Paramount Global needs to evolve into a “media and technology” company to compete in today’s turbulent entertainment industry, tech magnate and soon-to-be Chief Executive David Ellison told investors and financial analysts on Monday, a day after the company’s board approved a merger deal with his Skydance Media.
“If you look at the landscape today, you’re seeing a lot of technology companies rapidly expanding into media companies,” Ellison said during the hour-long conference call. “It’s essential for Paramount to expand its technology capabilities to become both a media and technology company.”
The plan also includes improving the algorithmic engine and ad tech capabilities of Paramount’s streaming service, Paramount+, Ellison said. Making Paramount+ profitable is a key goal for Ellison, and improving the algorithm that drives user recommendations should increase the amount of time viewers spend on the platform and the ways content is delivered to them, he said, which should in turn help reduce churn.
On Sunday, the companies announced that Paramount’s board of directors had approved an $8.4 billion proposed acquisition by Ellison’s Skydance Media and its backers of the Redstone family’s Massachusetts holding company, National Amusements Corp., that would give Ellison a controlling stake in Paramount and merge Skydance with the storied media company.
However, the company still faces significant challenges due to its strong linear TV presence and high debt load. Given all this, the company needs to adapt to new technologies to stay competitive and become more efficient.
Ellison noted that Skydance Animation is partnering with Oracle, the company co-founded by his father, to build what’s being called a “cloud studio.” Animation has long been considered an on-premise industry, but Ellison said Skydance’s latest animated film, “Spellbound,” was made partially in the cloud, reducing costs.
“We intend to expand this to all creative workflows,” he said, adding that the company plans to use artificial intelligence tools to “enhance creativity and improve production efficiency.”
“The combination of art and technology is the cornerstone of our business and we believe it will be essential to our future,” Ellison said.
But investors in the market may not have been convinced: Paramount shares were down about 5% to $11.21 as of around 7:30 a.m. Pacific time.
Mr. Ellison has endured months of intrigue and negotiation to gain control of Paramount. Last summer, he approached Paramount’s independent chairman, Shari Redstone, about a deal to buy her late father’s company. The two seemed close to a deal in June, but then Redstone suddenly backed down and pulled out of the deal.
But a team of investors led by Ellison regrouped and began putting together a revised deal in recent weeks, culminating in Sunday’s announcement. The deal, which still requires regulatory approval, is expected to be completed by the end of this month.
In a memo to employees Sunday night, Paramount’s so-called “Co-CEO Office” — made up of three executives — said the company continues to move forward with the plan it announced late last month, which includes “streamlining teams, eliminating duplicative functions and reducing employee count.”
“It will be business as usual until the transaction closes,” the memo said.
