Paramount Now Belongs to David Ellison. What Will He Do With It?

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1:51It is Monday, July 28th. If it seems like we've been talking forever about the Paramount sale and the federal government's pending approval of the deal, we kind of have this$8 billion sale of the company behind the Paramount Movie Studio, CBS, Cable Channels, Paramount+. It was announced last July, a lifetime ago in the political world. But on Thursday, it finally happened. The FCC issued an order greenlighting the transfer of the CBS broadcast license. The commissioner, Brendan Carr, he said he was satisfied that Paramount agreed to end its DEI programs and monitor CBS News for so-called political bias.

2:28That was enough. That was the last big hurdle for the deal that will give David Ellison and his Skydance Media control of the whole company. It's now expected to close on August 7th. And then what? We've been debating the politics of this deal for so long, but we haven't really discussed in detail what's going to happen, or at least what we think will happen based on our reporting and what the company and Ellison himself have said. Because changes are definitely afoot. Ellison and his deputy, Jeff Schell, they've been putting together their plans for more than a year. We know Cindy Holland, the former Netflix executive, is going to run the TV group.

3:01George Cheeks will stay at CBS. Skydance executives will take over film. But what else? Lots of moving parts here, and options are on the table. Most of all, questions are being asked. So that's what we're doing today. Actually, we recorded this on Friday, but it's running today. Lucas Shaw is here from Bloomberg and it's Paramount and Skydance on the brink. What's about to change and what are the biggest open questions? From The Ringer and Puck, I'm Matt Felony and this is The Town.

3:32Okay, we are here with Lucas Shaw from Bloomberg. Welcome back, Lucas. My final episode from New York. Oh, you're coming back. You know, you missed beautiful weather. It's like perfect here. I'm feeling very superior to everyone sweating their ass off on the East Coast. All right. We're talking Paramount today because finally, a year after this deal was announced, finally the FCC has given the go-ahead. The order came down. Brendan Carr has approved the transfer of the license of CBS, which was the final holdup for this deal, expected to close within the next couple weeks. The Ellisons, barring some last minute surprise or a possible South Park episode that directly takes down Donald Trump even more, I'm kidding, they will own this company.

4:24So that raises a lot of questions. And I want to go through some of the top questions with you because I think we can tease out some of the issues that they are facing immediately. And we both know they have a plan. They've been sitting on this plan for a year. They have executives that are lined up to come in. They have not officially announced yet, but you and I know pretty much who they are. And there are tricklings of the plan that have leaked out, but not the official, this is what's happening. So let's go through the questions. You want me to start or do you want to start? I'm happy to start.

5:02I feel like the first one is sort of obvious. Yes. What the fuck is the streaming strategy? Okay. Yeah, that is, I think, the future of this company. We both agree. They say they have one. They say that they are, what was the line that Ellison gave? Like we are, you know, blend the best of an old media company with the best of a new media company leaning on his father with Oracle. They do have a deal with Oracle that they have announced. No, they didn't announce it. They didn't announce it? We reported it, but they have not announced it. Oh, okay. So you reported it. I did not get any pushback from them when I mentioned it.

5:40So I'm assuming that is coming. But they will have a deal for technology infrastructure with Oracle, which Paramount was not at the forefront of the technological innovation category. But it doesn't say what they're actually going to do with Paramount. What do you think they're going to do? well Merge Paramount Plus and Pluto TV that's the first thing right I don't know that they will do that so there are a lot of questions they face one do they go it alone or do a joint venture with someone else I think the previous regime was more interested in a joint venture and maybe folding it into something like Amazon they talk to Amazon Amazon or HBO Max or something I don't see that happening with David Ellison he believes that he can bring the tech bona fides to make them a player and also So if you're going to buy this company and then basically get rid of the growing part of it or merge it with someone else, what exactly are you buying?

6:38The combination of Paramount Plus and Pluto, I think there will be a combination on the back end, no question. That's the fast service, by the way. That is their free ad support. Free ad supported that was once the market leader and has since lost a lot of ground, mostly because of underinvestment, because Paramount put all its money into Paramount Plus. I don't know whether they will actually merge the front end, which means that there's only one service you go to. Because if you do that, you probably lose a lot of customers. It's very expensive. It takes a lot of time. It's totally possible.

7:06There will undeniably be greater integration of Paramount Plus and Pluto. I don't know that there will be an outright merger. Doesn't long term, doesn't it make sense to have one brand, one service, free? You know, it's like the good, better, best strategy. Good is the free channel. Better is Paramount Plus with ads and best is Paramount Plus without ads. Like, doesn't that seem like a more integrated service? Amazon Prime Video had a separate fast service in Freevi and they had IMDb TV previously. And they have now integrated that into Prime Video as one service. They didn't do the free tier, although Amazon is arguably free to people who subscribe for shopping.

