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David Ellison is taking control of Paramount. Now the real work begins

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David Ellison is taking control of Paramount. Now the real work begins

Tech scion David Ellison battled hard to get Paramount Global.

The Skydance Media chief executive first made overtures last summer to Paramount’s nonexecutive chair, Shari Redstone, then spent months negotiating and renegotiating a deal acceptable to Redstone, Paramount’s board and the company’s shareholders.

Now that he’s clinched the company through a complicated, multipronged transaction valued at more than $8 billion, the real work begins. Ellison is set to become the company’s chief executive, while former NBCUniversal Chief Executive Jeff Shell will be president (Shell left his old job after acknowledging an “inappropriate relationship” with a colleague).

The legacy media and entertainment company has major challenges Ellison will need to address quickly to get Paramount back on the right footing, once the deal closes during the first half of next year.

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Like many entertainment companies, Paramount is facing a decline in theatrical box office revenue as audiences haven’t returned to movie theaters with the same frequency as before the COVID-19 pandemic. Add to that Paramount’s particular woes with its money-losing streaming business as well as its heavy investment in cable networks that face challenges from cord cutting and declining advertising dollars, and it’s clear there is a lot for Ellison and his investors to fix.

“There really are amazing assets in this company,” said Jessica Reif Ehrlich, senior media and entertainment analyst at Bank of America Securities. “They just haven’t been managed well.”

For example, Paramount Pictures’ historic Melrose Avenue studio is valuable, as is Paramount’s broadcast network CBS. Some of the company’s cable networks, which include Nickelodeon, BET and MTV, have prized content and recognizable names. But they’re shells of what they used to be, Reif Ehrlich said.

“Every part of the business is under siege at this moment,” she said. “They really do need to resolve what they will be and have a clear point of view and way to achieve that as soon as possible.”

Paramount’s heavy debt load

First and foremost is paying down Paramount’s debt. Part of the company’s balance sheet problem will be addressed with a $1.5-billion cash infusion from Skydance and RedBird Capital Partners.

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Getting Paramount on solid financial footing is key to its future success.

“This is very much about the fact that David Ellison and Skydance have had a 15-year relationship with Paramount,” RedBird Capital founder Gerry Cardinale said in an interview. “So it made it a lot easier to look at a strategic recapitalization, as opposed to just doing a deal.”

Paramount’s three current co-CEOs have already embarked on a $500-million cost-cutting plan that will continue as the Skydance transaction unspools. That plan involves evaluating the sale of certain Paramount assets, potentially including BET, as well as an unspecified number of layoffs. During an investor presentation Monday, Skydance executives said they had identified as much as $2 billion in “cost efficiencies” that would help increase cash flow.

Kenneth Leon, research director at CFRA Research, sounded cautiously optimistic about the plan in a note to investors.

“We think the new company has major opportunities for content production and distribution, but the challenges of competing in today’s disruptive movies and entertainment industry remain,” he wrote.

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Cable networks: Asset and liability

It’s no secret that linear television revenue is declining as more customers cut the cord and abandon their traditional cable and satellite packages. But though the financial returns are diminishing, the cable networks are still making money for Paramount. That makes them an important asset to keep managing — strategically.

Last year, Paramount’s TV media segment, which includes CBS and the cable networks, brought in about $20 billion, or 68% of the company’s total revenue, according to its annual report. But that was about an 8% decrease compared with 2022.

Things were slightly better in the first fiscal quarter of 2024, when TV media brought in $5.2 billion in revenue, an increase of 0.7% compared with the same period a year ago.

“The linear business declining is not necessarily a bad story for Paramount,” said Laurent Yoon, senior analyst at Bernstein. “It’s already reflected in the stock price, and it’s not Paramount’s problem alone. There’s not much they can do. They just have to manage the decline.”

During Monday’s investor call, Skydance and RedBird executives touted the value and reach of CBS, noting that the network was a “driver” for the company.

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The studio: A new shine on the crown jewel?

As one of Hollywood’s first studios, 112-year-old Paramount Pictures is the crown jewel of the company. That’s certainly how Sumner Redstone, Shari’s late father, saw it.

