Chairman of GAMCO Investors Inc. Mario Gabelli filed a books and records request in Delaware on Friday regarding just how much Redstone will receive for her A shares, TheWrap has learned. (While not technically a lawsuit in itself, the move could be an early indicator of one to come.)

National Amusements owns 77% of Class A voting stock and 5.2% of Class B voting stock. Gabelli is the largest A shareholder behind Redstone, with GAMCO Investors Inc. representing clients that own 5 million Class A shares and 1 million Class B shares.

“I want my clients to have the option of continuing to own the voting shares. Why should they get squeezed out? That is not clear,” Gabelli told TheWrap earlier this week. “Secondly, are they worried I would discover a whole bunch of numbers that would indicate that they should get more money because the other guy got more money? I don’t know.”

The records request echoes a similar move made by fellow shareholders the Employees’ Retirement System of Rhode Island in May. The pension fund previously expressed concern over the Paramount board not preventing “Shari Redstone from diverting corporate opportunities or interfering with Paramount’s ability to seek the best deal for Paramount and its other stockholders.”

On Sunday, David Ellison’s Skydance Media announced it had an $8 billion deal in place to acquire Paramount Global. Ellison’s father, Oracle cofounder Larry Ellison, who is the fifth richest person in the world, is investing $6 billion of that total, while RedBird Capital funds the rest.

The deal, which is expected to close in the third quarter of 2025 subject to regulatory approval and other customary closing conditions, includes $2.4 billion for National Amusements, comprised of $1.75 billion for the equity and the assumption of $650 million in debt. Additionally, non-NAI shareholders will receive $4.5 billion and $1.5 billion in new capital will be used to pay down Paramount’s $14.6 billion in long-term debt, recapitalizing its balance sheet.
Class A shareholders can elect to receive $23 cash per share or 1.5333 shares of Class B stock of new Paramount. Meanwhile, Class B shareholders can elect to receive $15 per share or one share of Class B stock of new Paramount, which is subject to proration if those elections exceed $4.3 billion in aggregate. If shares are elected over cash, reducing the cash required to under $4.3 billion, the $1.5 billion of cash going to Paramount’s balance sheet could grow up to a cap of $3 billion.

Skydance’s consortium of investors, which includes RedBird Capital Partners and the Ellison family, will control 70% of shares outstanding and have 100% voting ownership in new Paramount, which will remain public. The deal also includes a 45-day go-shop provision, in which Paramount would pay a $400 million breakup fee in the event that the company receives a better offer from another bidder.

“I wanted to take this opportunity to reach out to you directly not only to share the news, but to express my tremendous gratitude to each and every one of you for what we have been able to accomplish together for the past several decades,” Redstone wrote in a memo to Paramount employees following the acquisition. “I want to express my deepest thanks to you for your commitment, hard work and, most importantly, your support of my family and me. Against a challenging industry backdrop and many changes at the company, you have protected Paramount’s assets and delivered for our audiences.”

Paramount did not immediately respond to TheWrap’s request for comment. Puck News was first to report this development.

The post Top Paramount Shareholder Sets Lawsuit in Motion With Docs Request for Shari Redstone’s Skydance Payday appeared first on TheWrap.

“I could not be more excited about making Wondery our home,” Shepard said in a statement to media. “Jen Sargent and her team have created a brand that imbues quality, daring and creativity. The Wondery logo actually means something. They are the HBO of the podcast space. We are extremely excited to join forces and bring fresh new content to listeners around the world.”

As part of the collaboration, the actor/comedian/Kristen Bell’s husband will develop two new podcasts. It also includes a first-look deal for Shepard’s future podcast ideas, live-stream hosting gigs on the platform and the rights to launch a line of “Armchair Expert” paraphernalia.

“Armchair Expert,” which its team describes as a “podcast that celebrates the messiness of being human,” is cohosted by Shepard and actress Monica Padman. Since its 2018 debut, the interview-focused podcast has aired more than 350 episodes and featured numerous big names including Amy Poehler, Camila Cabello, Bradley Cooper, Goldie Hawn and others.

The new deal comes as part of negotiations between WME, which represents Padman and Shepard, and Wondery.

“’Armchair Expert’ consistently delivers relatable, thought-provoking and entertaining social commentary based on shared human experiences and interests from the most recognizable entertainment and cultural figures in the world,” Wondery CEO Jen Sargent said in a statement. “This incredible show is a natural fit for the Wondery roster built to entertain, engage and delight podcast fans globally.”

“As we embark on a true collaboration with Dax and Monica, we look forward to helping the ‘Armchair Expert’ brand expand its audience and reach within Amazon’s fandom-flywheel across audio, video, merchandise and beyond,” Sargent added.

This news was first reported by the Hollywood Reporter.

The post Dax Shepard’s ‘Armchair Expert’ Podcast Inks $80 Million Deal With Amazon’s Wondery, Leaving Spotify appeared first on TheWrap.

In 2021, the NFL renewed an agreement that would allow CBS Sports to continue to be the home of the American Football Conference (AFC), which consists of a full slate of regular season and playoff games each year, including the AFC Championship, as well as a Divisional game and a Wild Card game.

It further secured rights to three Super Bowls and additional Wild Card games in the 2024, 2029 and 2033 seasons. The pact also included a long-term rights extension for Pluto TV, “CBS Sports HQ” and “Inside the NFL,” which began streaming exclusively on Paramount+ that year.