7:48but that to me seems like a cleaner strategy, but you're right, more expensive to integrate. What is the programming strategy, right? Because right now the Paramount Plus audience or their most popular stuff is basically football and Taylor Sheridan where there's a lot of overlap between those shows, right? CBS shows do well too. CBS shows, a little bit of animation, but Cindy Holland, who's coming in and is going to run streaming, she was the number two under Ted Sarandos for a large chunk of Netflix's history. And her strength as a programming executive, everyone thinks she has phenomenal taste and phenomenal relationships.

8:29But the types of shows that she's known for are pretty different from the core audience of the Paramount Plus service. And so, in fact, the core audience of the Paramount Plus service is sort of like what Bella Bajeri is doing at Netflix now. Right. Yeah. So can Cindy change or does Paramount Plus change? That was going to be one of my questions. Right. Which is a corollary to what the fuck is the streaming strategy? Yeah. We'll move on to my first question here. My first question, I'm going to start with the end question here. What else are they buying? Because I actually think this is the start.

9:04This is not the end of this process. And now David Ellison owns Paramount and CBS, and he's going to be happy running these businesses for the next 40 years. I think he sees himself as a version of the new Sumner Redstone or Rupert Murdoch, who took very small media assets and built conglomerates out of them. I think he sees himself as having unlimited money. His father is the second richest man in the world, last I checked. He's 80 years old. He's not going to be around forever. and he's going to use Paramount as the first of many things that he will buy and try to create the modern media conglomerate for the 21st century.

9:50See, I had as a question, what else, or not what else, but what are you going to sell? But that's separate. Let's do what are you going to buy? The problem with the comparison to Rupert Murdoch or to Sumner Redstone setting aside any family dynamics you want to get into is that they both got into certain industries at, if not the start, the beginning of the boom, right? You know, Sumner Redstone got into cable at the beginning, basically. Rupert Murdoch got into newspapers right before one of the greatest eras and the greatest era in its history. He got into cable, television, and movies right before really good eras.

10:28David Ellison is inheriting a shrinking business, so it makes it a little bit more difficult to use that. But with unlimited funding. Correct. and with an eye. I mean, his dad is talking about buying TikTok. So maybe TikTok becomes part of the Paramount conglomerate. The part that makes it different is the family checkbook and how that may or may not be used, right? Now, it's not a liquid checkbook, I don't believe. A lot of that net worth comes from holdings in Oracle. But sure, if you were to look at what does a forward-thinking media company buy in this day and age, it would be buying something in social media.

11:05It'd be buying something in gaming. It'd be buying something in AI, maybe buying something in sports. You certainly wouldn't add more film and television assets to it. No, maybe a creator agency, maybe some big YouTube properties. Like, it's an interesting question. Like, what would you buy with unlimited money trying to build the new News Corp or the new Viacom? Because those guys were visionary when they had their assets. Sumner Redstone had a movie theater chain and he realized that television was a thing. So he got into that business and he bought Paramount. Then he bought CBS. And all of a sudden he's at one point the biggest media mogul in the world.

11:45Same with Rupert Murdoch. Like Fox didn't just happen. He decided there could be a fourth network and went after it and succeeded. Like what's the modern version of that? It's not quite the same. We got a little bit of a teaser of this when Blackstone gave Kevin Mayer and Tom Staggs, who came from Disney, a large checkbook to go out and build an independent studio. And they bought a Hollywood production company in Hello Sunshine. They bought a YouTube company in Moonbug. They bought a social adjacent company in Attention. They bought a couple of international media assets in Exile. And I forget the name of the Israeli company.

12:19And it didn't work. Far away road. Far away. Now, the Moonbug acquisition, setting price aside, great business that they bought, fine. The rest of it isn't quite the same. But this, I guess, gets to a question for David Ellison and for Paramount. Are you a studio at your core or are you a platform company at your core? Yeah. Production or distribution? Or both? If you're production, you would go out and buy like IP. You'd buy a library, you'd buy YouTube channels, you'd buy that. If you're a distribution player, it's totally different. And I would argue that with unlimited money, you have the luxury of at least trying to become a platform.

12:58So far, the outlets, the companies that are sticking with the production business are doing so mostly because they don't have the scale and they don't have the wherewithal to compete. And Blackstone gave Candle Media, what was it,$5 billion? Like the Ellison fortune is much larger than that. So maybe there is a path where Paramount merges with TikTok at some point, or they go after a big platform that is emerging and they grow it with the content of Paramount. Something like that. Paramount can't really merge with TikTok. Or whatever the U.S. business of TikTok. The core of TikTok is not getting sold.

