Paramount closed its deal to acquire Warner Bros. Discovery on Tuesday, putting the tech scion David Ellison in control of a vast media empire that oversees many of Hollywood’s most valuable properties.
The deal immediately catapults the combined company, now called Skydance, to the front rank of competitors alongside streaming titans like Netflix and YouTube, just behind giants like Disney and Amazon.
“Today is a historic day, not just for Skydance but for our entire industry,” Mr. Ellison said in a statement on Tuesday. “We couldn’t be more excited to get to work,” he added.
There were signs that Mr. Ellison was moving at lightning speed to take control of his new empire. Warner Bros. employees who opened their laptops Tuesday morning saw them suddenly emblazoned with the new company’s logo over a field of stars. A link to a “global town hall” meeting, scheduled for 1 p.m., popped up. And an 1,705-word memo titled “Day 1” from Mr. Ellison and his co-chief executive, Ynon Kreiz, landed in their inboxes.
“We’re proud to write this next chapter with you,” they wrote. “Now the real work begins. Let’s go!”
The new company is a hard-fought prize. Mr. Ellison wrested Warner Bros. Discovery from a rival bidder, Netflix, after a monthslong tug of war that prompted him to make nine offers for the company. Along the way, Mr. Ellison was criticized for courting President Trump while his deal was under review by the Department of Justice; in April, he held a dinner in Washington “honoring the Trump White House.”
During a news conference on Tuesday on the Paramount lot, Mr. Ellison pointed to other business leaders who have attended state dinners with Mr. Trump, including Tim Cook, the former Apple chief executive, and Jeff Bezos, the founder of Amazon. Now that the deal is closed, Mr. Ellison said, Skydance will “move forward.”
“We were in a transaction review process, but with that said, we are now turning that page,” he said.
A coalition of state attorneys general sued to block the deal on antitrust grounds, but settled after extracting a series of concessions, including the establishment of an editorial independence board to safeguard the integrity of CNN and a promise from Mr. Ellison to spend an additional $1.5 billion on movies over the next five years.
Hundreds of Hollywood insiders said the deal would sharply consolidate corporate power, leading to job losses and further stagnation in Hollywood. Skydance has argued the merger is a necessary counterweight to Big Tech.
The new company, which owns two major movie studios in Warner Bros. and Paramount Pictures, news networks including CNN and CBS News and the streaming services HBO Max and Paramount+, is making its debut in an industry navigating profound change.
Cable television, one of the biggest cash cows in media, is still profitable but in terminal decline. Streaming still hasn’t replaced those profits. Trust in the news business is in the basement. And tech companies like Amazon and Apple are muscling in on movies, TV shows and sports rights, driving up content costs.
Those challenges will pose a major test for Mr. Ellison, 43, who until last year had never run a public media company. He and his team must convince Wall Street that the new company can manage those challenges while it pays down $82 billion in debt, a staggering sum for a traditional media company. He must also rally tens of thousands of employees at Warner Bros. and Paramount; both companies have undergone nearly annual layoffs in recent years.
There were some signs of early turbulence on the horizon. On Tuesday, the ratings agency Fitch said it was downgrading the combined company to reflect increased debt as well as “significant execution and integration risks.”
And Mr. Ellison and Mr. Kreiz alluded to the prospect of looming layoffs in their memo. They must deliver $6 billion in cost-cutting over the next three years — a target they are likely to hit, in part by eliminating thousands of jobs.
“Integrating two companies will bring change, including difficult decisions that affect our work force,” they wrote. “We are committed to handling this process thoughtfully and respectfully.”
Elsewhere at the company, corporate leaders sought to reassure employees amid the uncertainty caused by the deal. Bari Weiss, the editor in chief of CBS News, reminded journalists on a call Tuesday morning that they had become accustomed to carrying out their duties despite “a lot of things going on in the press.”
“Nothing right now is going to change,” Ms. Weiss said. “This is a process that’s going to unfold under time.”
Mr. Ellison has assuaged some of those concerns by retaining Mark Thompson as chairman of CNN. In a memo to employees Monday, Mr. Thompson said that he had spoken to Mr. Ellison and came away convinced that executives at Skydance would support the “independent news that CNN has always stood for.”
Mr. Ellison further addressed the anxieties about CNN’s independence on Tuesday during a town hall meeting, where he and Mr. Kreiz were interviewed by the CNN anchor Anderson Cooper.
“We believe in complete editorial independence,” Mr. Ellison said. “We trust Mark, we trust the team.”
“You’re pledging not to interfere with news coverage of CNN?” Mr. Cooper interjected.
“Correct,” Mr. Ellison said. “We’ve been very clear.”
During the interview, he also affirmed that he supported CNN’s efforts to fight President Trump’s White House press ban.
At the news conference later, Mr. Ellison was asked how he would handle the tricky task of integrating CBS News, which is unionized, with CNN, which is not. Mr. Ellison said he was “thrilled” with Mr. Thompson and Ms. Weiss and said he would spend the next several months examining that issue.
Another of Mr. Ellison’s biggest challenges will be winning over Hollywood’s creative class in an era of uncertain box office receipts, artificial intelligence and algorithmic personalization. He has pledged to invest in content, promising to release at least a combined 30 theatrical films annually. After two years, that number would rise to 32 films. He has also promised to overhaul the company’s technological capabilities.
- Credits: The New York Times
- Author: Benjamin Mullin
- Photo: Mark Abramson
