Why Did Paramount Kill the Skydance Merger? | Pivot

1. 0:00 – 0:30

   Skydance talks collapse: Shari Redstone pulls the plug

   1. KSKara Swisher0:00

      Scott, we're back with our second big story. The fate of Paramount is up in the air. It looks like Shari's gonna run it herself after controlling shareholder Shari Redstone killed merger talks with Skydance earlier this week, ending a months-long saga that keeps going on. I know, you know, we've talked about whether it's important or not, but it's very interesting. National Amusements, the Redstone family company that owns Paramount, said the parties have not been able to reach a deal, noting they could not agree on outstanding non-economic terms. Redstone is now reportedly looking to pursue a separate sale of National Amum- Amusements without trying to merge

2. 0:30 – 1:00

   What options are still on the table (Sony/Apollo, WBD, and other rumored structures)

   1. KSKara Swisher0:30

      Paramount with another company. I- I- I- I've been trying to figure it out. Um, there's a Sony deal, Apollo deal that was sticking out there, but it was the only other one. Um, there was a talk about a Paramount-Warner Bros. merger. There were all these plans to take CBS and have Jeff Zucker and Jeff Schell run it. That's gone. Um, I don't know what to say here. I guess David Zaslav is probably calling her, I suppose. Um, it's such a convoluted ownership structure. And by the way, media investor

3. 1:00 – 1:18

   New bidders circle National Amusements; shareholders get hit

   1. KSKara Swisher1:00

      Edgar Bronfman Jr., backed by Bain Capital, is reportedly looking to make a $2 billion offer for National Amusements. Um, Steven Paul, Hollywood producer Steven Paul is also lining up financing. What do you do if you're a Paramount shareholder? Is there anything to do? It- the shares dropped 8% on Tuesday.

4. 1:18 – 1:57

   Scott’s thesis: this saga is billionaire family drama, not strategy

   1. SGScott Galloway1:18

      Again, I don't wanna make a sh-... I- I- I wish Paramount would develop, be essentially really poorly trained or have a limp, and that- that the governor of South Dakota would just take this thing and shoot it and bury it in a gravel pit. I am so sick of hearing about the neuroses of billionaires. Do you realize... You know, th- this is really an interesting and disparaging statement on America. The only people going after this thing now are billionaire children. Edgar Bronfman Jr., Shari Redstone, David Ellison. What do they all have in common? They've all inherited billions.

   2. KSKara Swisher1:51

      Billionaires. Mm-hmm.

   3. SGScott Galloway1:52

      That- those are the three players involved in this. And then, and then what did we-

   4. KSKara Swisher1:56

      On Apollo and Sony.

5. 1:57 – 2:32

   Apollo’s patience play: wait for dysfunction to force capitulation

   1. SGScott Galloway1:57

      Well, okay. There, but what did we predict? Apollo's just waiting for this dysfunction to- to pan out.

   2. KSKara Swisher2:04

      Mm-hmm.

   3. SGScott Galloway2:04

      Have at it. Have at it, billionaire weirdos. (laughs) And-

   4. KSKara Swisher2:08

      Mm-hmm.

   5. SGScott Galloway2:08

      ... when you're serious and-

   6. KSKara Swisher2:09

      I hadn't thought about that, you know? (laughs)

   7. SGScott Galloway2:10

      ... and- and when you're serious and realize-

   8. KSKara Swisher2:12

      Mm-hmm.

   9. SGScott Galloway2:12

      ... this- these pretzel, weird, gymnastic, unnatural-act deals fall apart because they make no fucking sense and they never did, we're here. Probably not at a price you like, but we're here.

   10. KSKara Swisher2:24

       Mm-hmm.

   11. SGScott Galloway2:24

       And you're right. It's either gonna go... I don't know if Warner can do it with their debt right now. I- I think-

   12. KSKara Swisher2:30

       Well, they- they've brought it down quite a bit. They brought it down-

6. 2:32 – 3:26

   The market verdict: six months ‘in play’ and the stock still falls

   1. SGScott Galloway2:32

      But look, this is what's happened.

   2. KSKara Swisher2:34

      ... because they're a disciplined executive.

   3. SGScott Galloway2:35

      The company has been in play for six months.

   4. KSKara Swisher2:38

      Mm-hmm.

   5. SGScott Galloway2:38

      When companies are in play, their stocks go up.

   6. KSKara Swisher2:41

      Yeah, it's like a house. Mm-hmm.

   7. SGScott Galloway2:41

      In the last six months, Paramount Global's stock has gone down 34%-

   8. KSKara Swisher2:47

      Mm-hmm.

   9. SGScott Galloway2:47

      ... because all this drama has reflected is the controlling shareholder at Paramount is a billionaire child. And the great thing about dynasties is usually, the kid fucks it up and spends most of Dad's money. And usually what's interesting is the grandkid looks up and says, "Grandfather was a baller, Grand- Dad was an idiot," and they make some of it back. But this is the next generation of idiots blowing-

   10. KSKara Swisher3:12

       Mm-hmm.

   11. SGScott Galloway3:12

       ... their parents' money. Notice how no institutional investor is a serious bidder here.

   12. KSKara Swisher3:18

       Yeah. Yeah, not yet. They're waiting.