In 2022, the league also entered into a joint venture with Skydance Sports to significantly expand its programming, with an emphasis on scripted and unscripted non-game content.

“CBS has been a great partner for us back to 1956, I think they’ve been extraordinary right up to the Super Bowl this past year, where we had record ratings at the Super Bowl. So they’ve been a great partner. We’re obviously paying close attention to the process,” Goodell said when asked by CNBC during a Thursday interview at the Allen & Co. conference in Sun Valley, Idaho. “We know Skydance, we’re partners with Skydance. They’ve done a terrific job with our relationship. So we’ll look at the structure of the deal, we’ll see how it impacts us, we’ll see how it impacts our business, and we’ll make the best decision for the NFL at that point.”

When asked if the NFL was being underpaid, pointing to the recent NBA negotiations for a $76 billion, 11-year contract, Goodell touted the “great relationship” with its partner networks, adding that its media rights agreements are less about money and more about reaching the widest possible audience.

“Obviously, we want to be paid fairly, but for us, it’s about reaching fans. Being on a free platform like we are allows our fans to see that, and I think that’s what’s led to the great — not only popularity of the league, but obviously the great ratings.”

One way the NFL is expanding its reach is through a partnership with Netflix to stream games on Christmas Day.

“Over 85% of our games are on free television and we’ve committed, even when it is on a platform that’s a paid television platform, that in the local markets of those two teams, it will be on free television. So I think we’re going where the fans are,” he explained. “Netflix has close to 300 million subscribers on a global basis, which was really attractive for us in being able to reach that global fan … I think the three games we played on Christmas last year were in the Top 25 of the entire season. So I think they’re going to take this, they’ll globalize it, they’ll put, you know, a Netflix twist to it, and I think it will be great for the fans.”

Goodell also suggested that Netflix could see more NFL games as part of the league’s ambitions to expand internationally.

“Maybe,” he said. “We believe that the game is going to be incredibly popular globally. We just have to bring more games to them.”

In addition, Goodell addressed the recent court ruling that the league would have to pay over $4.7 billion in damages for violating antitrust laws for distributing out-of-market Sunday afternoon games as part of their “Sunday Ticket” subscription service.

“We obviously disagree with the jury verdict. And we are committed, obviously, to following the legal process,” he said. “It’s a long process. We’re aware of that. But we feel very strongly about our position, our policies, particularly on media, that we make our sport available to the broadest possible audience. ‘Sunday Ticket’ is just a complimentary product. So we’re committed to following the litigation, all the way, and making sure that we get this right.”

The suit was originally filed in 2015 and dismissed in 2017 before being reinstated by the 9th U.S. Circuit Court of Appeals. It covered 2.4 million residential subscribers and 48,000 businesses who paid for the package of out of market games from the 2011-2022 seasons on DirecTV.

The commissioner also said the NFL is considering capping private equity ownership of its teams at 10%.

“We’ve been very deliberate on this, just looking at our ownership policies in general and as sports evolve, we want to make sure that our policies reflect that,” Goodell explained. “We created a committee last September that looked at all aspects of our policies, including debt and including private equity. We’ve had a tremendous amount of interest. And we believe that this could make sense for us in a limited fashion, probably no more than 10% of the team. But that would be something that we think could complement our ownership and support our ownership policies. So we think we’re moving in a very positive direction. And hopefully, we’ll have something by the end of the year.”

The post NFL Monitoring Paramount-Skydance Merger Impact, Commissioner Says appeared first on TheWrap.

The pair is responsible for successful films like “The Hunger Games” and “Crazy Rich Asians,” as well as groundbreaking shows such as “Pose” and “American Crime Story.”

“We are thrilled to have this overall film deal with Color Force,” Sony Pictures’ Motion Picture Group presidents Josh Greenstein and Sanford Panitch said in a statement. “Nina and Brad have an amazing track record finding incredibly compelling stories, A+ (plus) relationships in town, the best taste and are just all-around terrific humans who know how to make film franchises.”

Jacobson and Simpson added jointly: “We love making movies. That is why we are excited to make Sony Pictures our home base for feature films. Sanford, Josh, Tom [Rothman] and the whole team have shown their commitment to filmmakers and the theatrical experience time and time again. We feel fortunate to have studio partners who are as energized about making movies as we are.”

Under Color Force, Jacobson and Simpson produced “The Hunger Games” franchise, which has altogether grossed $2.9 billion worldwide, including the prequel film, “The Hunger Games: The Ballad of Songbirds and Snakes,” which premiered in November 2023 and earned almost $340 million globally.

Jacobson and Simpson also produced the groundbreaking film “Crazy Rich Asians,” based on Kevin Kwan’s international bestseller for Warner Bros., and “Ben Is Back,” which premiered at the Toronto International Film Festival to critical acclaim. Jacobson began Color Force in 2007; Simpson joined in 2012, with the pair’s first collaboration together being “Diary of a Wimpy Kid” (2010), which spawned three beloved sequels.

Prior to starting Color Force, Jacobson was president of the Walt Disney Motion Picture Group, where 15 of her projects grossed over $100 million domestically, including “Pirates of the Caribbean,” “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe” and “The Princess Diaries.”

