In January, Paramount’s board of directors, including Shari Redstone, the company’s chairman, met with a group of bankers to get an update on the media industry and to hear about potential deals that could help the company better to compete with streaming giants such as Netflix and Disney. †
The bankers, from Goldman Sachs and LionTree, came up with many deal ideas, according to four people who were aware of the meeting. The most logical, the bankers said, was to combine some parts of Paramount — which owns networks like Nickelodeon and MTV, and streaming service Paramount+ — with those of Comcast, the cable giant that owns NBCUniversal and streaming service Peacock. The two companies already have a streaming joint venture in Europe.
But in the end, the board of directors, Ms. Redstone and Bob Bakish, the company’s CEO, didn’t feel compelled to pursue either combination. They would keep zigzagging as Hollywood saw.
That is, Paramount – with its collection of streaming services including Pluto TV and Showtime in addition to Paramount+ – it would continue to do it alone.
The meteoric rise of streaming has reshaped the media industry in just a few years as companies have felt the pressure to spend billions on new TV shows and movies to attract enough subscribers to compete with the giants in the world. industry. MGM, the famous movie studio, sold to Amazon. And Discovery combined with WarnerMedia, the film and TV giant behind ‘Game of Thrones’ and ‘Succession’.
Not supreme. Since the company was formed from the merger of Viacom and CBS three years ago, it hasn’t sought another big deal. Instead, the company has been trying to build its own profitable streaming business before the cash flow from traditional TV, still the big money maker, dries up.
In interviews, both Ms. Redstone and Mr. Bakish said that with its global presence, its streaming business and the film studio behind the new hit movie “Top Gun: Maverick”, Paramount would have success on its own terms.
“In many ways we remain the underdog, and that’s okay,” said Mr. bakish. “But I think as time goes on, people will see more and more that Paramount is powerful.”
Mrs. Redstone and Mr. Bakish have much to convince Wall Street to do. In the years since Ms. Redstone advocated the effort to unite the two halves of her family’s media empire—Viacom and CBS—to form Paramount, the combined company’s value has dropped significantly. On the day the merger was announced, in August 2019, Wall Street valued both companies at $29.6 billion. Today, Paramount is worth $22.1 billion, a 25 percent drop. Share prices of Paramount’s competitors, including Disney and Netflix, have also fallen over the same period.
Rich Greenfield, co-founder and analyst at LightShed Partners, a research firm, doubts Paramount can survive alone. Paramount’s streaming business is growing rapidly, but it’s still not profitable, Mr. Greenfield said. And much of the audience for Paramount’s signature content — think MTV and Nickelodeon — has shifted to new media platforms like TikTok and Instagram.
The race to rule streaming TV
“I don’t think anyone believes that in five years this company won’t be buying other things or becoming part of something bigger,” said Mr Greenfield. “It’s eat or be eaten time.”
Wall Street has sharpened its focus on the profitability of streaming companies in recent weeks. Netflix said in April it was losing streaming subscribers in the first quarter of the year, reversing a decade of growth and decreasing stock. Mr Bakish said competitors such as Netflix – which he boldly refers to as “legacy streamers” – are only now realizing the importance of the revenue strategies that Paramount has embraced for years, including advertising.
Checkout, another traditional business largely shunned by Netflix, is another example, Bakish said. “Top Gun: Maverick,” is on track to generate $150 million in ticket sales over its opening weekend, but in an exception to most studio-produced films, it won’t appear on Paramount+ within the typical 45-day window .
Still, some experts think Paramount’s strategy is a good one. Brett Feldman, a Goldman Sachs analyst, said the global streaming subscriber market is much larger than the pay-TV subscriber audience. Paramount+ added 6.8 million subscribers in the first quarter of 2022. Mr. Feldman is in the minority of analysts who have a “buy” on Paramount.
“Not everyone pays for cable, especially outside the US,” said Mr. Feldman. “Most people have an internet connection or cell phone to stream video.”
