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

Skydance Media and RedBird Capital Partners executives shed some light on what strategy they intend to use to approach Paramount Global’s streaming business.

Skydance Media and RedBird Capital Partners executives shed some light on what strategy they intend to use to approach Paramount Global’s streaming business after Paramount and Skydance announced over the weekend they had reached a deal to merge. 

The executives said on Monday that their approach to the direct-to-consumer (DTC) business would feature strategies like making technological improvements and looking into potential streaming partnerships. They also discussed plans for other segments of the "New Paramount" that is expected to form upon the completion of the transaction.

"We all know obviously streaming is an incredibly important part of the business and very much the future of the business," David Ellison, who will lead the combined company as CEO, told analysts.

Paramount+, Pluto TV and BET+ are the services that currently make up Paramount’s DTC business, which has not yet reached profitability. The company’s namesake streaming service, first launched in 2021, had over 71 million subscribers as of the first quarter.

PARAMOUNT AGREES TO MERGER WITH SKYDANCE

"Our intention is to rebuild the Paramount+ platform and believe that with the technological prowess and relationships that we have, we can expand our DTC business," Ellison said.

He said the Skydance Investor Group wanted to improve Paramount+’s recommendation algorithms in a bid to "increase time spent on the platform, reduce churn and drive lifetime value for all of our shareholders."

Seeking to "unify cloud providers across all the distribution services for significant efficiencies" and optimizing the company’s advertising technology were among the other technology-related opportunities they saw, according to Ellison.

Meanwhile, the new Paramount will also "take a look at how much money we’re generating from our content and what content belongs where, and what content [we] should license to ourselves and what content we should license to others," said RedBird Capital’s Jeff Shell, who’s slated to serve as the merged company’s president.

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The "New Paramount" also plans to weigh the possibility of entering partnerships with other streaming platforms, executives indicated.

"We’re going to be evaluating all options to be a winner in DTC, and to be a winner in DTC really means being in the ultimate bundle that’s coming," Shell said. "We’ve got a bunch of inbound from a number of people about partnerships that could involve a partnership with another player or players, and so we will evaluate all that."

Partnerships and bundles among streaming services have become more and more common.

At one point during the call with investors, Shell said that "there’s going to be some form of bundle solution that’s easy and simple" in streaming and that people "already see that bundling process starting to happen with some of these new bundles."

EMBRACE OF STREAMING TELEVISION BUNDLES IS GROWING

Comcast has rolled out a "StreamSaver" bundle consisting of Peacock, Netflix and Apple TV+. Competitors Disney and Warner Bros. Discovery also created a streaming package of their own with Disney+, Hulu and Max.

Paramount and Skydance said they aim to complete their deal in the first half of 2025, provided that it receives necessary regulatory approvals and that Paramount does not find a different deal during its 45-day "go-shop" period.

The proposed merger came Sunday after reports of renewed talks between the two companies emerged this month and after months of interest from various potential bidders.

The companies pegged the enterprise value of New Paramount at about $28 billion.

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