Prior to partnering with Jacobson on Color Force, Simpson was president of Leonardo DiCaprio’s Appian Way. He began his career as a producer and executive at legendary New York indie production company Killer Films.

The post Nina Jacobson and Brad Simpson’s Color Force Banner Signs Producing Deal With Sony Pictures appeared first on TheWrap.

But, according to a new 8-K filing with the U.S. Securities and Exchange Commission on Thursday, that window can be extended to Sept. 5 in the event that the media conglomerate’s independent special committee enters talks with a rival bidder that it has “determined in good faith is or would reasonably be expected to lead to a Superior Proposal.”

Paramount will be subject to certain restrictions on its ability to solicit alternative acquisition proposals, provide non-public information and engage in discussions and enter into an agreement with third parties.

If it reaches a superior proposal, Paramount would pay Skydance a $400 million breakup fee. It would also be responsible for that payout if the transaction does not occur before April 7, 2025, subject to two automatic 90-day extensions, or if a regulator blocks the merger.

Others who have expressed interest in acquiring Paramount included IAC chairman Barry Diller, “Baby Geniuses” producer Steven Paul, former Warner Music Group CEO and chairman Edgar Bronfman Jr, Sony Pictures Entertainment and Apollo Global Management — who submitted a $26 billion all cash offer in May — and Allen Media Group founder Byron Allen, who placed a $30 billion bid including debt. Warner Bros. Discovery CEO David Zaslav also met with former Paramount CEO Bob Bakish about a potential merger in December, though those talks were later halted.

Under the terms of the deal with Skydance, new Paramount will have an enterprise value of $28 billion. Skydance is being valued at $4.75 billion, with its equity holders receiving 317 million newly issued Class B shares valued at $15 per share. Paramount’s Class A shareholders will receive $23 per share.

Skydance’s consortium of investors will own 100% of new Paramount’s Class A shares and 69% of outstanding Class B shares, or about 70% of the pro forma shares outstanding. Paramount’s non-National Amusements Class B shareholders will receive a 48% premium to the price of the stock as of July 1, while Class A shares will receive a 28% premium.

The deal, which is backed by RedBird Capital Partners and the Ellison family, includes $2.4 billion for NAI, $4.5 billion for non-NAI shareholders in Paramount and an additional $1.5 billion in new capital to help pay down debt and recapitalize the company’s balance sheet.

During a conference call with Wall Street on Monday, new Paramount’s incoming CEO and chairman David Ellison and president Jeff Shell outlined their vision for the future.

The pair said they would “rebuild” the Paramount+ platform to increase time spent, offer subscribers improved recommendations and reduce churn. They also plan to utilize artificial intelligence to “turbocharge content creation capabilities” and lower costs, leverage Skydance and Paramount’s combined portfolio of animation and sports content and to explore potential partnerships and content licensing opportunities. Additionally, Shell made clear that asset sales are still on the table and that CBS will be a “cornerstone” asset of the new company.

The Skydance-Paramount transaction is expected to close in the third quarter of 2025, subject to regulatory approval and other customary closing conditions.

The post Paramount Can Extend Skydance Merger’s Go-Shop Period if It Enters ‘Good Faith’ Talks With a Rival Bidder appeared first on TheWrap.

The pacts will now be sent to the league’s governors for approval, which is expected to be a formality, according to the New York Times’ Athletic, which first reported the news Wednesday. The board of governors are said to meet on Tuesday in Las Vegas.

Warner Bros. Discovery’s TNT Sports, which currently pays roughly $1.2 billion for NBA rights under the current contract that runs through the 2024-2025 season, will have five days to match after being sent the finalized contracts. If it declines, The Athletic reports that the new NBA deals could be announced as early as before the start of the Olympics on July 26.

Representatives for TNT Sports, Amazon and ESPN declined to comment. Representatives for the NBA and NBC did not immediately return TheWrap’s request.

NBCUniversal is expected to pay the NBA an average of $2.5 billion a year to show around 100 games per season – half of which would air exclusively on Peacock, an individual familiar with the terms previously told TheWrap. The games would air on NBC on Tuesdays and Sundays to avoid conflicting with the network’s “Sunday Night Football.”

The Wall Street Journal previously reported that Amazon would pay $1.8 billion for regular season and playoff games, the new NBA in-season tournament and “play-in” games where teams compete for the final payoff spots. The tech giant is also reportedly being given a share of the conference finals, which it will split with NBC and ESPN.

Meanwhile, Disney would pay about $2.6 billion per year to continue to air the NBA Finals, up from its current $1.5 billion. ESPN is expected to have around 80 games, down from around 100. During the NFL season, NBA games will air on Wednesdays, Saturdays and Sundays, with Fridays being added in after the NFL season, according to the Athletic. Saturday games will air in a special window on ABC.

The post NBA Finalizes 11-Year, $76 Billion TV Contracts With NBC, Amazon and ESPN appeared first on TheWrap.

The projects include Ryan Murphy’s “All’s Fair” with Kim Kardashian, Glenn Close and Halle Berry, Cooler Water Productions’ “Latitude,” Faith Media Distribution’s “Lot Patrol,” an untitled Apple Studios series and a recurring TV series from CBS Studios.

