Paramount Global majority shareholder Shari Redstone is said to be in favor of signing a deal with Skydance. Paramount’s board has also previously rejected offers from private equity firms (remember, this Sony deal is coupled with private equity firm Apollo Global Management). But former Paramount CEO Bob Bakish made it pretty clear in early 2022 that the company was likely up for sale. We say “formerly” because Bakish was removed as the company’s CEO earlier this week as acquisition discussions became increasingly heated. It really depends on when, not if, Paramount changes ownership at that point.
This all comes as Hollywood considers how to survive in a streaming-centric future, where box office revenue is increasingly uncertain (but no less important), and where only the big boys seem to be able to survive. This is why all these media mergers have happened in the last few years. Disney has acquired Fox. Discovery bought WarnerMedia and formed Warner Bros. Discovery. Most major studios have attempted to launch their own streaming services, with Netflix currently the only one that is reliably profitable. It is a time of chaotic change. Sony clearly sees an opportunity to compete more strongly through greater growth.
If Sony wins, the downside would be the loss of another major Hollywood studio. We would go from five to four, with Disney, Warner Bros. and Universal Pictures still in play. A decline in studios means filmmakers will have fewer opportunities to sell their projects, most likely fewer films released per year from major studios, and fewer jobs available. No matter who ends up taking over Paramount or merging with Paramount, there will be mass layoffs. That much is certain.
Whether or not this is all for the benefit of consumers remains to be seen. Other recent mergers have been hectic, and it’s hard to say that the end result was better for consumers – or for cinemas, for that matter. But for those hoping that Sony doesn’t acquire one of its rival studios, it seems all but certain that this deal would be subject to significant regulatory scrutiny. Under the Biden administration, the Federal Trade Commission has been aggressive in suing big tech companies and breaking up potential monopolies to protect American consumers, and a deal like this would absolutely come under that agency’s microscope. Additionally, the Federal Communications Commission has rules that prohibit foreign companies – in this case, Japan-based Sony – from acquiring controlling interests in television networks in the United States, and Paramount Global currently has more than 25 television networks under its umbrella. Therefore, as Variety notes, Sony would have to create some sort of separate U.S. ownership structure for these TV networks. These are significant hurdles, but we’ll see what happens – wilder things have happened in this industry in the past, so stay tuned for further developments.