Skydance is Likely to Buy Paramount
I was too steamed over yesterday’s news to notice that #TheDarkHeraldWasRight again.
As I had guessed, Shari Redstone was just using David Zaslav to get David Ellison to see things her way. Skydance has entered into exclusive talks with Paramount with a view towards a merger. This is by no means a guarantee but Redstone is hot to sell and Skydance is hot to buy, so this is now just negotiating.
Warner Brothers was never a serious contender, even though Zaslav is desperate to find a buyer in this seller’s market. The fact was it was a bad fit for both companies As I said back in December:
“Paramount and Warner Brothers Discovery don’t really have complimentary problems, they have the same problems. They both gambled big on streaming and lost and they’ve both been beaten to a pulp by endless rounds of merger purge. Most of the key talent links have been cut in one way or another. Warner Brothers has a major superhero franchise at a time when all of the air has left that room, a Wizarding World franchise that has underperformed of late, and a moribund Middle Earth franchise that is very dependent on picking the right talent to support it. Paramount owns a lot of franchises that are cobwebbed and likely to stay so, it also owns Star Trek which comes with Alex Kurtzman inextricably glued to it. Although Paramount does own the Yellowstoneverse, but frankly one healthy franchise does not a studio make.
The biggest problem both studios have is gigatons of debt.
Warner Brothers’ debt came from AT&T paying a ridiculous $150 billion to buy them up in the first place. When producers at Warner found out that Ma Bell was going to be their new owner they went on a ludicrous spending spree which added to the debt bomb. Back in 2018 all of the studios were convinced that their own streaming services were going be eating Netflix’s lunch. Five years later the one eating Netflix lunch is Netflix. Consequently, Plan A of “pay off all of our debt with the shitloads of money we will be making off streaming” is now looking about as sound as “meeting a late payroll by having a really great weekend in Vegas.”
I was the only one predicting it back then but #TheDarkHeraldWasRight, streaming has been an unmitigated disaster for all of the studios that got involved in it. The only one to do all right was Sony and that was only because their PlayStation Vue service died an early death. Tom Rothman had already gone through the stages of grief and moved on with life before Disney+ even began streaming, consequently, his studio was the best positioned to avoid the disasters that befell everyone else. And he still controls Spiderman.
Now Warner Brothers does own Discovery… Well… Actually, it’s more like Discovery owns Warner Brothers. Zaslav and company were brought in by AT&T as a turn-around team. Their job from the start was to get Warner Brothers ready for a sale. The problem is, no one wants to buy anymore. Mostly because it’s primary asset, Discovery will fly away again once Warner Brothers is sold. Zaslav will be taking his company with him when he leaves and every potential buyer knows it.
All of that said…
Paramount has a few diamond-in-the-rough assets that might just be worth the risk of a merger.
Paramount has gotten back into the theater ownership now that the anti-trust ban has been lifted. It’s not a bad idea. Normally the theatrical split works out to 50% of the gross, meaning a film has to double its budget just to break even. BUT not if you own the theater it’s being shown in. All that money is yours.
Second, while commercial-free streaming has been a financial black hole, advertisement-supported streaming is another story altogether. And Paramount owns Pluto.TV which has a monthly user base of 80 million, that is something you can work with.“
This is a fairly decent deal for both partners. Paramount gets a creative leadership that can find its ass with both hands and Skydance gets all the pictures Paramount made when Eisner and Katzenberg were in their prime back in the seventies and eighties.
The question a few of you are asking is; does this mean the end of Alex Kurtzman’s Star Trek?
Answer: Damned if I know. He’s been about as easy to kill as a New York City cockroach. His lawyers have proven to be exceptional even if his shows have been hideous abortions. His real talent has been his ability to find unlikely sources of finance. Something a cash-strapped Paramount couldn’t afford to ignore. However, Skydance produced the first two Star Trek movies that J.J. Abrams directed. The previous contracts might grant Skydance pre-existing primacy regarding Star Trek. There is also the issue that Paramount would have known that being required to keep Alex Kurtzman as the head of Star Trek would be a millstone on any acquisition talks. Possibly, why his last contract was so generous, they wouldn’t give him any kind of job security in case of a buyout. If I’m right (and that is a BIG if) expect to hear whining to the trade media about Star Trek: Section 31 being sent to the Iron Vault of Tax Write Offs.
So what happened with Warner Brothers?
“I have no idea!” Says everyone in Hollywood before stuffing hands in pants pockets and wandering quickly away, whistling innocently.
But I’m not in Hollywood, so I’ll hazard a well-aimed guess. One of Paramounts assets that until last month was worth something was Nickelodeon. And David Zazlav’s company, Investigation Discovery just turned the ‘Nick’ name into radioactive slime with a documentary on all of the sexual abuse of child actors that was going on there in the 00’s.
In Tinsel Town there are some things you don’t get air in public without consequences.
