5 Suggestions for David Ellison to Make Paramount a ‘Media and Technology Enterprise’

Skydance's mission impossible: saving Paramount.

David Ellison and Tom Cruise" width="970" height="763" data-caption='David Ellison (L) has <span style="font-weight: 400">stated the goal to build Paramount (PARA) into</span><span style="font-weight: 400"> “both a media and technology enterprise.</span> <span class="lazyload media-credit">Kate Green/Getty Images for Paramount Pictures</span>'>

America’s never-ending game of billionaire media hot potato continues as David Ellison’s long and arduous courtship of Shari Redstone finally seems to be over. Skydance Media and Redbird Capital’s $8.4 billion takeover of National Amusements and its controlling stake in Paramount Global will become unofficially official at 11:59 PM on August 21, assuming Redstone doesn’t change her mind (again) before then and the federal government approves the deal. The regulatory review could take a year or so but should ultimately result in a new owner for one of Hollywood’s storied legacy studios.

Unfortunately for that century-old studio, it belongs to a media company shouldering $14.6 billion in debt at a time when its share price has cratered by 78 percent over the last five years. Atlas faced less of a lift than restoring this once potent powerhouse to its former glory.

In the spirit of unsolicited advice, here are some obvious and not-so-obvious suggestions for Skydance’s stewardship of Paramount.

1) Sell off non-essential assets

Paramount Global consists of a handful of brand assets including CBS, Showtime, BET, Comedy Central, MTV, Nickelodeon, Paramount Pictures, Paramount Network, Paramount+, Pluto TV and a few others. 

In recent years, Redstone and Co. reportedly ixnayed separate deals for BET and Showtime that could have garnered around $6 billion in total. It would be a miracle to get half of that today. While conversations about BET are bubbling up again, Skydance should bid adieu to any non-essential assets once the takeover is complete, even though some are still spitting cash.

This includes brands such as VH1 and MTV, which defined culture during the heyday of pay TV but are now disconnected from the zeitgeist and part of a declining model. No one has publicly put forth an excellent plan to reinvent these brands for today’s audiences, and around-the-clock reruns of Ridiculousness can only take you so far.

2) Make the NFL the centerpiece of CBS (and beyond)

Legacy media and Big Tech have failed to fully leverage sports properties. Although some of this is due to contractual restrictions, The Walt Disney Company (DIS) and Paramount took until the 2020s  to simulcast NFL games designed for kids. Why isn’t Amazon integrating NFL talent, access and collaboration efforts throughout Cloud, AWS, online retail, Echo/Alexa and Kindle? Given the NBA’s global reach, Disney should better include the IP at the ESPN Complex in Disney World.

Live sports rights can drive downstream value for legacy owners and distributors. Given the high costs, this should be a high priority. Yet, the thinking at these companies seems to stop and start with the broadcasts.

Greater access to NFL talent and cozier relationships is a must, as CBS pays the NFL $2.1 billion a year. The broadcast network has the oldest primetime audience among the Big Four at 67.8 years old. More should be done to attract youth interest via Nickelodeon (more on Nick below). The NFL has strict merchandising policies, but some sort of partnership would provide a huge boon to the otherwise bland Paramount Shop. Where are the strategic brand bridges between the overlapping audiences of the NFL, CMT, Smithsonian Channel and TV Land? Social features, worthwhile push notifications and other mobile-first engagement efforts should also be a key focus area as should a new emphasis on live experiences given Paramount and Skydance’s IP (that’s a column for another day). 

CBS should make the NFL the centerpiece of its brand while stretching into the rest of Paramount’s offerings. 

3) Reorient direct-to-consumer business around kids, sports and news

As I’ve covered before, hyper-focusing on kids and family, news, and sports creates a differentiated streaming service rather than another copycat subscription. Currently, Paramount competes for the same territory dominated by Netflix, HBO, Disney and others. Premium entertainment is a crowded clown car of competition. Opting out of that specific battle may create more room for success. (Or, at the very least, focus on the sitcom/procedural, Yellowstone, Mission: Impossible audience and cut everything else.

Paramount could find scripted content partners overseas (Netflix, Peacock or Apple TV+) where Ellison is reportedly interested in an “arms dealer” strategy. 

Netflix already houses popular Paramount programming and carries natural library consumption affinity with CBS sitcoms and procedurals. Licensed programming from Paramount accounted for a 12 percent audience demand share among Netflix’s U.S. TV catalog in Q2, according to Parrot Analytics, where I work as Senior Entertainment Industry Strategist. That’s a larger share than NBCU, Disney and Warner Bros. Discovery (WBD). 

