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'Seems Clean Enough'

Paramount/Skydance Not Expecting Major FCC, DOJ Headwinds

Paramount Global's pending deal with studio Skydance Media shouldn't face notable objections from the FCC or DOJ, we are told. The $8 billion agreement sees Skydance founder-CEO David Ellison and his family, along with private equity firm RedBird Capital, buying National Amusements Inc., which has a controlling stake in Paramount. The Skydance investor group would then combine Skydance with Paramount. The transaction includes a $1.5 billion infusion into Paramount to reduce debt and for strategic initiatives. Paramount said it expects to close the deal by Sept. 30, 2025.

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A lawyer with experience with one of the companies in the New Paramount transaction said the content creation space outside broadcast is likely big enough that the Paramount/Skydance consolidation wouldn't merit concern. The lawyer, who was not involved in the transaction, said the FCC's dual network rule also shouldn't impede the deal as Skydance lacks TV networks. Another hurdle avoided, he said, is that Skydance also seemingly doesn't have attributable interests in TV broadcast stations. The FCC could have been concerned about the concentration of networks. Moreover, public interest groups are unlikely to raise objections around broadcast station issues, this lawyer said.

Licenses for Paramount's broadcast stations should easily transfer, "and there appears to be ample competitive dynamics in the streaming space to avoid any challenge there," Adonis Hoffman, CEO of consulting firm The Advisory Counsel and former aide to then-FCC Commissioner Mignon Clyburn, wrote in an email. The deal from a regulatory perspective "seems clean enough," he added. "However, that says nothing about its investment or market value, for which time will tell."

Ellison will become chairman and CEO of New Paramount, with Jeff Shell -- former NBCUniversal CEO, now with RedBird -- president.

In a call Monday with analysts, Ellison said goals for New Paramount include rebuilding the Paramount+ platform, which in turn will help expand its streaming business, and transitioning New Paramount to a tech and media hybrid. Paramount and Skydance have produced numerous films together, including multiple Mission: Impossible, Transformer and Star Trek movies. In addition, the deal will unite each company's rights in those franchises, he said.

Pointing to a "challenged" and declining linear TV business, Shell said the goal is cash flow generation. The plan is for $2 billion in cost cuts at New Paramount, with Skydance supplying verticals that Paramount needs, such as gaming. New Paramount's studio output would emphasize animation. Shell said there will be "a bit of a fresh approach" with cable networks such as MTV and Comedy Central. New Paramount would prioritize being part of what Shell said was a forthcoming "ultimate bundle" in streaming, with various streaming services inevitably aggregated together with a universal programming guide. “If you're in that bundle, you're going to win. If you're not, you're going to be in a lot of trouble," he predicted.

New Paramount "has major opportunities for content production and distribution, but the challenges of competing in today's disruptive movies and entertainment industry remain," CFRA analyst Ken Leon wrote in a note Monday. "This is probably the best strategic deal Paramount is likely to be offered that comes closest to satisfying all parties, at least in part," Benchmark analyst Daniel Kurnos noted. He said the incoming new management seems more open to monetizing content on third-party streaming platforms than has been Paramount's practice so far.