13:36That's true. This is all a little bit of a farce. But you know what I'm saying, where they have some relationship or they have some kind of a preferred status or whatever. Or maybe TikTok buys Paramount. I don't know. All right, so let's move on to... What will you sell? Yeah, let's just go to what would you sell. So you can start with what would you sell. I mean, it's all the cable networks. But the question is, can they find a buyer? I think the three are BET, Comedy Central, and MTV. That have value, have name recognition. Some rich Gen X guy might say, wait, I can own MTV? Something like that.

14:14I think MTV is the weakest of the three. Oh, it is. It is now. I just don't know what it is anymore. BET at least kind of knows what it is. Comedy Central, even though they only have really two shows, it knows what it is. It has a brand. Yeah. There were people who tried to buy BET. There were people who kicked around Comedy Central. I know. It's funny to think that there was a$3 billion offer for Showtime. Unbelievable. And now what is Showtime? It is an appendage to Paramount+. Barely. Barely an appendage. We'll see when they do the fifth Billions spinoff. And Dexter, didn't Dexter die? How is he back?

14:50You know, people die and come back. That's the beauty of the entertainment business. Characters never die. They never die if you have a media conglomerate to feed that desperately needs some kind of a justification for their carriage on cable systems. Okay, so you think that they are going to be sold individually or are they going to do the Comcast strategy and float all of these cable networks into a spinoff that they can load with debt and they can make them go away and all of a sudden Paramount is a studio and streamer company. And CBS. The problem for them is they are the single most exposed company in terms of cable networks.

15:34It accounts, I believe, for the largest share of their revenue and profit of any of these companies. And so I don't think they can, they can't get rid of all of them because then all they have left is their movie studio and a streaming service. And Warner Brothers Discovery has done it, but their studio is much larger. In particular, their television studio is much bigger. And their streaming service includes HBO, which is a TV network that makes a lot of money. So, you know, I guess they could spin off some of them into something that people buy. I think there's also value in having some of them because of the packages they can do with carriers where you leverage CBS because there's retrans fees associated with CBS and you package in some of these old Viacom networks with them and you might get more value than someone might get without a CBS.

16:22Yeah. Because they have NFL. I think it would make more sense to sell them individually because you need people who want the individual brand. I don't think BET and Comedy Central together gets you much of anything. So beyond cable, what else do they sell? Anything else? I mean, real estate. Ed Sullivan Theater is gone. They're selling that. They still have some international media assets that they could sell if they wanted to.

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17:21Now nominated for eight Emmys, including outstanding comedy series. The New York times declares the series from comedy director, Emmy nominee, Christopher Storer a masterpiece. The fourth season of the acclaimed series features Emmy-nominated performances from Iowa Debery, Rob Reiner, and Jamie Lee Curtis. All episodes of FX's The Bear are now streaming on Hulu and Hulu on Disney Plus for bundle subscribers for your Emmy consideration. My next question, what the hell is a CBS News ombudsman going to do? That was one of the concessions that they made to Brendan Carr and the FCC is that not only will they eliminate their DEI programs, but they will add a viewer representative ombudsman to CBS News to monitor bias, wokeness, whatever you want to call it.

18:13And what? Report back to the authorities? Go public? What is the ombudsman at CBS News going to do? Well, it's that second part that's the problem, right? Having an ombudsman is not particularly uncommon. No, well, these days it is, but newspapers used to have them a lot. Right. The problem is, to whom is the ombudsman going to report? Right. Are we going to have the government vetting this at all, vetting the news reports from CBS? Because that you don't want. Yeah. And what happens if the ombudsman sits in a meeting and someone says, you know what, these Trump people, screw them. And then the ombudsman goes and tells Brendan Carr, what are they going to do?

18:54Don't know. Can you imagine someone that would be more hated at the office than the ombudsman who is there only because of a government mandate? And what happens when they bring in, like, let's say they buy the free press, which I don't think is going to happen. But let's say you don't think it's that they're negotiating. I mean, Barry Weiss has a very inflated sense of her value. I don't know that the free press is worth 250 million. I don't think that that would end well. Listen, the history of the media business is things that sounded great and did not end well. I don't think it sounds great either.

19:25Not as a spite to the free. You're going to come in and fire thousands of people or hundreds of people and sell stuff. And you're trying to overall. And at the same time, you're going to spend a couple hundred million dollars on a news organization that doesn't make money and is run by a controversial person who is going to alienate most of your journalists. It feels like a recipe for disaster. And you know who would be hated more than the ombudsman? Barry Weiss. Can you imagine 60 minutes story meeting where Leslie Stahl is going over a story and all of a sudden Barry Weiss chimes in and says, you know, I think that could be perceived as a liberal slant on that story.