Paramount programming also fits the bill for Apple TV+, which is stubbornly committed to premium programming but needs a larger library of middlebrow content to boost subscriber growth (it appears the Apple streaming executives finally agree as well). NBCU and Paramount are already partners in the European joint streaming venture SkyShowtime. Two subscale legacy platforms working together make a lot of synergistic sense and would be a vast sports play to challenge Venu Sports and ESPN’s forthcoming over-the-top (OTT) service.

Pump up the volume of wide-release theatrical films – perhaps swiping away a Monkeypaw Productions, Village Roadshow, or Blumhouse from a rival via first-look/overall deals to prioritize quality, cost-effective theatrical bets – to steadily supply the streamer with acquisition-driving movies on a monthly basis. (Perhaps even take a page out of Universal’s book and bifurcate the Pay One window to boost Paramount+ while still generating lucrative licensing revenue). Star Trek and Taylor Sheridan originals can continue feeding domestic audiences while fetching a pretty penny on the international open market. 

4) Reinvest in Nickelodeon

Nickelodeon is an undervalued programming asset. It is responsible for about one-fourth of all audience demand for Paramount+’s TV catalog, making it the platform’s top contributor in terms of brands, per Parrot. Demand outstrips supply for kids’ content on Paramount+ by a healthy margin, suggesting further investment is warranted. Inquiring as to the availability of the Looney Tunes IP over at Warner Bros. Discovery seems to be worth a phone call given the latter’s lack of activity with the franchise (including shelving the completed $70 million Coyote vs. Acme film).

SpongeBob remains a marquee generational cross-platform IP foundation, and the future animated Avatar universe is also positioned to provide a big boon. Successful kids’ programming like this forms the key building blocks for multimedia franchises that offer long-term value. 

5) Position Pluto TV as a minor replacement for regional sports networks (RSNs)

Incoming Paramount president Jeff Shell aims for at least $2 billion in budget cuts while beefing up the CBS Sports portfolio. However, with RSNs falling off a cliff, the future of sports distribution and fandom development looks uncertain. Major streaming services like Netflix and Amazon Prime Video focus on national and global audience interests. However, free ad-supported streaming TV (FAST), such as Paramount’s Pluto TV, boasts a growing focus on regionality. 

Local broadcast TV news had 8-12 times more viewers over the age 18 than the streaming audiences of Netflix, Amazon, Apple TV+, Disney+ and HBO Max in select U.S. markets. As of July 2022, sports accounted for 117 distinct FAST channels with ample room for growth for major leagues such as MLB (four channels), NFL (four), PGA Tour (three), WWE (one), UFC (one), MLS (one) and EPL (one). The interest in locally-specific content is on-platform, as is the growing sports opportunity. 

Historically, free-to-air sports broadcasts have grown the overall awareness of sports and attracted new fans. Niche sports channels don’t require expensive media rights and can reach profitability faster with a smaller audience. FAST helps solve and support both.

Pluto TV generated 80 million monthly active users in April 2023 and held a 0.9 percent share of U.S. streaming TV usage in May, per Nielsen’s The Gauge. Simulcasting with Paramount+ would cast an even wider net. 

The economics of FAST will always be the same as that of RSNs. Even as some estimates peg total FAST revenue at $12 billion by 2027, it’s still a fraction of the traditional pay-TV model. But doing nothing is not an option. Skydance’s Paramount could leverage a younger-skewing medium that serves as a natural first touch-point for Gen X+ cord-cutters.

Ellison’s team must push the angle that he’s “saving” a legacy studio. Paramount’s alternatives to Skydance would reportedly have sold the company off piece by piece, dismantling a beloved legacy studio with 100-year-old roots. Skydance is investing $1.5 billion to help pay down Paramount’s debt and grow the business. Trade outlets running puff pieces along these lines can help influence consumer, talent and analyst perceptions.

The goodwill generated from such narratives can help negate potential backlash from Ellison’s stated goal “to be both a media and technology enterprise.” This will involve improving Paramount+’s algorithmic engine and ad technology capabilities of Paramount+, which is absolutely necessary (UX/UI are imperative to success). The other element will likely embrace artificial intelligence to cut costs and streamline production aggressively. That won’t go over as smoothly with the creative community.

Ellison cares about the studio and keeping the company largely intact and wants to implement more modernized problem-solving. For the health of the industry, it’s probably best that he won the Paramount sweepstakes. But can an infusion of new resources and a more tech-driven mindset revitalize the company, or is Paramount too small and too far gone to survive and thrive in today’s more complex media arena? We’ll find out soon enough.