Paramount Global's Current Situation So Far And How They Can Control Their Fate With Streaming After Failing To Reach A Skydance Deal (Including One Big Wild Card)

You don't need to be a genius to see that Paramount Global is currently dealing with a crisis, in and outside the company. Almost 5 years ago, Shari Redstone finally got her way and made the divorced CBS and Viacom come back together after 15 years separated. Both were considered too small to be separate, considering how much the market changed in only 15 years, and both would have been as small as a 20th Century-less FOX Corporation. 

In almost 5 years, Paramount relaunched the smaller, less appealing CBS All Access to Paramount+ while also shutting down many niche services (some you never knew existed); sold Simon & Schuster, many iconic CBS locations, and the now very controversial CNET, who's credibility been degraded by the new owner's use of artificial intelligence; got many films at #1 at the box office with Top Gun: Maverick being the most successful film Paramount has had in years; and even managed to trade over $90 in the stock market. Things were looking promising for Paramount.

However, their problems would arise as many Wall Street analysts realized that in 2022 after Netflix lost subscriber counts in over 10 years, many streaming services were not profitable as they relied on subscription count growth rather than returns. Disney+, (HBO) Max, Peacock, and many others started to chase down a path that many consumers have come forward with those displeasing announcements.

Paramount eventually joined the trend by removing The Fairly OddParents: Fairly Odder, The Harper House, Jordan Peele's The Twilight Zone, The Real World: Homecoming, and Guilty Party on January 31, 2023. 6 months later, they removed Grease: Rise of the Pink Ladies, Star Trek: Prodigy (now on Netflix), The Game (2021), and Queen of the Universe.

Paramount has struggled even as a strong competitor of Peacock in the streaming wars. What really ticked them off were the merger rumors. Many were speculating that Skydance Media, Apollo Global Management, and others could potentially end the long tenure of the Redstone family run of controlling the current company we know as Paramount Global.

David Ellison

Skydance, run by the son of Oracle founder David Ellison, almost made this happen as we managed to get an exclusive one-month window with Paramount Global's parent company, run by the Redstones, National Amusements. Though they didn't get a deal in time when the contract expired, Skydance continued negotiating. But two surprise bidders came through and shocked the entertainment industry. Sony and Apollo placed a joint $28B bid on Paramount Global that would separate the company, with Sony only maintaining Paramount Pictures and the library and Apollo with the other assets. They did back out, as they decided to reconsider their bid.

Behind the scenes were said to be havoc as former president and CEO Bob Bakish and Shari Redstone disagreed on how the company would continue while negotiations were underway. With how dissatisfied with how Paramount was running, Bob Bakish was fired from his role just hours before their quarterly earnings were announced. His temporary successor(s) were the heads of the CBS, MTV, and Paramount Pictures/Nickelodeon divisions: George Cheeks, Chris McCarthy, and Brian Robbins, with McCarthy serving as their "true" temporary CEO to comply with SEC regulations. All three discussed ways to move forward if no deal were to be reached.

On June 3, Paramount and Skydance had agreed to terms for a merger just before Paramount's shareholders meeting. Ellison would buy Shari Redstone's 80% stake in National Amusement and then merge Paramount with Skydance afterward. Shari was displeased with it, and on June 11, National Amusements ended talks with Skydance Media.

WireImage

The trio had been working on a strategy behind the scenes that consisted of three things: Explore a joint venture with Paramount+; Cut $500m in costs, which means layoffs; and Divest non-core assets. 

The question is how they will explore a joint venture with Paramount+? How would Paramount reevaluate itself in the streaming world?

Many are speculating a merger of Paramount+ and NBCUniversal's Peacock, which Bakish had discussed with Comcast before the merger fiasco came about. Paramount and NBCUniversal already have a relationship through streaming with their other joint venture with SkyShowtime in some parts of Europe, which replaced Paramount+ in those regions. The question is how would they brand it? Will they use the already established Paramount+ name that's also used internationally (Peacock is only available in the United States), will they globalize the Peacock name, or will they go with an entirely new name? Also, who's technology would be used?

There is speculation that Warner Bros. Discovery is also in the mix for a Paramount+/Max partnership.

The trio is also looking into finding a technology partner if a joint venture doesn't play out, continuing Paramount+ as is with a partner who would handle operations. Nothing has come out after the statement was released, though Amazon has talked to Paramount recently about a partnership. 

There is one big wild card in their streaming reconfiguration that many analysts don't talk about, and Paramount can capitalize on this if they gain a streaming partner. That is...

Pluto TV

Pluto TV

This shouldn't be a surprise. Paramount bought Pluto in 2019 and has since become a profitable business. The free ad-sported television (FAST) market has rapidly grown thanks to services like Pluto, Tubi, and The Roku Channel.

In comparison, when FOX Corporation lost its movie studio, the FX networks, and its stake in Hulu, they capitalized by acquiring Tubi and sending more of its non-Disney-produced content onto Tubi alongside Hulu as part of their deal.

CBS has sent many of their current shows to Pluto TV. It's episodes that are available for free on CBS.com and the app. The problem is that CBS hasn't acknowledged that Pluto TV has those episodes. Instead, they spent the marketing favors towards Paramount+.

If Paramount decides to merge or shut down Paramount+ (likely the former), they should go all in on Pluto TV. It's working for FOX, and it can work for Paramount. Even if they go without affecting Paramount+, they have to push Pluto TV before Tubi or The Roku Channel capitalizes and overtakes them.

No matter how much people talk about whether Paramount should have joined the streaming wars, they had to take the risk. Paramount can't rely on its declining cable networks and CBS for its profits when the studio is not generating money. Paramount is not Sony, which has other subsidiaries other than filmed entertainment. Whether Paramount+ survives or not, hopefully, Paramount can soon get off this rabbit hole. But it will never be easy to recoup. No hard bundles are required.