Abstract:
Paramount completed the acquisition of Warner Bros. Discovery on Tuesday local time, giving technology tycoon David Ellison control of a huge media empire and many of Hollywood's top quality IPs. This deal will directly push the merged new company (named Skydance) into industry T1, competing with streaming media giants such as Netflix and YouTube, and second only to industry giants such as Disney and Amazon.
Ellison said in a statement on Tuesday: "Today is a historic day, not just for Skydance but for our entire industry." He added: "We can't wait to get to work."
The new company is the result of a fierce battle. Ellison defeated rival Netflix and won Warner Bros. Discovery after months of tug-of-war, during which he submitted nine acquisition bids. A coalition of state attorneys general filed suit on antitrust grounds in an attempt to block the merger, but the deal still went through.
The state attorney general eventually reached a lawsuit settlement with the company in exchange for a number of commitments, including the establishment of an independent editorial committee to ensure the independence of CNN reporting; Ellison promised to invest an additional $1.5 billion in film production over the next five years. Hundreds of Hollywood industry insiders said that this transaction will significantly increase the concentration of power among industry companies, trigger layoffs, and further stagnate the development of Hollywood. Skydance argued that the merger was a necessary move to compete with large technology companies.
The assets that Ellison currently controls are as follows:
Movie studio
Paramount Pictures
Warner Brothers
Dance in the Sky
Streaming media platform
Paramount+
HBOMax
Pluto TV
News organizations
CBS News
CNN
Polish TVN24 (one of the most popular news channels in Poland)
Cable TV channels
Comedy Central
Nickelodeon
Turner Television Network (TNT)
Turner Broadcasting Company (TBS)
HBO
Music Television Network (MTV)
Food Network
Blockbuster IP Series
DC Universe (including Batman, Superman, Wonder Woman and other characters)
The Wizarding World of Harry Potter
"Star Trek"
"Mission Impossible"
Now, he needs to run it all.
The new company’s debut comes at a time when the entire media industry is undergoing profound changes. Cable TV was once one of the core profit sources of the media industry. Although it is still profitable, it has entered a stage of continued decline. Streaming has yet to make up for lost profits from cable TV. The credibility of the news industry has hit rock bottom. Technology companies such as Amazon and Apple continue to enter the film and television and sports copyright markets, constantly pushing up content costs.
These challenges will be a major test for the 43-year-old Ellison. Until last year, he had never run a publicly traded media company. He and his team need to convince Wall Street that the new company can deal with the above problems while still being able to repay $82 billion in debt - a huge debt that puts great pressure on traditional media companies. He also needs to stabilize tens of thousands of employees at Warner Bros. and Paramount, which have cut jobs almost every year in recent years.
Complicating the situation further is Ellison's personal relationship with President Trump, which has made some CNN employees uneasy. This spring, Ellison hosted a dinner "paying tribute to the Trump administration" before the White House Correspondents' Association's annual dinner; later, he also accompanied Trump to watch the Ultimate Fighting Championship (UFC) event at the White House. (Paramount holds UFC media rights)
To alleviate concerns, Ellison retained the position of CNN Chairman Mark Thompson. Thompson sent an internal memo to employees on Monday saying that he had communicated with Ellison and was convinced that Skydance management would support CNN's consistent commitment to independent news reporting.
Another major problem facing Ellison is to win the support of Hollywood creative practitioners in an era of shrinking box office and personalization of artificial intelligence and algorithms. He promised to increase investment in content and ensure that a total of at least 30 theater movies will be released every year; after two years, the annual production will increase to 32 movies. He also promised to comprehensively upgrade the company's technology system.
But while accomplishing all the above goals, he also needs to achieve a total cost reduction target of US$6 billion in the next three years. To achieve this goal, thousands of jobs will most likely be eliminated.
Part of the layoffs are expected to come from merging overlapping business segments. CNN and CBS News are potential targets for downsizing, and some administrative positions at Paramount and Warner Bros. may also be cut. Relevant integration work has already started: David Zaslav, CEO of Warner Bros. Discovery, and Cindy Holland, head of Paramount’s streaming media business, both chose to leave after the completion of this transaction.
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