It has churned out such landmark films as “The Godfather,” “Chinatown” and “Breakfast at Tiffany’s,” while moving into the modern age with franchises like “Top Gun” and “Star Trek.” But the company’s studio business has been a mixed bag of late.

Paramount’s filmed entertainment segment, which includes Paramount Pictures, its animation arm, Nickelodeon Studios and Miramax, brought in about $3 billion in revenue last year, down 20% from the previous year, according to regulatory filings. For the three-month period ending March 31, Paramount’s filmed entertainment sector revenue totaled $605 million, up about 3% from last year.

In some respects, the studio is being hit by the same external forces battering the rest of the entertainment industry — the 2024 box office receipts are not reaching the levels they did last year and fall far short of pre-pandemic levels. But the studio’s creative strategy needs to be rethought, as well as film budgets, said Reif Ehrlich of Bank of America.

Rethinking the studio strategy means leaning into franchises, Shell said in an interview.

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“In Hollywood, you really make money when you have big franchises and are able to monetize them, and they really have not done that very effectively at Paramount,” Shell said. “For example, there’s no ‘Top Gun’ theme park ride anywhere in the world.”

If the studio’s finances were optimized — meaning if it cut back on expenses — it could be a $3-billion to $4-billion business with a potential for a 10% to 15% margin, said Yoon of Bernstein.

“Paramount obviously has a great heritage when it comes to moviemaking,” he said. “It feels like they should do better, but they’re not. But it does have the potential to stabilize.”

Ellison also said the Skydance deal would bolster the combined company’s animation capabilities, allowing Paramount to expand its family entertainment business.

Paramount+: The struggles of streaming profitability

The foray into the streaming business has been a costly one for Paramount. The company was late to join the so-called streaming wars, lagging behind competitors Netflix and even Disney, and then spent heavily on the service.

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Even so, the company is struggling to add subscribers, leading to about $2 billion in losses for Paramount+ since launch. In the first fiscal quarter of 2024, however, the company’s streaming division reported revenue of nearly $1.88 billion, up 24% compared with a year earlier. The segment’s quarterly loss was $287 million.

Ellison laid out a plan Monday for tech upgrades to the Paramount+ service, including improved ad technology and a better algorithmic recommendation engine that could help reduce subscriber churn and increase users’ time on the platform.

One option currently being explored by the company is a joint venture for the streaming service, Paramount executives have said. Having a partner could help Paramount turn a profit in streaming, Yoon said.

Such a partnership would not be unprecedented. In May, Warner Bros. Discovery and the Walt Disney Co. said they would join together to offer a new streaming bundle this summer that would allow subscribers to access Max, Disney+ and Hulu in the same deal. Separately, Disney, Warner Bros. and Fox are preparing to launch a streaming venture for sports.

“It’s generally believed at this point that Paramount+ could be profitable in 2025, but ‘profitable’ is relative,” Yoon said. “Is it a dollar or is it a billion? They need to make sure the margin increases.”

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Column: The Trump shooting and the glorification of guns

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Column: The Trump shooting and the glorification of guns

Much is still not known about Saturday’s shooting at a Trump rally in Pennsylvania, but it’s clear that the incident placed the stupidity and hypocrisy of America’s gun culture in high relief.

Former President Trump was nearly assassinated while addressing the rally. One spectator seated in the bleachers near him, Corey Comperatore, 50, was killed and two spectators were critically injured and are currently hospitalized. The shooter, identified by the FBI as Thomas Crooks, 20, was killed at the scene.

That the glorification of guns erupted (again) into violence at a political gathering was always a case of not if, but when. Trump and his acolytes have infused their rhetoric with violent imagery.

They endorsed the tactics of the violent mob that stormed the Capitol on Jan. 6, 2021; Trump himself promised to pardon those who have been convicted of federal crimes in connection with the insurrection.

‘Two-thirds of our [survey] participants in 2022 and three-fourths in 2023 rejected political violence as never justified — not just in general, but for one specific objective after another.’