Paramount received a confidence vote this month from Berkshire Hathaway, the holding company of billionaire Warren Buffett. Berkshire Hathaway said in a filing that it had amassed a $2.6 billion stake in Paramount. Berkshire Hathaway did not explain the rationale for investing in Paramount and the company declined to give The Times an interview. But the news caused Paramount’s stock to surge 15 percent.
Ms. Redstone said Berkshire Hathaway’s investment in Paramount surprised her. She got the news hours after it went public.
“I was out for dinner and the person said to me, ‘What do you think of Buffet’s investment?'” said Ms. Redstone. “And I was like, ‘What?'”
The ultimate fate of Paramount will most likely be determined by Ms. Redstone, who in 2018 triumphed from a bitter legal battle with Les Moonves, then the chief executive of CBS, to retain control of the entertainment assets her family owned for decades. Like her father, the scheming and warlike lawyer turned mogul Sumner Redstone, Ms. Redstone controls Paramount through National Amusements, a holding company she runs that owns voting shares in the company.
While mr. Known for his cranky and impulsive decisions—he once threatened to cut Paramount’s ties with Tom Cruise after his couch-jumping episode on “The Oprah Winfrey Show”—Mrs. Redstone is a more subdued leader. She underlined the contrast with a joke.
“As I once said to my father, I said, ‘Everything I am is thanks to you, except the nice things – they came from my mother,'” she said with a laugh.
Ms. Redstone said she is weighing the direction of the Paramount in one-on-one conversations with Mr. Bakish and spending time cultivating business relationships inside and outside the company. She suggested Mr. Bakish to Brian Robbins, who with her support eventually became president of Paramount, and helped close a deal with South Korean entertainment company CJ ENM by Mr. Bakish to connect with Miky Lee, the vice president of the company’s parent company.
Ms. Redstone was an early proponent of Paramount’s decision to compete directly with major players such as Disney and Netflix in direct-to-consumer streaming — a strategy still in the air when Viacom and CBS merged in 2019.
In the wake of the merger, company leaders debated whether to invest in its existing subscription streaming service — then known as CBS All Access — or forego streaming for a “weapons dealer” strategy: Movies and TV Shows. sell to other streaming companies, said three people knowledgeable about the discussions.
So in early 2020, just weeks after the deal was closed, Paramount decided to take its first step into streaming: the company would put some content from Viacom on CBS All Access, quickly expanding the service without spend money on producing original content.
A few months later, with encouragement from Ms. Redstone and Marc Debevoise, then the company’s digital chief and co-founder of CBS All Access, Paramount decided it would spend money on original movies and TV shows for the service, effectively making it the streaming battle. the people said.
That spring, Mr. Bakish held a series of meetings and asked the heads of each of the company’s networking groups to pitch projects for inclusion in a company-wide subscription streaming service.
In July of that year, the company finalized its current course. In a board meeting, company leaders summed up the strategy, along with some possible names for the as-yet-unnamed streaming service: Paramount+, Honeycomb, The Eye and Pluto+. (The latter option was inspired by the company’s popular ad-supported streaming service.) Over the summer, they chose Paramount+, according to two people familiar with the matter.
Under the revamped streaming strategy, major Paramount movies – excluding some hits, such as “Top Gun: Maverick” – will be released on Paramount+ within 45 days of their theatrical release. The idea behind that approach is that it gives Paramount one foot in the emerging streaming era and one firmly planted in the traditional ways of making money of old Hollywood.
At the premiere of “Top Gun: Maverick” last month, shortly after a splashing promotion on a leased aircraft carrier in San Diego, Mr. Cruise pays tribute to Sumner Redstone. As Mrs. Redstone watched, Mr. Cruise on that the film had a wide release on May 27, which would have been Sumner Redstone’s 99th birthday. (He died in 2020.)
Ms. Redstone said she believed her father would generally agree with her approach to Paramount. And she said she thinks Wall Street will eventually get there, provided the company keeps its promises.
“I think the market keeps saying, ‘Show me, show me,'” said Ms Redstone. “And I really believe we’ll keep showing them.”
