In 1994, when Sumner M. Redstone bought Paramount Pictures for about $10 billion, the equivalent of about $22 billion today, he did more than just acquire a company. He ascended a cultural throne.
Studios like Paramount — founded in the 1910s, with soundstage complexes and control of vast film libraries — were valuable businesses on the verge of striking out on a goldmine: the DVD. But perhaps more importantly, they gave their owners a valuable identity as certified members of the cultural elite.
Movies still reigned supreme. Top sellers in 1994 included such touchstones as “The Lion King,” “Schindler's List,” “Interview With the Vampire,” “Mrs. Doubtfire,” “Philadelphia,” “Speed” and “Pulp Fiction.” In 1995, when “Forrest Gump” — a Paramount release — won the Oscar for best picture, more than 48 million Americans tuned in to watch.
Those days are over.
On Sunday, the Redstone family reluctantly gave up Paramount, handing the studio over to David Ellison, the tech scion behind a 14-year-old entertainment company called Skydance. If the complex deal closes, Ellison and his backers, including RedBird Capital Partners, will spend about $8 billion on a collection of assets that includes Paramount, CBS, two streaming services and a portfolio of cable networks including MTV, Nickelodeon, BET and Comedy Central.
Considering that the studio was worth $22 billion in 1994 alone, it wasn't exactly a celebratory moment in Hollywood. Rather, it was another example of the harsh reality creeping in on a world still fond of fantasizing about reliving its golden age. (Universal recently renovated its lot, and a sign above one of its entrances reads, “Welcome All Who Change the World.”)
Sure, Mr. Ellison, 41, is now considered a bona fide Hollywood mogul. But what does that mean in 2024? His rise is a far cry from that of the robber barons like Mr. Redstone who came before him, in part because there’s little left to rob.
With a few exceptions — notably animated features — the box office has been a relative wasteland; Memorial Day weekend was the worst in nearly 40 years, after adjusting for inflation. Most streaming services have been financial disasters; Paramount+ alone has lost nearly $4 billion since the start of 2022. Metro-Goldwyn-Mayer and 20th Century are little more than logos. Warner Bros. is in the midst of its fourth superhero reboot strategy in eight years.
“We cannot in good conscience encourage you to practice our profession,” said the Art Directors Guild, which represents set designers. and other film professionals, it said in May when it suspended its training program. A recent column in Deadline, an entertainment trade publication, described Hollywood — ravaged by the coronavirus pandemic, two prolonged union strikes and the still-rising popularity of TikTok — as “something post-apocalyptic, with zombies and lots of smoking ruins.”
Artificial intelligence threatens jobs, especially in visual effects and animation. Streaming has made it easier to pirate content.
The Oscars have been kept alive. This year's Academy Awards ceremony drew 19.5 million viewers, down 60 percent from 1995.
Unlike the gilded Redstone glory days, the era that is dawning at Paramount will be defined by Mr. Ellison’s skills as a handyman. He acknowledged as much on Monday, telling analysts on a conference call that he planned to transform the collection of assets into a “tech hybrid.” He would do so, he said, by drawing on his experience as a Skydance producer on films including “Top Gun: Maverick” and “The Tomorrow War” while tapping into relationships in Silicon Valley; Mr. Ellison is the son of Oracle founder Larry Ellison.
“If you were to go into a lab and design the perfect executive for the next generation of Hollywood, you would literally spit out David Ellison, because not only can he go to a table and read, he can go into the next room and program,” Jeff Shell, Ellison’s top lieutenant at the new company, said on the call. Mr. Shell previously served as CEO of NBCUniversal, where he was known for shaking up long-standing Hollywood business practices, including theatrical release patterns. (Mr. Shell left NBCUniversal last year after admitting “an inappropriate relationship with a woman at the company.”)
Gerry Cardinale, founder of RedBird Capital, said Mr Ellison would turn Paramount into “the pace car for how these existing media companies need to be run in the future.”
They were vague on the details, with two exceptions: Mr. Ellison plans to reshape Paramount+ while cutting and burning old businesses to find more than $2 billion in “cost savings and synergies.” (To put that number in context, the company’s previous management team said last month that $500 million in cuts was aggressive enough.)
Mr. Ellison has run Skydance as an ultra-lean operation. Larry Ellison has also shown a lack of tolerance for Hollywood largesse, forcing him to overhaul his daughter’s money-losing Annapurna Pictures in 2018. Annapurna largely left the film industry and found success with independently produced video games.
Paramount has weathered boom and bust cycles before. In the 1960s, the studio’s owner, the conglomerate Gulf & Western Industries, sold the struggling Paramount almost for its real estate value. There was talk of a cemetery adjacent to the studio. More cemeteries were planned.
That's when Paramount's young production chief, Robert Evans, turned a macabre drama, “Rosemary's Baby,” into a box office smash. Evans turned the studio into a showcase for culture-defining cinema, with “The Godfather,” “Chinatown” and “Urban Cowboy.” Barry Diller took over and delivered hits like “Raiders of the Lost Ark,” “Grease” and “Beverly Hills Cop.” Sherry Lansing kept Paramount afloat in the late '80s and '90s with films like “Fatal Attraction,” “Braveheart” and “Titanic,” a co-production with Fox.
Mr. Ellison is revered by Paramount's history. During Monday's call with analysts, he repeatedly said he wanted to revive the studio's status as a haven for storytellers. But he also made it clear that nostalgia was no longer enough.
“This is a defining and transformative time for our industry,” said Mr. Ellison. “We are committed to driving the business forward and strengthening Paramount with contemporary technology, new leadership and a creative discipline focused on enriching future generations.”
