Paramount Global, the parent company of iconic brands like CBS, Paramount Pictures, Nickelodeon, and the Paramount+ streaming service, is nearing a major milestone. The company announced on Wednesday that it expects to finalize its sale to David Ellison’s Skydance Media by this summer. This timeline is slightly adjusted from its initial hope of completing the deal by mid-April. The delay comes as the company faces scrutiny from the Federal Communications Commission (FCC), particularly over a controversial “60 Minutes” interview with Vice President Kamala Harris. The FCC has opened an inquiry into allegations of news distortion, which could potentially impact the approval process for the sale. Despite these challenges, Paramount remains optimistic about the deal, which would transfer control of the company to Ellison’s family.
The update on the sale timeline coincided with Paramount’s fourth-quarter earnings report, which fell short of analysts’ expectations. The company reported a net loss of $224 million for the quarter, a stark contrast to the $514 million profit it posted during the same period last year. This financial underperformance comes at a turbulent time for Paramount, as it navigates not only the complexities of the sale but also a high-profile legal battle. Earlier this month, former President Donald Trump amended a $20-billion lawsuit against the company, alleging that edits made to a “60 Minutes” interview with then-Vice President Kamala Harris constituted consumer fraud. Paramount has agreed to enter mediation to settle the dispute, with controlling shareholder Shari Redstone pushing for a resolution to smooth the path for the sale of her family’s interests to the Ellison clan.
The “60 Minutes” interview has become an unexpected flashpoint in Paramount’s negotiations with regulators and investors. Journalists and industry insiders have rallied around the news division, urging Paramount’s leadership to stand firm against external pressure. However, morale within the news division is reportedly strained, as the controversy has cast a shadow over the organization’s editorial integrity. At the heart of the dispute is a question about the Biden administration’s handling of the Israel-Hamas war, during which Harris provided a jumbled response that was later edited for clarity in the broadcast. While CBS producers insist that they accurately represented Harris’ remarks, the unedited footage released by the FCC has drawn criticism for its portrayal of the vice president’s performance. News organizations often edit interviews for brevity and clarity, but this particular case has sparked intense debate.
Beyond the “60 Minutes” controversy, another potential hurdle for the Paramount-Skydance deal is the involvement of Chinese media company Tencent, which holds a minority stake in Skydance. Some conservative lawmakers and critics have raised concerns about Tencent’s influence, suggesting that the FCC should carefully scrutinize the arrangement. These concerns add another layer of complexity to the approval process, which is already delayed by the ongoing investigation into the “60 Minutes” broadcast. Despite these challenges, David Ellison and his team remain eager to take control of Paramount, which boasts a diverse portfolio of assets including CBS, Paramount Pictures, Nickelodeon, Comedy Central, BET, and the Paramount+ streaming service. The company is currently being run by a trio of executives, but the transition to new ownership could bring significant changes to its operations and strategy.
Paramount’s financial struggles were evident in its fourth-quarter earnings report, which highlighted the ongoing challenges facing the company’s streaming division. The unit, which includes Paramount+ and Pluto TV, reported a loss of $286 million for the quarter, though this represented an improvement over the $490 million loss incurred during the same period in 2023. Paramount+ added 5.6 million subscribers during the quarter, its best performance in two years, bringing its total subscriber base to 77.5 million. The company expressed confidence that its streaming unit would achieve domestic annual profitability by the end of this year, citing an 8% increase in full-year streaming revenue compared to 2023. However, the broader television segment faced declines, with revenue dropping 4% to $4.98 billion due to lower advertising sales and fewer sporting events on CBS. Affiliate fees and subscription revenue also declined by 7%, as more consumers cut the cord on traditional pay-TV services. Despite these challenges, television licensing and other revenue saw a modest 3% increase to $911 million for the quarter.
Paramount Pictures, meanwhile, reported an adjusted operating loss of $42 million for the quarter, though the filmed entertainment division managed to generate $1 billion in revenue thanks to strong performances from releases like “Gladiator II” and “Sonic the Hedgehog.” This marked a significant improvement over the $647 million generated during the same period in 2023. Despite these positive signs, Paramount’s overall revenue for the quarter fell short of expectations, coming in at $7.98 billion. The company’s shares dipped about 1.5% in after-hours trading, reflecting investor concerns about the stalled sale, ongoing legal battles, and financial underperformance. As Paramount navigates this critical juncture, all eyes will be on whether the company can overcome its current challenges and secure a successful transition under new ownership. The outcome of the FCC inquiry, the resolution of the Trump lawsuit, and the performance of its streaming and film divisions will all play a pivotal role in shaping Paramount’s future.