The five shows, which are expected to spend an estimated $386 million in the state during their upcoming seasons, will directly support local businesses and employ 1,196 crew members, 685 cast members and 15,869 background performers. Collectively, they will generate 438 filming days across California.

“We are pleased to see these new projects taking advantage of California’s unparalleled resources and talent pool,” CFC director Colleen Bell said in a Wednesday statement. “During the first half of 2024 alone, the Film and Television Tax Credit Program has attracted 12 new and one relocating television series to California, creating essential jobs for the industry and sustaining the livelihoods of thousands of cast and crew members. It’s a testament to our resilience and the critical role of film and television in our state’s economy.”

“All’s Fair,” which follows a a successful divorce lawyer and the owner of an all-female law firm in Los Angeles, has received a credit allocation of $14,122,000.

The legal drama is expected to spend $69,735,000 in qualified expenditures, film a total of 97 days in California, including 10 filming days outside the Los Angeles area, and hire 215 cast members, 195 crew members and 3,500 background players.

“Ryan Murphy and I are thrilled to be able to shoot our upcoming legal drama ‘All’s Fair’ in Los Angeles, with incredibly experienced local crew members, access to authentic and quintessential Los Angeles locations and utilizing top production facilities due to the California Film Commission’s Film & Television Tax Credit Program,” showrunner and executive producer Jon Robin Baitz said. “Walk onto a soundstage and you understand instantly that hundreds of jobs are created and nurtured by keeping the work here, and even more families and lives thrive as a result. This credit is central to our industry and to California’s position as one of the largest economies in the world. And now more than ever, as the production landscape shifts, the importance of the program cannot be overstated.”

“Lot Patrol,” which follows a group of overzealous, unarmed production lot security guards whose unpredictable shifts lead to a series of unexpected and often hilarious situations, has received a credit allocation of $1,461,000 and is expected to spend $7,303,000 in qualified expenditures.

The series, which is executive produced by Manny and Yolanda Halley, producer Rodney Turner and line producer Tawana Turner, will film a total of 49 days in California and hire 95 cast members, 105 crew members and 1,300 background players.

“We are deeply grateful to the California Film Commission for their unwavering support and granting this tax credit,” Manny Halley said. “This initiative makes it possible for independent content creators like us to thrive. The program allows us to bring this comedic urban tale to life right here in California! It also fosters creativity and supports our local economy. Thank you for believing in our vision and helping us share laughter with the world.”

“Latitude,” which was recently awarded a tax credit in the program’s previous round in April, has received a credit allocation of $20,275,000 and is expected to spend $104,357,000 in qualified expenditures.

The production, which recently dropped out of the program due to scheduling conflicts but has since reapplied and will rejoin, is expected to film for a total of 125 days and hire 31 cast members, 381 crew members and 5,717 background performers.

The Apple miniseries and recurring CBS Studios series have received credit allocations of $14,937,000 and $7,531,000, respectively. The former is expected to spend $74,685,000 in qualified expenditures, film 95 days in the state and hire 144 cast, 240 crew and 3,520 background performers, while the latter is expected to spend $37,175,000 in qualified expenditures, film 72 days in the state and hire 200 cast, 275 crew and 1,832 background performers.

The current $1.55 billion Film & Television Tax Credit Program will run for a total of five years, with a sunset date of June 30, 2025. California Gov. Gavin Newsom signed Senate Bill 132, which extends the program for another five years through fiscal 2030-31.

Looking ahead, the next film application window is slated for July 29-31, with about $80 million available for both independent and non-independent projects. Television applications will be accepted in August and October.

Other TV projects that have received recent tax credits from the state include “Fallout” Season 2, Prime Video’s live-action “Spider-Man Noir” and Murphy’s “Dr. Odyssey.”

The post Ryan Murphy’s ‘All’s Fair’ With Kim Kardashian Scores $14 Million in California Tax Credits appeared first on TheWrap.

The board resignation comes after heightened scrutiny from both U.S. and European antitrust regulators on Microsoft’s partnership with the ChatGPT creators. Microsoft announced the departure in a letter Tuesday.

“Over the past eight months, we have witnessed significant progress by the newly formed board and are confident in the company’s direction,” the company wrote, according to WSJ. “Given all of this, we no longer believe our limited role as an observer is necessary.”

They continued, “We appreciate the support shown by OpenAI leadership and the OpenAI board as we made this decision.”

Microsoft first earned a seat after helping to reinstate OpenAI CEO Sam Altman after he was pushed out by other board members in 2023, getting an observer seat on the board in the process.

“We are grateful to Microsoft for voicing confidence in the Board and the direction of the company, and we look forward to continuing our successful partnership,” OpenAI added in a statement.

Microsoft did not immediately respond to TheWrap’s request for comment.

The surprise resignation came after the FTC opened an investigation into the tech giant’s investment — valued at around $13 billion — into OpenAI. The U.K.s’ Competition and Markets Authority and the European Union also had eyes and questions about the partnership.

According to reports, OpenAI will no longer have observer seats open to partners.

The post Microsoft Exits Role as OpenAI Board Observer Effective Immediately appeared first on TheWrap.

“I think there’s a great opportunity, the fact that we’ll have one of the first owned and operated studios, that will be that will be stable, that can think long term. That’s not just going to have to focus on tomorrow but can focus on several years from now,” Ellison told CNBC in an interview on Wednesday. “We really are going to take the long-term approach to this business. And it’s been it’s been really both exciting, encouraging and humbling that the greatest filmmakers in the world and artists are supportive of this transaction.