   13. SGScott Galloway3:19

       So, and- and again, I'm just kinda like, uh, d- d- can we just fast-forward to when this thing is put out of its misery?

7. 3:26 – 3:54

   Scott’s preferred fix: break Paramount up and sell the pieces

   1. KSKara Swisher3:26

      So, so let me ask you then, what is that? What is the best answer here? 'Cause there's some very valuable media assets here-

   2. SGScott Galloway3:32

      They split up.

   3. KSKara Swisher3:32

      ... no question. Split up and sell the different parts.

   4. SGScott Galloway3:34

      They give the movie company to a- to- to Sony, give the cable companies to a larger roll-up that will cut costs instead of pretending there's a future in cable-

   5. KSKara Swisher3:43

      So, Warner.

   6. SGScott Galloway3:43

      Just make Nana and Pop-Pop comfortable and cut costs faster-

   7. KSKara Swisher3:47

      Mm-hmm.

   8. SGScott Galloway3:47

      ... then the business is declining, 'cause it's still a good business, it's still a profitable business, it's just not growing, and call it a day. Uh, but Shari-

   9. KSKara Swisher3:54

      Mm-hmm.

8. 3:54 – 4:16

   Why deals keep failing: Shari’s changing stance and banker fatigue

   1. SGScott Galloway3:54

      My sense of Shari is every time the bankers kinda convince her this is the best deal, she, you know, hangs out with Alito's wife and decides she's getting a shitty deal after-

   2. KSKara Swisher4:04

      Mm-hmm.

   3. SGScott Galloway4:04

      ... a few glasses of Chardonnay and then blows the deal up. I mean, I would imagine every serious banker and every serious acquirer is sort of like, "Yeah, we're just kinda done here. We can't get a deal done with these people."

9. 4:16 – 4:56

   Kara’s reporting: ‘personal drama’ and leadership instability inside Paramount

   1. KSKara Swisher4:16

      Yeah, uh, oddly enough, I was talking to a very high-profile banker who- who is peripherally involved, uh, th- this week, and they're like, "This is all about personal drama-"

   2. SGScott Galloway4:25

      100%.

   3. KSKara Swisher4:26

      "... playing out in a thing." And, uh, it's like someone needs to get a therapist, which Shari had a very... I like Shari. Um, I've interviewed her several times. But it- it's like she- she can't run it herself. She just doesn't... She just can't. They're gonna leave. And by the way, s- these tri- these triple CEOs, at least two of them, I understand, are gonna leave. Um, they have a triple CEO situation in place. Um, they're gonna go. It looks like, you know, they're gonna get out of Dodge and they're- they're saddled with all kinds of things. But in-

10. 4:56 – 5:41

    Valuable IP trapped in a deteriorating company

    1. KSKara Swisher4:56

       in there is all this valuable IP, all this really interesting IP, um, hit thi- hit shows, lots of, lots of juicy bits here. And it just... to- to take the... to watch this company, you know, Paramount Pictures was Paramount fucking Pictures, right?

    2. SGScott Galloway5:13

       Yeah.

    3. KSKara Swisher5:14

       And, you know, there- there are some very dynamic media companies still. Um-

    4. SGScott Galloway5:19

       Yep.

    5. KSKara Swisher5:19

       ... this is not one of them. And so I- I just wonder... It's so romantic, the idea of buying it, but it's so ri-... Like, I don't... If I don't understand a deal, I- I was like, "You're gonna buy what and sell what to what?" What does this have to do with what's good for Paramount or what's good for CBS or whatever, you know? None of it has anything to do with what's good for the business, but...

    6. SGScott Galloway5:40

       Whenever you're selling anything-

    7. KSKara Swisher5:41

       Mm-hmm.

11. 5:41 – 6:46

    Ego and ‘billionaire kid’ incentives vs. grown-up capital discipline

    1. SGScott Galloway5:41

       ... whether it's a football team or a business, you just really want to hope that the child of a billionaire or a kid who inherited billions shows up.

    2. KSKara Swisher5:49

       Mm-hmm.

    3. SGScott Galloway5:49

       Again, notice how the only three people bidding on this thing right now are billionaire children.

    4. KSKara Swisher5:55

       Yeah, it's interesting. I will say David Ellison's done a very good job as a movie producer. He made Top Gun-

    5. SGScott Galloway5:59

       Very sharp guy.

    6. KSKara Swisher6:00

       ... Star- Star Trek. And, um, you know, I'm- I was kind of like, "Why do you need to be..." He wanted a little more power, right? And this was a short trip to that, for z- he thought it was a short trip to it. But what a waste of his time. Go make another movie, David. Go make another hit movie. You're good at it.

    7. SGScott Galloway6:13

       But look at e- e- this is all ego. Billionaire kids are like, "I don't need money. What do I want to do? I want to go to the Cannes Film Festival and the Oscars, and I like movies, so I get to do that." And the serious investors, the serious investors are like, "You know, we'll just sit this one out until they come to us and say they're willing to sell at a price that makes sense for our limiteds." We're... you know, we have... we're cursed with being grown-ups and we don't have billionaire parents, so we need to act more rationally and a little bit more like see-above grown-ups.

    8. KSKara Swisher6:39

       Yeah, absolutely. Anyway, we'll see.

Episode duration: 6:46