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Paramount-Skydance merger: what strategies execs plan to use for streaming

After Paramount and Skydance announced they had reached a merger agreement over the weekend, executives from Skydance Media and RedBird Capital Partners revealed how they plan to approach Paramount Global’s streaming business.

Executives said Monday that their approach to the direct-to-consumer business will include strategies such as improving technology and exploring possible streaming partnerships. They also discussed plans for other segments of the “New Paramount” that are expected to be formed after the deal closes.

“Everybody obviously understands that streaming is a critical part of the business and it’s the future of the business,” David Ellison, who will be CEO of the new company, told analysts.

Paramount Global and Skydance Media announced a merger agreement over the weekend. (Rafael Enrique/SOPA Images/LightRocket via Getty Images)

Paramount’s DTC business currently consists of three services — Paramount+, Pluto TV and BET+ — but it has yet to turn a profit. Its eponymous streaming service, which launched for the first time in 2021, had more than 71 million subscribers as of the first quarter.

Paramount agrees to merge with Skydance

“Our objective is to reimagine the Paramount+ platform and we believe our technology and relationships will enable us to grow our DTC business,” Ellison said.

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Paraa Paramount Global 21.02 +0.55 +2.69%

He said Skydance Investor Group is working to improve Paramount+’s recommendation algorithm, aiming to “increase time spent on the platform, reduce churn and increase lifetime value for all shareholders.”

Ellison said some of the tech opportunities the company saw included “integrating cloud providers across all of our delivery services for significant efficiencies” as well as optimizing its ad tech.

Skydance logo

Paramount Global and Skydance Media announced a merger agreement over the weekend. (Pablo Gonchar/SOPA Images/LightRocket via Getty Images)

Meanwhile, the new Paramount is “in the dark about how much we’re making from our content, what content belongs where, what content belongs to … [we] “We need to figure out what content we should license to ourselves and what content we should license to other people,” said Jeff Shell of RedBird Capital, who will be president of the combined company.

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The new Paramount will also explore potential partnerships with other streaming platforms, executives suggested.

“We’re going to evaluate all of our options to be a winner in DTC, and being a winner in DTC means being part of the ultimate bundle that’s coming,” Shell said. “We’ve had a lot of proposals from a lot of different people about potential partnerships, including with other players, so we’re going to evaluate it all.”

Paramount +

Paramount Global and Skydance Media announced a merger agreement over the weekend. (Rafael Enrique/SOPA Images/LightRocket via Getty Images)

Partnerships and bundles between streaming services are becoming increasingly common.

At one point during the investor call, Shell said that “you’ll see some easy, simple bundling solutions” in streaming, and that people are “already seeing the bundling process begin with some of these new bundles.”

Streaming TV bundle adoption grows

Comcast has rolled out a “StreamSaver” bundle that includes Peacock, Netflix and Apple TV+, while rivals Disney and Warner Bros. Discovery have also created their own streaming packages that include Disney+, Hulu and Max.

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Dis The Walt Disney Company 97.37 -0.17 -0.17%
World BD Warner Bros. Discovery 7.11 -0.10 -1.39%
CMCSA Comcast Corporation 37.33 -0.53 -1.40%
AAPL Apple. 227.82 +1.48 +0.65%
NFLX NETFLIX Inc. 685.74 -4.91 -0.71%

Paramount and Skydance said they aim to close the deal in the first half of 2025, assuming necessary regulatory approvals are received and Paramount doesn’t find another deal during a 45-day “go-shop” period.

Reports of fresh talks between the two companies surfaced this month and the proposed merger was announced on Sunday after months of interest from a range of potential bidders.

The two companies estimated the new Paramount’s enterprise value at approximately $28 billion.

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