When asked by CNBC’s David Faber how “Mission Impossible” and “Top Gun: Maverick” star Tom Cruise — with whom Ellison worked on those franchises through Skydance — views the announcement, Ellison revealed that the actor is “supportive.”

“We’ve made nine movies together. He is one of the greatest most talented artists in the world,” Ellison said of Cruise.

Hollywood heavyweights who have come out in support of the deal include Jane Fonda, John Krasinski, Tyler Perry and more in statements obtained by TheWrap.

Fonda, who worked with Skydance on “Grace & Frankie” and “Luck,” called the announcement a “match made in movie heaven,” adding that Ellison “deeply believes in the power of creative storytelling and creative storytellers and has the essential expertise and understanding of how technology can enhance the creative experience.”

Perry said that he has “so enjoyed working with Shari Redstone every step of the way all through the Viacom to the Paramount days.”

“She has been a pillar for me, so this is a bit bitter sweet because I am equally as excited to be working with Skydance,” he added. “It is so fantastic to have someone who loves this business at the helm of one of the most storied studios.  It is particularly exciting given David Ellison’s expertise in both the creative and the technological advances needed to bring us into this next chapter.”

Krasinski praised Skydance and Paramount, noting that he’s had “the good fortune” to work with both companies for nearly the past decade on film franchises like “A Quiet Place” and his Skydance-produced Prime Video series “Jack Ryan.”

“The fact that they are now joining forces ensures that I get to continue the collaboration with an incredibly talented and enthusiastic film family,” he said.

Mark Wahlberg called the Skydance-Paramount merger a “win for the industry” and touted his partnership with Ellison and Skydance on “The Family Plan” and the upcoming “Balls Up.”

“David is an extraordinary filmmaker and executive, and I’m confident he’ll bring the same creative leadership to Paramount, one of the most historic studios in Hollywood,” he said.

James Patterson, who’s collaborating with Ellison and Skydance on several projects including Prime Video’s “Cross,” said the team is “the right people to help fortify Paramount’s future.”

“It has been my pleasure to work closely with David Ellison and his Skydance team,” Patterson said. “They have my continued faith in adapting my work, and my heartfelt excitement for the opportunity to work with their new company.”

In a statement, “Reacher” author and producer Lee Child said, “My inflexible rule is to partner only with people I like, trust and admire. David Ellison fit that bill when we teamed up many years ago, and he has proved me right many times since – he has made great decisions, and has always put the needs of the show ahead of everything else. I have had a great time with both Paramount and Skydance, and to have them combined under David’s leadership makes me very happy.  Onward and upward, as we both like to say!”

In a post on X, Scott Derrickson wrote “I just completed a movie with Skydance, and here’s what I can tell you about David Ellison and his top executives: they are all smart, decent people who truly love movies.”

Under the terms of the deal, the new Paramount will have an enterprise value of $28 billion. Skydance is being valued at $4.75 billion, with its equity holders receiving 317 million newly issued Class B shares valued at $15 per share. Paramount’s Class A shareholders will receive $23 per share.

Skydance’s consortium of investors will own 100% of new Paramount’s Class A shares and 69% of outstanding Class B shares, or about 70% of the pro forma shares outstanding. Paramount’s non-National Amusements Class B shareholders will receive a 48% premium to the price of the stock as of July 1, while Class A shares will receive a 28% premium.

The deal, which is backed by RedBird Capital Partners and the Ellison family, includes $2.4 billion for NAI, $4.5 billion for non-NAI shareholders in Paramount and an additional $1.5 billion in new capital to help pay down debt and recapitalize the company’s balance sheet.

Additionally, a 45-day go-shop provision will allow the Paramount board of directors’ independent special committee to solicit and evaluate alternative acquisition proposals. In the event of a superior proposal being selected within that time span, Paramount would pay Skydance a $400 million breakup fee.

During a conference call with Wall Street on Monday, Ellison and new Paramount’s president Jeff Shell outlined their vision for the future.

The pair said they would “rebuild” the Paramount+ platform to increase time spent, offer subscribers improved recommendations and reduce churn. They also plan to utilize artificial intelligence to “turbocharge content creation capabilities” and lower costs, leverage Skydance Media and Paramount’s combined portfolio of animation and sports content and to explore potential partnerships and content licensing opportunities. Additionally, Shell made clear that asset sales are still on the table and that CBS will be a “cornerstone” asset of the new company.

The Skydance-Paramount transaction is expected to close in the third quarter of 2025, subject to regulatory approval and other customary closing conditions.

The post Hollywood’s Support for Skydance-Paramount Merger Has Been ‘Remarkable and Humbling,’ David Ellison Says appeared first on TheWrap.

On that day — seven months before the company launched Disney+ — executives gathered on the Disney studio lot in Burbank at their annual Investor Day and laid out their plans to Wall Street for how the entertainment giant was going to try to catch up to tech-entertainment company Netflix.

Wall Street was ascribing massive value to Netflix, a Silicon Valley creation, for the ballooning subscriber revenue it was generating, not just in the U.S., but all over the world. And Disney executive Kevin Mayer had lobbied inside the Disney C-suite for his company to get in the game now. 

