The battle for Paramount Global is entertainment worthy of Hollywood. Controlling shareholder Shari Redstone favours a deal with David Ellison’s Skydance over joint interest from Sony and Apollo, pitting her against minority shareholders and prompting the departure of the CEO. But it also shows the climax is approaching in a longer-running industry drama. The likely sale of Paramount marks it out as the first big casualty of the streaming wars. It may not be the last.
When companies followed Netflix into streaming, market entry was straightforward. Technology companies like Apple leveraged their existing customer bases to lure subscribers, while venerated studios such as Warner Brothers built platforms for their intellectual property. All players used their existing profitable business lines — specifically cable TV for the media companies — and the favourable borrowing environment to finance flashy films and series.
The road to profitability, however, has been more winding. Initial streaming losses were seen as an investment in market share. But streaming has also killed media companies’ golden goose, as consumers have “cut the cord” of cable TV in favour of subscriptions. In a rush to gain market share, Paramount, Warner Bros, and NBCUniversal have poured billions into streaming. With interest rates higher, subscriber growth slowing, and streaming losses mounting, Wall Street has now turned up the pressure on Hollywood.