Skydance – Paramount: International Channels & Streaming Services In The Spotlight As Overseas Analysts Chew Over Potential Ramifications Of Deal

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“Global” is in the name above the door and industry-watchers are weighing the international ramifications of Skydance’s $8BN merger investment in Paramount.

Paramount Global top brass has said it is business as usual until the deal is over the line, but international analysts are already considering what happens next given the company’s major free-TV operations in the Argentina, Australia, Chile and the UK, cable nets around the world, FAST service Pluto TV, and local iterations of Paramount+.

That’s not to mention SkyShowtime, a joint-venture streamer operated with Comcast, and a long-established program sales business that shops the likes of the NCIS and CSI franchises around the world.

Takeovers naturally give staffers cause for concern. The presentation accompanying the post-announcement conference call detailed $2BN+ of “cost efficiencies.” Skydance does not, however, have anywhere near the international footprint or headcount of Paramount, meaning there isn’t the scope for eliminating duplicate roles in offices around the world as seen when the likes of Warner Bros. and Discovery hitched their wagons.

RedBird founder Gerry Cardinale said on the conference call the deal is based on the idea on “keeping all the assets intact” and it is “not predicated on any restructuring.”

Richard Broughton, Executive Director at data and analytics outfit Ampere Analysis said this could be an international growth story. “Skydance’s history has been one of investment and rapid expansion,” he told Deadline. “Its private equity backers KKR and RedBird have previously referenced investment in sports, and investors Tencent and CJ ENM have interactive entertainment ambitions.

“With economic recovery across most major markets now underway, production activity recovering – particularly internationally – there is likely to be an opportunity for renewed investment in both core areas of Paramount’s business, and also in diversifying the media portfolio.”

FAST mover advantage?

CBS is joined by Australia’s Network Ten, Argentina’s Telefe, Chile’s Chilevision and Britain’s Channel 5 in the free-TV stable. The latter started as an upstart commercial network in the UK and is now an established player, jostling with the likes of Channel 4 for market position.

Paramount has already aligned some of the broadcaster’s streaming properties with FAST service Pluto TV. “The ad market is a scale game, and in a complex marketplace, simplifying the consumer proposition and ensuring as many brands are available in one place should be the priority for the new entity,” Broughton said.

FAST is certainly becoming big business. “In 2021 after only seven years after the founding of the company, we managed to become a billion-dollar advertising [revenue] business,” Pluto EVP and GM Olivier Jollet said at Deadline-moderated keynote during the Cannes Film Festival.

Skydance has talked about leaning into technology and Paramount brings both paid-for and free streaming services. “The major players in streaming will compete on having a broad stable of products and services, and Paramount certainly can claim to cover all the bases through its SVOD brands and Pluto TV for AVOD/FAST,” said Tony Gunnarsson, Principal Analyst at Omdia.

In cable, Paramount owns a plethora of storied cable nets, including MTV and Nickelodeon, which remain staples on pay TV services around the world. Former boss Bob Bakish came through the international ranks at Viacom, securing distribution for these pay channels internationally.

Partnerships+?

It was also Bakish who presided over the cuts to international originals at Paramount+ as it yanked a swath of originals from its service and refocused on Hollywood content. That created consternation among subscribers and hurt the streamer’s reputation among international producers.

Gunnarsson outlines the challenge in international streaming. “Paramount+ is doing relatively well domestically – Omdia puts it at over 40 million paid subscriptions in the U.S. by end of 2024,” he said. “Internationally, it’s a rather different story. While Paramount has over 70 million D2C subscriptions as of Q1 2024 (including SkyShowtime), in most international markets its market share is quite a far bit behind the major services Netflix, Amazon, Disney and WBD/HBO/Max.”

Paramount+ is being bundled with other pay and streaming services in various territories. On Sky in the UK, Paramount+ is free to Sky Cinema subs, in France it is included with other streamers on a Canal+ package, and in South Korea it is bundled with the TVing SVOD service.

Bundling, partnerships or joining forces with another streamer are all possibilities. “The new leadership team have highlighted that a JV may be an option for Paramount+, which, with the right partner, could boost the scale and appeal of the offer,” said Ampere’s Broughton. “Paramount already collaborates with NBC Universal on SkyShowtime in Europe, so has a template for a JV approach to the streaming world. In Korea, it also collaborates with CJ ENM on local streaming service TVing.”

Balancing longstanding revenue streams from program sales with proprietary D2C services such as Paramount+ will be another challenge.

Jack Davison, EVP at global content consultancy 3Vision said: “It has become increasingly obvious to many [studios] that they won’t scale d2c and they need to target content sales revenues and create a hybrid future, and this was especially true for Paramount. They have clearly decided that they pushed too hard towards D2C with Paramount+ and need to find more revenues from their library and pipeline.”

Some market-watchers are not convinced Paramount+ has a D2C future outside the U.S. “Internationally, Paramount+ does not have necessary scale to grow profitably, and the merger with Skydance does not change that,” said Enders Analysis’ Senior Media and Telecoms Analyst, Francois Godard. “The new owners need to think hard about the only viable option: going back to a wholesale model under which they sell their content to third party platforms and give up retailing directly to consumers.”

The momentum already looks to have moved towards program sales or launching branded Paramount+ blocks rather than full-fledged services around the world. Lisa Kramer, President, International TV Licensing, exclusively told Deadline earlier this year that the question is now: “Do we continue to roll out these very large flagship Paramount+ [services], or do we look at the markets outside of that footprint and take a different strategy.”

“Without partnerships there is no future for Paramount+,” said 3Visions’ Davison. “Even with them they need to be stronger and go deeper. Paramount are of a level in the streaming ecosystem that means they can’t go it alone and need to be supported by local partners.”