“It was intoxicating,” Mayer, then Disney’s chief strategy officer, recalled to TheWrap about Wall Street’s growing love affair with Netflix, which in a competition-free zone of 2018, had a market cap of $116.85 billion — roughly 78 times the company’s $1.6 billion operating profit and 7.3 times its $16 billion in revenue that year.

That day Disney introduced its pricing scheme for Disney+, talked about the exclusive content it would feature and the trajectory to initially grow the platform to between 60 million and 90 million paid subscribers by 2024.

The audience cheered. 

“You could just taste it,” Mayer said. “This is going to transform our company, transform the industry, and our shareholders are going to massively benefit from it. We were sure of it. And we were right, by the way. It did happen that way — until it didn’t.”

Five years after Hollywood made a huge strategic shift to streaming, the studios are facing persistently low stock prices, a moribund theatrical business for the fourth year in a row and a streaming business that has yet to turn a profit, with the notable exception of Netflix.

The global theatrical box office for the seven major studios plummeted 31% from $27.5 billion in 2018 to $18.9 billion in 2023, according to Comscore. Disney topped $11.1 billion in 2019, but no studio has reached even $5 billion since.

TheWrap spoke to analysts and executives at the traditional studios that took the streaming plunge — Disney, Warner Bros Discovery, Universal and Paramount — and took a hard look at balance sheets and the prospects of growth in Hollywood and asked: Was that fateful pivot the right decision?

“You saw the industry take a ‘scale at all cost’ approach, and I don’t believe that is the right way to look at this,” said David Ellison, whose Skydance Media secured a deal to buy Paramount Global on Sunday. He spoke to reporters on Monday about his plans for Paramount+. “Scale is important, but it has to be achieved while maintaining profitability,” he said.

At the time, studio executives didn’t seriously consider how the move to streaming would ultimately affect its theatrical arms and train consumers to experience movies in their homes rather than theaters. And while the COVID-19 pandemic and the double strikes also have played critical roles in accelerating that shift, the Hollywood majors now find themselves in a race to make streaming profitable to offset theatrical revenue that may never fully recover, amid mounting debt and linear television divisions that are in an inexorable death spiral. 

“The strikes clearly extended the pain at the box office, but rushing into streaming exacerbated the problem,” Michael Pachter, an analyst at Wedbush Securities, told TheWrap. “The box office must suffer if a cheaper alternative is offered within a reasonable period of time, just like eating out suffers from food delivery services.”

The question for Hollywood now is can it adjust the streaming pivot? Or reverse course altogether? 

TheWrap found that, so far, at least, streaming has proved a salve rather than a savior.

“Most of these companies were losing money anyway,” Ross Benes, senior analyst at eMarketer, told TheWrap. “WBD and Paramount would still be in dire straits even if they didn’t launch streaming services. But being unable to sufficiently make money on their streaming services just made their financial situations grimmer.”

And some studio executives are resigned to being in this new world.

“Consumer behavior has shifted, and it is probably not coming back,” Universal Studios Chairwoman Donna Langley noted in May in an address at UCLA. “One of the things we’ve focused on is that pre-pandemic, the majority of the moviegoing audience would see four or five films in theaters a year. That same number of people are now seeing one or two films. We’re meeting the consumer where they are and with a lot of flexibility, giving them different ways to engage with our content.”

The road to the future

At the time Disney was considering a push into streaming, Netflix was gaining viewership and spurring consumers to cut the cord from their traditional cable-TV viewing, threatening not only premium cable revenues but all home entertainment revenue, including high-margin DVD and Blu-ray sales. In 2010, consumer home entertainment spending on physical media was $10.3 billion, according to DEG. In 2023, that total was down to $1.6 billion.

“There’s a big component of revenue that essentially disappeared for studios, Daniel Loria, SVP content strategy and editorial director at Box Office Pro, told TheWrap. “I don’t think studios ever went into the streaming conversation to address an issue that they had found in theatrical. It was a necessary step to plug a hole on the boat that was basically created when the home entertainment sales started dissipating.”

Linear television’s share of TV viewing fell below 50% for the first time last August. Streaming made up a record 39% of viewing, compared to 22% for broadcast and 28% for cable, according to Nielsen.

The London-based research firm Ampere Analysis has predicted that streaming revenues could overtake pay TV revenues as early as the third quarter of 2024, bolstered by recently launched ad-supported offerings.

That poses a huge challenge, since for most of the major studios traditional linear television still represents a large chunk of overall revenues, but less and less of their profits. Paramount Global’s TV Media division, for example, accounted for 68% of the company’s $7.69 billion in revenues in the first quarter, with WBD relying on linear for 51% of its $41.32 billion in revenues.

Paramount’s linear pressures combined with ongoing streaming losses prompted S&P Global to downgrade the company’s credit rating to junk status in March, and Moody’s warned on Tuesday that it may follow suit.

At first, the studios were content simply to license their movie and TV content to Netflix, which needed to fill its pipeline to keep scaling the business. But as cord-cutting accelerated, by around 2017 they realized they needed to plan for a streaming-dominated future.

Some executives, like Mayer, clamored for a disruptive approach, figuring that consumers were declaring by their actions that they wanted to enjoy more content at home. Movies seen in theaters would increasingly be reserved for big-budget tent-pole action films —including a heavy dose of superhero fare — where an elevated experience, with stadium-like seating and Dolby-infused sound systems, would better justify the ticket (and concessions) price. 

