In 1994, when Sumner M. Redstone bought Paramount Pictures for about $10 billion, equivalent to about $22 billion today, he did more than simply acquire a company: he ascended a cultural throne.
Studios like Paramount — founded in the 1910s, which operated complexes of recording studios and controlled vast film libraries — were valuable companies that were on the cusp of striking a goldmine: the DVD. But perhaps more importantly, they gave their owners a valuable identity as certified members of the cultural elite.
Movies remained king. Among the top-grossing films of 1994 were such landmark films as “The Lion King,” “Schindler’s List,” “Interview with the Vampire,” “Mrs. Doubtfire,” “Philadelphia,” “Speed” and “The Rolling Stones.” In 1995, when “Forrest Gump,” a Paramount release, won the Oscar for best picture, more than 48 million Americans tuned in to see it.
Those days are over now.
On Sunday, the Redstone family reluctantly stepped down from Paramount and handed the studio over to David Ellison, the tech heir behind a 14-year-old entertainment company called Skydance. If the complex deal closes, Ellison and his backers, including RedBird Capital Partners, will spend roughly $8 billion on a range of assets that includes Paramount, CBS, two streaming services and a portfolio of cable networks including MTV, Nickelodeon, BET and Comedy Central.
Considering the studio was worth just $22 billion in 1994, it wasn’t exactly a moment of celebration in Hollywood. Rather, it was another example of harsh reality intruding on a world that still likes to fantasize about recapturing its golden age. (Universal recently renovated its lot, adding a sign over one of the entrance gates that reads: “Welcome all who change the world.”)
Sure, Ellison, 41, is now considered a bona fide Hollywood mogul. But what does that mean in 2024? His rise looks nothing like that of the robber barons like Redstone who preceded him — in part because there isn’t much left to steal.
With a few exceptions (most notably animated films), the box office has been a disaster; 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 on its fourth superhero reboot effort in eight years.
“We cannot in good conscience encourage them to take up our profession,” said the Art Directors Guild, which represents set designers. and other film specialists, he said in May, when suspended its training program. A recent column In Deadline, a specialized entertainment publication, he described Hollywood, hit by the coronavirus pandemic, Two long union strikes and the growing popularity of TikTok, as “something post-apocalyptic, with zombies and lots of smoking ruins.”
artificial intelligence is threatening jobs, particularly in the fields of visual effects and animation. Streaming has facilitated content piracy.
The Oscars have been on life support. This year's ceremony attracted 19.5 million viewers, 60 percent fewer than in 1995.
Unlike Redstone's glory days, the era beginning at Paramount will be defined by Ellison's skills as a repairman. On Monday, he acknowledged as much, telling analysts on a conference call that he intended to remake the collection of assets into a “tech hybrid.” He would do so, he said, by drawing on his experience as a Skydance producer of films such as “Top Gun: Maverick” and “The Last Stand.”The war of tomorrow” while leveraging connections 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 the Hollywood company, you would literally spit out David Ellison, because not only can he go to a table read, he can go into the next room and code,” Jeff Shell, Ellison’s top lieutenant at the new company, said on the call. Shell was previously chief executive of NBCUniversal, where he was known for changing long-held Hollywood business practices, including theatrical release patterns. (Shell left NBCUniversal last year after acknowledging “an inappropriate relationship with a woman at the company.”)
Gerry Cardinale, founder of RedBird Capital, said Ellison would make Paramount “the vehicle for controlling how these established traditional media businesses will be run in the future.”
They didn't give many details, with two exceptions: Ellison plans to revamp Paramount+ while cutting and gutting older businesses to find more than $2 billion in “cost efficiencies and synergies.” (To put that figure in context, the company's former management team said last month that 500 million dollars (The cuts were quite aggressive.)
Mr. Ellison has run Skydance as an extremely lean operation. Larry Ellison has also shown a lack of tolerance for Hollywood largesse. forcing a review into Annapurna Pictures, his daughter's money-losing company, in 2018. Annapurna has largely exited the film business and has found success with independently produced video games.
Paramount has been through boom and bust cycles before. In the 1960s, the studio's owner, the Gulf & Western Industries conglomerate, was on the verge of selling a struggling Paramount because of its real estate value. Negotiations began with a cemetery that borders the studio and consideration was given to more burial plots.
That’s when Paramount’s young production chief, Robert Evans, turned a macabre drama, “Rosemary’s Baby,” into a box-office hit. Evans made the studio a showcase for culture-defining cinema, with “The Godfather,” “Chinatown” and “Urban Cowboy,” among others. Barry Diller took the helm, delivering hits like “Raiders of the Lost Ark,” “Grease” and “The Gifted Detective.” Sherry Lansing kept Paramount in good shape in the late 1980s and 1990s with films like “Fatal Attraction,” “Braveheart” and “Titanic,” a co-production with Fox.
Mr. Ellison has a deep respect for Paramount’s history. On Monday’s call with analysts, he repeatedly said he wanted to regain the studio’s status as a haven for storytellers, but he also made clear that nostalgia would no longer suffice.
“This is a defining and transformative moment for our industry,” Ellison said. “We are committed to reenergizing the business and strengthening Paramount with contemporary technology, fresh leadership and creative discipline that aims to enrich future generations.”
