1. Skydances With Paramount

So the never-ending saga of who will eventually buy Paramount seems to be heading to the series finale, as Skydance, the very California-named company (you know there are at least several hundred kids in the Golden State who are actually named “Skydance”) owned by Larry Ellison’s son David, appears poised to take control.

I say “appears poised” because there is that pesky thing called the US government that still needs to say a bracha over the deal and there are still lots of moving pieces like what assets it might sell off before that deal goes through (BET being the most frequently mentioned). 

But, for the purposes of this column, let’s assume that it is indeed going through.

So now what?

Ellison has made a lot of his desire to transform Paramount into a tech company or a tech-and-entertainment hybrid. 

Given that his dad founded Oracle, that’s not a particularly idle threat, but it’s vague enough that everyone in the industry can smugly assume that their interpretation of what it means is the right one.

Personally, I didn’t find it all that revelatory—tech is a big part of today’s entertainment landscape and will only become a bigger part of it going forward. And so it would only be shocking if he did not see a future in becoming a major tech platform. 

Unless he’s got ideas to roll out a Paramount smartphone, which I kind of doubt.

Why It Matters

Paramount has a lot going for it in terms of assets, it’s turning all those assets into something that is bigger than the sum of its parts that is the challenge.

To begin with, it’s got an incredible library of shows from CBS, BET, Comedy Central, MTV, VH1, Nickelodeon. The latter three being particularly important as they have a treasure-trove of long-running shows that seem to be ideal library fodder for Xers, Millennials and Zoomers who grew up on shows like The Real World, iCarly and Dora The Explorer.

It’s also got PlutoTV, which is both one of the stronger players in the FAST space and the one with the largest international presence. International is going to be huge for FAST going forward, because once you are outside of the US and Europe, there aren’t many places where people have disposable income for pay TV subscriptions. So the ability to supply free streaming TV will become a major asset.

There is also Paramount the movie studio and its sizable library plus CBS News and CBS Sports.

And yet…

If Ellison does one thing to make Paramount a “tech company” it will be to acknowledge that it needs to be a tech company because its biggest competitors are also tech companies, not media companies. 

Which means that rather than figuring out how to take on NBCU or Warner Bros or Disney, he needs to take on the entire GAMMA array: Google, Amazon, Meta, Microsoft and Apple.

You can’t do that without being a tech company and how you do that is something I will leave to Ellison and his lieutenants, but it’s likely going to involve either getting bigger via mergers or alliances or going niche.

But either way, it’s going to be a challenge, one that won’t be met by business-as-usual or by tweaking the type of programming on Paramount+.

Data is going to be the key to any success as data is the key thing that all the GAMMA companies have going for them. Well that and the fact that entertainment is largely a hobby business for all of them. Which is why I am frequently flummoxed by the industry’s continued love affair with “FAANG.”  Netflix is a smart forward-thinking company that has completely revolutionized the industry ... .but there is no universe where they are remotely in the same boat as Google, Apple, Amazon and Meta, multibillion dollar tech giants with dozens of revenue streams for whom entertainment is a hobby business. Not their only business.

But I digress…

Along with turning Paramount into a tech player, Ellison has made pledges about cutting inefficiencies (to the tune of $2B) which seems to be an aggressive sum and will no doubt piss off large numbers of people who had gotten very used to riding the gravy train that the TV industry has been selling first class tickets to for the past 30 years.

Meaning you will soon see lots of puckish articles deriding Ellison and the decisions he makes.

What You Need To Do About It

If you are the TV industry, you need to accept that the years 1992-2022 were a 30 year aberration wherein the presence of billions of dollars of carriage and retrans fees allowed for the sorts of salaries, benefits and profligate spending that would have made Caligula proud. And that that era is dead and gone and no amount of bitching, moaning and catty blog posts is ever going to make it come back.

Meaning there will be cuts that need to be made. That advertising will need to be prioritized. That the masses will need to be catered to. And that the alternative is bankruptcy, which will suck a whole lot more.

If you are Ellison, accept that you will be scrutinized, often unfairly, and that the speed at which you can create change will never match the speed at which your detractors think you can create it. 

Accept that. Don’t let them rattle you, stay the course and try and make your big ideas work. It will not be easy—people always resist change—but given the now-or-never situation the industry finds itself in, it’s an incredible opportunity. And who knows—if you succeed, in the future people might refer to Oracle as the “company founded by David Ellison’s father, Larry.”

Stranger things have happened.

 2. The NBA Takes On Amazon

We seem to have final confirmation on something I feel like I’ve been hearing about for the past year, which is that Amazon is going to be getting a good-sized passel of NBA games as part of the league’s new rights deal. Which is not even the most notable thing about the deal. The fact that it’s an 11-year grant that locks everyone in place for more than a decade seems even more important.

(And why 11? Why not 10 or 12?)

Here again I say we “seem to” have final confirmation, because there are rumors that WBD, whose TNT unit and Venu app are apparently cut out of the deal, intends to sue, specifically around language they allegedly claim would rule out the NBA inking a deal with Amazon.

So there’s that, but I’m thinking it’s unlikely Amazon will get cut out altogether. Which means that football and basketball fans will now need to include Amazon in their streaming bundle.

Why It Matters

Let’s start off with fans. 

Most people consider Amazon to be something of a gift from the gods: it’s as if Bezos took every Web 1.0 company ever and brought them back to life. (Looking at you, Pets.com.) Yes there are curmudgeons and privacy advocates who abhor them, but there are people who don’t like puppies too.

If all that free delivery of stuff comes with free TV and pretty well targeted ads—even better.

So there’s unlikely to be much pushback on having to have a prime subscription to see games.

Then there’s the data piece.

To revisit the old maxim, Meta knows who you want to be, but Amazon knows who you really are. 

Meaning you may follow Peet's Coffee on Instagram, but you have a monthly subscription for Maxwell House from Amazon.

All that data is a windfall for the NBA who, you may have noticed, sells a whole lot of merchandise.

It’s not just jerseys either, it’s tickets to games, targeting to drive tune-in for games on NBCU and the ability to charge advertisers up the proverbial wazoo for access to all those fans. 15,000 Meriters in particular, e.g., people who subscribe to the ad-free version of all their subscription services and thus only see ads during sporting events. 

But mostly it’s that the NBA has been very smart about staying one step ahead of trends and they know that people like watching streaming, find it easier and more convenient, and that other leagues, other sports are going to follow suit.

Or to put it another way, the genie is out of the bottle, he’s got a good gig on Aladdin, and there’s no way he’s going back in.

What You Need To Do About It

If you are WBD, try every trick in the book to get those NBA rights back, legal and otherwise, because you really do need them for Max and for Venu. Even if people don’t watch more than the last 5 minutes of a game, knowing that they could watch a full array of games matters, especially if you expect them to shell out a goodly chunk of cash for a Venu subscription.

If you are the NBA, well done. You need to make the migration to streaming slowly, along with your audience, so splitting the deal between NBCU and Amazon makes sense, especially given that a subscription to Amazon comes with multiple other benefits.

If you’re a fan, this is a good deal for you too—if nothing else, Amazon can afford to pay the billions Adam Silver is asking them for without having to turn around and pass on the cost to the consumers. 

Something traditional media companies will not be able to accomplish.

Even traditional media companies that are trying to become tech companies.