The spiraling chaos at Paramount

Paramount Global's official slogan is "Popular Is Paramount," but the entertainment conglomerate appears to be anything but that these days. The company, one of the most notable entertainment brands in the U.S. and a legacy Hollywood studio, has needed an economic lifeline for months and thought it found one with Skydance Media, a production company owned by billionaire David Ellison. 

But just as Paramount thought it had a solution, a deal to merge the brands fell apart, with Paramount and its parent company, National Amusements, ending talks with Skydance in the final stages of negotiations. Now Paramount, which had already been on a downswing, is back to square one, and Hollywood is left wondering what will happen to the iconic studio. 

Why has Paramount been struggling? 

Paramount has been looking to sell itself and get a financial boost for years. The studio, like other Hollywood heavy hitters, has "been struggling to recover from last year's monthslong strikes by Hollywood writers and actors, a soft advertising market, and falling cable subscriptions in the United States that has eroded profit for its TV business," said Reuters. The company's flagship streaming service, Paramount+, is also lagging far behind its competitors; Digital Trends reported that the streamer has the fifth most subscribers among major brands with 71.2 million users. By comparison, Netflix, the top streamer, has more than three times that amount with 269.6 million users. 

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Paramount has been on a steady decline ever since CBS merged with Viacom in 2019 to eventually create Paramount Global. Despite the merger, "shares of Paramount have fallen more than 65% since then, losing more than $14 billion in market value," said Reuters. Even the studio's tentpole brands haven't been helping much; 2023's "Mission: Impossible - Dead Reckoning Part One" grossed $567 million at the worldwide box office, but was considered an underperformance for Paramount given that its gross budget was nearly $300 million. 

What went wrong with the Paramount deal? 

Skydance seemed like the logical partner for Paramount, as the two companies had previously entered into production deals with one another. However, the merger was declined at the last minute almost entirely at the behest of Paramount Chairwoman Shari Redstone. Redstone had been at the forefront of negotiations for months, but the deal fell apart because she "just didn't want to sell," said The New York Times. 

The Redstones have been at the helm of Paramount for years. As talks got closer, a "fundamental question hovered over everything: Was the Redstone family finally ready to part with the media empire it has owned for decades?" said the Times. The deal was so close to being finalized that Paramount and Skydance had already agreed to financial terms, an $8 billion deal that would see Redstone receive $2 billion and Skydance buy out nearly half of Paramount's shares, CNBC reported. However, Redstone "decided she still wasn't satisfied [with the finances] and communicated her desire to end the talks to Skydance," said The Wrap, with one source telling the outlet that she "just wants the most money for herself."

Beyond Redstone getting cold feet, there are other rumors as to why the deal fell through. One narrative is that "while the two parties had agreed on the economic terms," Paramount and Skydance didn't agree on "whether the deal should have been subject to approval from a majority of the minority shareholders," said CNN. 

What comes next for Paramount?

Whatever the true reason for the deal falling through, "squabbling about the reason it could not get across the finish line does not change that reality," said CNN. Now, Paramount must look to the future, and in a memo obtained by Deadline, Paramount co-CEOs George Cheeks, Brian Robbins and Chris McCarthy outlined their plans. The company will focus on "transforming our streaming strategy to accelerate its path to profitability, streamlining the organization and reducing non-content costs, [and] optimizing our asset mix." 

In terms of a future deal, Paramount "appears increasingly likely to go it alone," Guggenheim analyst Michael Morris said to The Hollywood Reporter. But Paramount's "current strategy has no hope of creating a viable, profitable long-term business," said LightShed Partners analyst Richard Greenfield, per The Hollywood Reporter. Expect an "aggressive battle between Amazon Prime Video, Warner Bros. Discovery/Max and NBCU/Peacock to license Paramount's content or create some form of joint-venture with Paramount+."