20:03Leslie Stahl would give her the double middle finger. Yeah. I don't know what they do there, but I'm going to choose to believe this. This won't be as bad as everyone thinks it will be. You think it's just lip service that David Ellison was just dancing for the FCC, telling them whatever they want to hear and that he will get in there and just do what he wants and not kowtow to the administration anymore. Well, sort of. I think he wants Barry Weiss. I think he likes that brand of news. He likes that it's considered, quote unquote, down the middle. I think he does like that. And he's interested in buying this.

20:37Yeah. His interest in it signals to me that there are many clashes ahead between the leadership of this company and their news division. because there's going to be an effort not even pushed necessarily by the government, but by the leadership of the company to come in and say, we need to be more balanced in our coverage. And that never goes over well when you say that to a news organization. Yeah, especially the number one news magazine, 60 Minutes. Right. But if you go and tell 60 Minutes, hey, you guys, we think you've either we think you've fallen off or we think that you're not as impartial as you used to say, yada, yada, then you have a big problem.

21:20Yeah. And CBS is a particularly prickly place. The culture of that place from everybody I've talked to is very unique. They just hired Bob Simon's daughter to be the executive producer of 60 Minutes and that it was received very well inside the unit. Seen as an encouraging sign. Yes. And they want David Rhodes to be the head of CBS News. We'll see if that deal ends up happening. But he previously ran CBS News, was not the most popular guy there and was formerly at Fox, but at least he has experience in the building. So we'll see if that happens. All right. Next big question. Can your movie studio be relevant again?

21:56That's a good one. What do you mean by relevant? Do you mean profitable or do you mean like winning best picture? More the former. They have one or two big movies a year, but they have been one of, if not the lowest grossing movie studio for many, many years now. They don't make or release as many movies as most of their peers and even though Disney doesn't make a lot of movies, the few movies that Disney makes tend to be gigantic. Paramount makes like one or two big movies a year. They have singles and doubles when they have hits. And then a bunch of tiny movies and their big movies are basically all Tom Cruise.

22:31Or Transformers. Or Transformers. So David Ellison loves movies, right? He spent most of his career financing and producing movies. He got started co-financing Paramount movies. They know that they need to make this movie studio more competitive with its peers just in terms of the annual performance, but that's going to take a real investment. And it's going to mean that they need to be more competitive in buying big packages and working with big filmmakers. And they're going to have to figure out if there's a way. I mean, we're talking about what should they buy. Like, is there a way to bring in more IP that means anything to people, right?

23:05Like they don't have the same stable of franchises that some of these other studios have. Yeah, I could see them going after like a legendary or like one of these companies that has franchises attached to them to bring in some of those. And I could also see them, you know, this is his background. They've done franchise style movies with mixed success, less success than they would like to admit. But it gets to the question of talent, which was my next question is what big talent deals are they going to do? Because they are going to have to step up. And I just wonder if they're going to do a version of what Warner Brothers did when David Zasloff came in.

23:45I reported in my Puck newsletter last week that they're doing a big deal with Will Smith and his company to make movies for Paramount. Now, he's sort of a damaged good right now just because the radioactivity around him. But he's proven at the box office that people will still show up for him. That, to me, is a kind of smart move. It's similar to what Warners did when they did these big deals with Margot Robbie and Timothee Chalamet and Tom Cruise right when David Zaslav came in. And I don't quite know what they got out of those other than just for the headlines of we're, you know, we have a, you gave an office on the lot to Tom Cruise.

24:22Well, they're getting a, that isn't Tom Cruise. They're getting the In a Re 2 movie with Tom Cruise in it. But then they passed on his second movie, Deeper, that he wanted to do with Ana de Armas. They were like, nope, too expensive for us. My point is they could have just hired him for the In a Re 2 movie. Maybe he wouldn't have done it for them, but it's a balance. Some of it is also signaling, right? The reason that Warner Brothers wanted to do all of that was partially because they felt that under the previous regime, the Warner Brothers reputation had suffered. Yes. They lost Chris Nolan.

24:53They wanted to make it seen as a haven for top talent. It's one of the reasons they also did that Ryan Coogler deal on Sinners. Which worked. Right. So are there versions of that that Paramount can do and go out and be in business with a couple of top filmmakers, a couple of top actors, people take some risks, take some swings? I think CAA and WME are going to salivate when this deal closes because they know they've got a window to pitch as many big, bold, expensive swings as they can and get Paramount to buy them to send the message to the town that we are the big boy movie studio now. We're going to be in the mix for this stuff.