Mayer said that Disney’s leadership had not counted on the decline of theatrical revenue when deciding to pivot to streaming. 

You could just taste it. This is going to transform our company, transform the industry, and our shareholders are going to massively benefit from it.

Kevin Mayer, former Disney executive , on the push into streaming

“We weren’t thinking at the time that we would change or disrupt the theatrical experience,” Mayer said.

“There was a lot of belief at Disney and elsewhere that theatrical was going to shift in any event,” he continued. “Streaming was just a manifestation of the fact that authority had shifted dramatically from producers and distributors to consumers. And it was quite clear that consumers preferred watching a lot of these movies at home than in the theaters. In my view – and shared by many — Hollywood had this paternalistic attitude that we decide where people see movies.”

So, Warner Bros, Disney, NBCUniversal and Paramount all began to create streamers from the ground up, with Disney acquiring a majority stake in Hulu in 2019. (It first launched publicly in 2008 as a joint venture between NBCUniversal and News Corp.) 

The one outlier was Sony, which went the route of being an arms dealer — licensing its content agnostically to all the streamers — which allowed it to be nimbler, Benes said.

“They don’t throw away money at a streaming service,” Benes said of Sony. “Instead, they profit off other legacy companies trying to compete with the new kids. They license the hell out of ‘Spider-Man’ for good reason.”

Sony had dabbled in streaming in 2015 with a service called PlayStation Vue. It also owned an even older platform, Crackle, which it sold in 2019 to Chicken Soup for the Soul Entertainment. (Crackle never accrued a serious subscriber count or received a significant investment in original content.) 

In late 2019, Sony revealed it would shut down PlayStation Vue to focus on its core gaming business. It cited a “highly competitive” industry and “expensive content and network deals” that had been “slower to change” than expected. Since then, the studio has said it does not plan to create a general entertainment streaming service, though Sony does control the anime-focused streamer Crunchyroll through a joint venture with Japan’s Aniplex. Crunchyroll has over 13 million subscribers and has been described as a “top growth area” for Sony Pictures, according to CEO Tony Vinciquerra. 

In April of 2021, Sony doubled down on its strategy by striking a deal with Netflix to release the studio’s theatrical titles on the streaming service six months after they hit the big screen. As other studios began building their streaming plans, “It did become clear at a certain point that many companies were going to lose many billions of dollars beating each other’s brains out,” Sony Pictures’ Motion Pictures Group chairman and CEO Tom Rothman told The Wall Street Journal.

Big Tech got in the streaming game as well, but with different motivations. Looking for another way to market their consumer products and later seeking Hollywood prestige, Apple launched SVOD streamer Apple TV+ in 2019, and Amazon continued to expand its video-on-demand offering, which started in 2006 in the U.S. as Amazon Unbox. In 2011, the service became a perk for Prime members, offering access to 5,000 movies and TV shows, and it later was rebranded as Prime Video.

Currently, Prime Video boasts 200 million monthly viewers, including 115 million in the United States. The tech giant has not reported the streamer’s metrics on a quarterly basis. But Amazon CEO Andy Jassy said in February that the company has “increasing conviction that Prime Video can be a large and profitable business on its own.” AppleTV+ has offered no insight into its profitability or subscriber figures — Apple lumps it in the results of its services division.

Project Popcorn and the post-pandemic theatrical shift

In 2021, after the pandemic had shuttered theaters throughout the world for the better part of a year, it wasn’t clear that the theatrical industry could recover. 

Complicating matters, China, the second-largest market for American films, continued to scale back on the number of U.S. films it exhibits in theaters to prioritize its growing local film output. In 2019, U.S. films earned $3.3 billion at the Chinese box office, or a 36% share. That plummeted to $1.2 billion, or about 16%, in 2023, Sony noted in a presentation.

Each studio took a significantly different approach to how it released films, resulting in a wide range of strategies. In December 2020, then-CEO of WarnerMedia Jason Kilar abruptly dumped the studios’ traditional movie release strategy, moving instead to release all 17 of Warner’s 2021 theatrical films simultaneously in theaters and on HBO Max. The strategy was dubbed “Project Popcorn,” and it was partly viewed as a temporary but necessary move because of the uncertainty inflicted on the theatrical market by COVID-19.

But it was also a choice that suggested Kilar was moving Warner decisively into a digital future that sacrificed current-day revenue for future state streaming profits, and it rankled top talent like Christopher Nolan and Denis Villeneuve in the process.

Universal deployed a dynamic windowing strategy and deals with movie theaters that continues to this day, and it has also leaned into Premium Video On Demand (PVOD).

Disney’s plan has been to release films on digital rental roughly 60 days after their release in theaters, followed by a release on Disney+ about 100 days after theatrical release. It started with the release of “Avatar: The Way of Water” in theaters in December 2022, one month after the ousting of Bob Chapek as CEO. 

Before the pandemic, Chapek experimented with day-and-date PVOD releases on films like “Mulan” and full pivots from theatrical to streaming-exclusive titles like Pixar’s “Luca” and “Turning Red.” Except for Disney subsidiary Searchlight Pictures, the studio has for nearly a decade focused almost entirely on big-budget films with production price tags of $200 million or more. 

