For more than a century, Paramount Pictures has stood tall at the heart of Hollywood as it churned out hundreds of movies, from Sunset Boulevard to Titanic. But the storied studio’s future, rather than its past, is currently the talk of the town.
Paramount – founded when films were silent and confined to theaters – is fighting, just like its rivals, to adapt to an age in which streaming reigns supreme. And as the billionaire media mogul behind it seeks a blockbuster deal, the production giant could soon enter a whole new era of its own.
Shari Redstone, chair of Paramount Global, has spent months mulling potential takeovers, with two key suitors – Skydance Media, run by David Ellison, son of Oracle founder Larry Ellison; and Sony Pictures, with private-equity group Apollo – in the frame.
Redstone is considering whether to call time on her family’s decades-long dominance of media and movies. Her father, the individualistic Sumner Redstone, died in 2020 aged 97 after transforming National Amusements, a Boston company his own father founded in 1936, into an empire that came to control the US broadcaster CBS, the publisher Simon & Schuster, a cinema chain and, from 1993, Paramount.
Like many giant companies, Paramount has been through multiple structural changes – leaving the family at the top, and nominally in control – and more than its fair share of corporate drama. Shari Redstone was initially nominated as her father’s successor, but spent years locked in an acrimonious battle with Sumner before landing the role.
National Amusements still holds the majority of Paramount’s voting stock, and Redstone has been said to favor the approach from Skydance, producer of movies, including Top Gun: Maverick, released through Paramount, over the Sony-Apollo partnership.
While Sony and Apollo reportedly backed away from an initial plan to make an all-cash $26bn bid for Paramount, focusing instead on the firm’s key assets, clearing the way for Skydance to return with another merger offer last week, Redstone is said to be unsatisfied.
David Ellison reduced what he intended to pay Redstone’s National Amusements to offer additional money to Paramount’s other shareholders, Reuters reported on 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 yield an agreement – but it has led to the abrupt departure of Paramount’s long-serving CEO Bob Bakish, the exit of four board directors and a slew of shareholder complaints.
At the center of this tumult stands Paramount’s prime, 65-acre, 30-stage lot – the longest-operating studio complex in Hollywood – which survived the Depression, the TV age and the rise of streaming.
Entertainment is a business, and Paramount is saddled with some $14.6bn in debt. But the Paramount lot is also where Billy Wilder directed Gloria Swanson in Sunset Boulevard; where Orson Welles made Citizen Kane; and where hundreds of other films, including The Godfather and Indiana Jones, were made.
“Media properties still have an aura and mystique that continues to play,” said Bob Thompson, a media professor at Syracuse University. “There’s something different about a company like Paramount, or Disney, than a company that may have more profits, be more efficiently run, because they are the things that mediate the world to tens of millions of people.”
Analysts have calculated the lot’s value at more than $1.5bn, either as a studio, or as land for development. Ellison, with backing from private-equity groups RedBird Capital and KKR, is said to want to keep it functioning as a studio.
“There’s a number of good landlords in Hollywood, but when just a landlord takes over, the cultural artifacts go elsewhere,” Brian Curran, president of Hollywood Heritage, told Bloomberg last month. “It’s a real risk that we’d be taking, as someone who works in historic preservation. It would be an endangered monument.”
The future Paramount, and any megadeal to control it, is underpinned – like so many other vast multinationals – by personal, and often complex, emotional webs.
Unlike on Succession – the hit HBO series inspired by dynastic intrigues and family-corporate heirloom battles, as with the Murdochs and Fox Corp, and the Arnaults and LVMH – in this case, only one heir matters. Shari Redstone is calling the shots.
Some investors, whose hands are tied by the company’s shareholder voting structure, have suggested they would likely have benefited more from the Sony-Apollo offer, and threatened legal action if the wave breaks for Skydance.
As Redstone mulls her options, the tension has already sparked upheaval inside Paramount Global. Bakish, one of the most senior executives in US media and a company veteran, abruptly departed in April. In his place, the firm has been run by three executives as part of an “office of the CEO”.
Paramount Global is a challenged business, with a market value that has fallen by two-thirds over the past three years. When it finally sold Simon & Schuster last year, to the private-equity firm KKR for $1.6bn, the company said the move would bolster its finances.
It needed the boost. The costs of running a streaming platform, for example – from acquiring customers and keeping them to storing data – are high. But ignoring the at-home, on-demand digital revolution is no longer an option.
Rare exceptions like Top Gun: Maverick, Barbie and Oppenheimer aside, moviegoing has never returned to pre-pandemic levels, falling 8% since 2019 in the US, and more in international markets.
Paramount’s venture in the streaming wars, Paramount+, now has around 71 million subscribers worldwide, compared to Netflix’s 269.6 million, and 153.6 million for Disney+.
Executives at Paramount were said to have once hoped a technology giant – like Apple, which has amassed an estimated 44 million subscribers for its own streaming service – would come forward with an offer. No such bid has materialized.
On Tuesday, at the company’s annual shareholder meeting, its trio of leaders announced a restructuring plan – endorsed by Redstone – which included $500m in annualized cost cuts, potential sales of assets and a possible joint venture for Paramount+.
Analysts at LightShed Partners have said they “sense National Amusements sees too many legal headaches” with the Skydance deal, but does not want “to see a breakup of the company” under Sony and Apollo.
So why is Redstone even thinking about calling time on her family’s history with Paramount? She is reportedly building a vacation home in Turks and Caicos, and motivated to spend more time on fighting antisemitism.
The idea of generational leadership over decades, where the only continuity is bloodline, doesn’t always make sense in a media environment where constant change is the norm, according to Thompson.
“It’s not quite clear what Shari Redstone has done,” he said. “We can’t categorically say that accomplishments of the father cannot be run by the offspring, because you have to look at the competence of the offspring.
“Augustus Caesar took over that empire with reasonable success, but I think we can safely say Shari is no Augustus Caesar.”