Why Hollywood Creatives Prefer a Skydance Deal With Paramount | Analysis

On Aug. 17, 2023, with members of the Writers Guild of America and SAG-AFTRA still on strike, WGA’s research and policy director Laura Blum-Smith said in a speech to the Federal Trade Commission and the U.S. Department of Justice that the rising wave of mergers in Hollywood was one of the many reasons why her guild’s members were on the picket lines.

“Harmful mergers and attempts to monopolize markets are a recurring theme in the history of media and entertainment,” she warned.

She added: “Wall Street continues to push for more consolidation among our employers despite the industry’s history of mergers that failed to deliver any of the consumer benefits they’ve claimed that left writers and audiences worse off with less diversity of content and fewer choices.”

But nine months later, that wave continues to roll through the entertainment industry, as Paramount weighs competing acquisition offers and must choose between a merger with fellow major studio Sony or remain on its own under the ownership of Skydance Media. The studio’s independent special committee has recommended the Skydance offer, and that’s the option that creatives would prefer.

But much is still in limbo. Skydance sweetened its offer to Paramount Global’s parent company National Amusements on Thursday, just ahead of the special committee recommending the Skydance offer over Sony and Apollo’s.

Momentum towards finalizing a deal seems underway as TheWrap Sunday reported Skydance’s offer of a $15 share price for Paramount shareholders to cash out. All of these developments are significant milestones towards finalizing a deal.

Meanwhile Sony and its bidding partner Apollo Global Management are still in the background, having signed nondisclosure agreements to dig deeper into Paramount’s finances. Sony and Apollo are said to be considering changing their offer from their initial $26 billion all-cash bid to acquire the studio on Melrose.

With the future of Paramount up in the air, several writers and producers who spoke to TheWrap said they are concerned about the possibility of losing another studio with its own slate of film and TV productions that needs constant product, making a Skydance-owned Paramount a far more preferable option for creatives.

“It’s absolutely concerning. It’s downright frightening when the window of opportunity continues to narrow as these places consolidate,” said one producer who asked to remain anonymous.

Of course, a Skydance-owned Paramount would remain its own separate studio. The specifics of Paramount’s place in Sony’s portfolio wouldn’t be ironed out until a dead is reached, but it would likely fold Paramount’s television business into Sony’s burgeoning production. Paramount’s film division would likely become a label alongside the likes of others in Sony’s portfolio like Columbia Pictures, TriStar, Screen Gems and Affirm.

That is a scenario that the Writers Guild has warned about for years. In 2021, as talks ramped up on the Warner Bros. Discovery merger, the WGA released a study called “Broken Promises,” which recounted the pledges made by media executives to federal regulators that mergers that were under review would not lead to harmful results for consumers, employees, and general business competitiveness.

Among the mergers examined by the WGA in the report were the 2009 Comcast-NBCUniversal merger and the 2019 Disney-Fox merger, which the WGA noted led to Disney “[exercising] its market power over content suppliers to unilaterally push creators and other entertainment industry participants to forego their participation in future licensing revenues on Disney shows.”

“Mergers in this industry benefit corporate owners and almost no one else. They have led to lower wages, declining working conditions, higher prices, and fewer choices,” WGA West President Meredith Stiehm told TheWrap. “Fortunately, the government has recognized the harms of consolidation and has taken a strong stance on antitrust enforcement. Studios should take notice and invest in their businesses to compete, rather than spending billions to purchase their competition.”

Stiehm is referring to the Biden Administration’s recently renewed push on antitrust enforcement, spearheaded by DOJ antitrust division chief Jonathan Kanter and FTC chair Lina Khan. The Justice Department recently filed antitrust lawsuits against four big tech giants in Google, Apple, Amazon and Meta, as well as a lawsuit against Live Nation and its subsidiary Ticketmaster in an effort to break up the company that has held a vice grip over the live event ticketing industry since the two companies merged in 2010.

But that renewed focus on antitrust could easily be reversed should former President Donald Trump be elected in November, making Paramount’s future potentially hinge on this year’s election.

Led by David Ellison, Skydance made a new offer last month that included a $3 billion stock buyback for shareholders who felt their stocks would be devalued in a deal where Skydance bought the 77% controlling stake held by Shari Redstone, president of Paramount’s parent company, National Amusements.

In the meantime, creatives like “The Rookie” writer Liz Alper are worried that more mergers will exacerbate two recent Hollywood trends: the post-strike downturn in entertainment employment and the recent backslide in progress for diversity in Hollywood.

Unlike Stiehm, she’s not optimistic that a Sony-Paramount merger will face much resistance in Washington after previous Hollywood mergers largely sailed through, and is particularly concerned about what would happen to CBS, which Sony would be required as a Japanese conglomerate to sell due to federal laws forbidding any foreign-owned entity from owning a TV network.

“I think the worst-case scenario is CBS getting sold off to a company that treats it the way Nexstar treats The CW,” said Alper, referring to the recent shift at The CW under Nexstar’s ownership away from the focus on scripted television that made the network a haven for both veteran and up-and-coming writers. “That shift was a total disaster for us. What if that happens to CBS?”

Umberto Gonzalez contributed to this report.

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