Paramount’s $8 billion sale to Skydance faces increasing challenges, largely due to complications with CBS, often referred to as the Tiffany Network.
Another significant obstacle arises from the ongoing conflict between CBS, Paramount’s news and entertainment arm, and its approximately 70 affiliates. CBS is pushing for higher fees for the programming it broadcasts, leading to complaints from affiliates who argue that these price hikes threaten their viability. There’s a possibility that CBS’s concerns could provide Trump-appointed regulators at the Federal Communications Commission (FCC) with justification to block the deal, especially given the administration’s interest in safeguarding local news outlets.
As long as CBS stands firm, there seems to be some frustration bubbling under the surface, according to sources.
Most viewers may not grasp the intricacies of the business arrangements sustaining their local TV content. In broad terms, cable companies pay local broadcasters like Sinclair and Nexstar for signal access, which they then deliver to millions of homes across the U.S.
It’s true that the audience is dwindling— largely older demographics—but there’s still substantial revenue potential in reaching this group through fees and advertising. This explains why local broadcasters often become affiliates of major news networks, agreeing to pay for programming.
Nevertheless, the entire structure is under strain. With more people cutting the cord, fewer viewers are engaging with network programming, and ad revenue is diminishing. Networks are shifting content to streaming platforms, but that transition isn’t always lucrative.
Take It or Leave It
Affiliates feel caught in the middle during disputes with CBS as the network tries to extract maximum profits from an increasingly unsustainable model. Sources indicate that CBS has rolled out numerous contracts demanding significantly higher fees on a strict take-it-or-leave-it basis, which complicates things for the affiliates.
There are deep concerns that this pricing pressure poses an existential threat to affiliate business models.
A spokesperson for Paramount chose not to comment, instead directing attention to a recent earnings call where co-CEO George Cheeks addressed concerns regarding affiliate relationships and financial pressures. He remarked, “We have invested heavily in essential live sports and the most viewed primetime entertainment schedules. When dynamics shift, it becomes challenging to maintain that economic model. Consequently, affiliates and local audiences will be impacted.”
This situation could potentially push CBS to reconsider its aggressive pricing strategies. At a time when CBS is raising fees, Shari Redstone, Paramount’s heir and manager, is eager to finalize a sale to the independent studio Skydance.
This sale matters to her for a few reasons. If the deal clears regulatory hurdles, she stands to gain $2 billion— a portion of the wealth her late father, Sumner Redstone, left behind when he built Paramount into a powerhouse, before its value waned due to shifts in traditional broadcasting. And while that might not be life-changing, it’s definitely secure.
The Fairness Dilemma
The investigation into fairness concerning CBS News could be further delayed until the FCC, headed by Trump appointees, greenlights the deal. As noted, Redstone appears desperate for approval, willing to settle a separate $20 billion lawsuit involving claims that a “60 Minutes” interview with Trump’s 2024 opponent, Kamala Harris, could paint Democrats in a more favorable light during the campaign.
This situation is undoubtedly messy. While Trump supporters often criticize the mainstream media for perceived biases, they generally appreciate local broadcasters. They view local news as more straightforward and less aligned with the left-leaning narratives often found on major networks, believing it remains a vital resource for small-town America.
In Central America, where many affiliates operate in a traditional media landscape, there’s hope that these affiliate models can endure, despite ongoing pressures.
FCC Chairman Brendan Kerr is focused on ensuring that local broadcasters navigate the rapidly changing media environment while adhering to fairness standards, given their use of public broadcasting frequencies, unlike cable networks.
He’s also affirmed his commitment to supporting local broadcasters, voicing concerns about the current dynamics and whether they represent a healthy evolution in the media landscape.
It’s clear that Shari Redstone has plenty to consider regarding the Skydance deal.
