance can kick-start Paramount’s business.

Video games are a conundrum for Hollywood companies; they’re expensive and risky, but ignoring them means missing a big opportunity to extend their IP to a hugely popular pastime.

WBD and Disney have taken stabs at games with mixed success, and Netflix is building out its games, but has yet to show meaningful results.

If Ellison could figure out how to leverage Paramount’s well known IP into games success, he’d accomplish something few others have.

What’s the endgame?

Paramount Skydance still isn’t considered big enough to hold its own among bigger media and tech giants, and industry observers expect more consolidation will follow.

Analysts have said Paramount Skydance could be a good pairing with Warner, with HBO Max’s prestige shows nicely complementing Paramount’s sports and Taylor Sheridan’s Western soaps. Such a deal would create more exposure to linear TV, though, and it could be hard to fit CNN and CBS under the same roof. And there’s the question of whether Comcast’s Brian Roberts will get to WBD first. WBD didn’t comment, and Comcast didn’t immediately reply to a request for comment.

Or, Paramount and NBCUniversal could form an alliance that could take on Disney, but it would require casting off one of their news networks to avoid antitrust concerns. Of course, all these scenarios would mean either Ellison, Warner’s David Zaslav, or Roberts would have to go away, which none seem ready to want to do.

Then, more interestingly, there’s the TikTok wild card. Oracle has already been involved in both TikTok and Paramount as its cloud services provider. It’s also a potential bidder among a group of US firms looking to buy TikTok’s US operations and save TikTok from a US ban, Bloomberg and other outlets have reported.

If Oracle ended up owning TikTok, it would put the Ellison family behind one of the biggest content companies and one of the biggest tech platforms, with more than 150 million active monthly US users.