Insiders at Disney say that current CEO Bob Iger sided with executives in the company that favored a renewed dedication to theatrical with firm windows, seeing that model as the key to turning its films into franchises that spawn years of downstream ancillary and theme park revenue.

Disney did not respond to a request for comment for this story.

Universal, with a more varied slate of films in terms of genre and budget size, has made PVOD a significant element of its theatrical strategy since the studio pulled “Trolls: World Tour” out of theaters in the early days of the pandemic. Universal settled a dispute with AMC Theaters with a windowing deal, later signed by other theater chains, that gave the studio the option to release a film on PVOD as early as 17 days after theatrical release if the domestic opening weekend earns less than $50 million. If it clears that mark, the PVOD window extends to 31 days. 

The impact such PVOD windows have had on the box office has been debated. Films that get released on PVOD at the 17-day mark, like the recent flop “The Fall Guy,” are not seeing a major drop in theatrical revenue afterwards. Still, some exhibitors who spoke to TheWrap said they’re concerned that the practice may train audiences to expect that certain films, even at a premium price, will be available in their living rooms faster — and that may factor into their decision on how they see an upcoming film that interests them. 

“My worry is that if there’s another film like ‘Fall Guy’ that isn’t a sequel but is getting good reviews, they’ll think, ‘Well, it will probably come out at home in a couple of weeks’ and then they’ll see it that way, maybe with some friends,’” said one theater executive who spoke anonymously. “The theaters get a cut of that, but we lose out on any concessions they would have bought.” 

Insiders at Universal say that “optionality” is at the core of their strategy. They continue to orient the marketing strategies for all their films around encouraging audiences to see them on the big screen, while maximizing potential revenue among those more disinclined to buy tickets than before the pandemic.

Three years later, the differences between studios’ strategies aren’t as stark. There’s widespread agreement that day-and-date doesn’t work and that the box office needs to be rebuilt. But there’s also a general consensus that the moviegoing habits that helped push the domestic box office to $11 billion per year in the 2010s aren’t coming back. 

How exactly to work around those new habits is something the major industry players can’t agree on, because the gaps in theatrical output caused by the pandemic and the double strikes have muddled the data. 

The path forward

Most of the streamers have yet to reach profitability in even one quarter, let alone two in a row. To try to turn those businesses around, the studios have been cutting costs by laying off workers and removing content from the platforms. 

Warner Bros. Discovery reported an $86 million profit in its direct-to-consumer business in its latest quarter, though that included traditional HBO cable subscriptions in the results. WBD is targeting $1 billion of streaming profit in 2025. Disney has said it’s on track to reach streaming profitability by the end of fiscal year 2024. Paramount is aiming for domestic profitability in fiscal 2025. Peacock has offered no timeline.

Further exacerbating these challenges are heavy debt loads and tumbling stock prices. Disney, with a market cap of $176.9 billion, has seen shares climb 10% in the past year, but fall 31% over the past five years. Shares of Warner Bros. Discovery, which has a market cap of $17.9 billion, have plunged 43% in the past year and 70% since the April 2022 merger. Comcast, owner of NBCUniversal, has a market cap of $147.2 billion, and has watched its stock slip 10% in the past year and 15% in the past five years. And shares of Paramount, which has a market cap of $8.1 billion, have fallen 29% in the past year and 78% in the past five years.

By comparison, Netflix shares have soared 55% in the past year and 83% over the past five years. The company’s market capitalization sits at $295.5 billion, up two-and-a-half times from 2018. Netflix has $13.2 billion in long-term debt, compared to Paramount’s $14.6 billion, Warner’s $39.1 billion, Disney’s $39.5 billion and Comcast’s $94 billion.

Even for Netflix, the road to streaming success has delivered some speed bumps. In April of 2022, Netflix’s first sequential loss of subscribers in over a decade sank its stock to its lowest levels in more than four years — flashing how tenuous streaming viability appeared to Wall Street.

Lately, Netflix’s competitors have been hiking subscription prices, licensing more content and opting to team up through bundles — or offering their streaming services through deals with pay TV providers like Spectrum owner Charter Communications or telecoms like Verizon or T-Mobile. 

Peacock, Apple TV+ and Netflix will be made available through Comcast’s StreamSaver bundle, while Disney+, Hulu and Max are teaming up for a bundle launching this summer. Paramount’s new co-CEOs have said they are in talks with other streamers and technology platforms — including WBD’s Max, according to CNBC — about packaging struggling Paramount+ in a joint venture or strategic partnership.

A recent spurt of theatrical grosses from two animated films won’t totally alter an expected down year at the box office in 2024. But next year a horde of big films will give Hollywood more data to finally understand whether the new lower box office is the new normal — or just a blip on history.

Pachter, for one, believes that even as they continue to chase Netflix’s tail, the major studios could still opt to dramatically change course. He suggested they create a three-year window for streaming, put only catalog TV and older movies on their streaming platforms, and maintain the theatrical and broadcast windows. 

“We’ve reached a point of no return for studio heads to understand this, as they are hopelessly clueless,” Pachter said, “but a new generation of studio leadership can salvage this.”

The post Hollywood’s Pivot to Streaming 5 Years On: Fatal Error – or Key to Survival? appeared first on TheWrap.