— Garen Wintemute, director of the California Firearm Violence Research Center

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Not three weeks ago I wrote about two developments that hinted, if hazily, that the long arc of our debate over guns might be trending toward rationality.

One was an “advisory” from U.S. Surgeon General Vivek Murthy identifying firearm violence as a public health crisis. The other was a Supreme Court decision upholding a ban on gun ownership by domestic abusers.

The instant reaction by the gun rights lobby to Saturday’s shooting shows that the obstacles to that trend remain powerful indeed.

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Calls to tone down the rhetoric of the presidential campaign were heard from both sides of the aisle. But not proposals to ban weapons such as those reportedly carried by the shooter, much less to tighten the laws and regulations on gun sales.

Here’s an aspect of America’s relationship with guns relevant to Saturday’s shooting: The vast majority of Americans are fearful that political violence could affect the outcome of our elections. More on that in a moment.

The weapon used by the apparent shooter Saturday was a semiautomatic AR-15, law enforcement sources say. To experts in mass shootings, this was almost predictable. The AR-15 was used in 10 of the 17 deadliest mass shootings in America since 2022, according to a roster published last year by the Washington Post.

The death toll from those shootings was 207. Nevertheless, Republican members of Congress paraded around Washington last year with lapel pins bearing the weapon’s silhouette, handed out by a congressman who owned a gun shop. Among those wearing the pin was Rep. Anna Paulina Luna (R-Fla.), who was photographed with it on Feb. 1, 2023, two days after a mass shooting in her home state left 11 people wounded.

Some features of the aftermath of Saturday’s shooting are also predictable.

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There will be pleas by the gun lobby not to “politicize” Saturday’s incident, as if gun control isn’t a political issue. But don’t be misled: Republicans and the right wing started politicizing the shooting within minutes.

Rep. Marjorie Taylor Greene (R-Ga.): “The Democrats and the media are to blame for every drop of blood spilled today.” Rep. Mike Collins (R-Ga.) called for Pennsylvania authorities to “immediately file charges against Joseph R. Biden for inciting an assassination.” Etc., etc. (Thanks to Kevin Drum for peering into the fever swamp and compiling the first acrid bubbles.)

As for the tone of political rhetoric, who’s responsible for its bloodthirstiness? Let’s take a look. After a violent attack at the San Francisco home of former House Speaker Nancy Pelosi seriously injured her husband, Paul, Trump lined up with a conspiracy theory that suggested that Paul Pelosi knew his attacker.

“It’s — weird things going on in that household in the last couple of weeks. … The glass it seems was broken from the inside to the out so it wasn’t a break in, it was a break out,” he said on a right-wing radio program.

The conspiracy claims have long since been debunked. The attacker, David DePape, has been sentenced to 30 years in prison on federal charges and is awaiting sentencing on five felony convictions in state court.

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Appearing at the California GOP convention last year about 11 months after the attack, Trump mocked Pelosi and her family: “How’s her husband doing, anybody know?” Trump said to a jeering crowd. “And she’s against building a wall at our border, even though she has a wall around her house — which obviously didn’t do a very good job.”

During the 2016 campaign, Trump said that “maybe … 2nd Amendment people” could stop his Democratic opponent, Hillary Clinton, from being able to appoint Supreme Court judges. The 2nd Amendment covers the right to bear arms.

Republican Party policy on guns is on a one-way ratchet — toward more guns and less control. After being critically wounded by a gunman and fervant opponent of Trump who took aim at a congressional outing in 2017, Rep. Steve Scalise (R-La.), a member of the House leadership, could have taken a stand in favor of better gun control. He went in exactly the opposite direction, saying that the incident reinforced his support for gun rights.

“I was a strong supporter of the 2nd Amendment before the shooting,” he said, “and frankly, as ardent as ever after the shooting in part because I was saved by people who had guns.”

“There’s no magic bill you can file to stop people from doing evil things, whether it’s with a bomb or a knife or whatever weapon they choose,” Scalise said more than a year later.

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And who can forget the Christmas card mailed out by Rep. Thomas Massie (R-Ky.) in 2021, depicting himself, his wife and five children brandishing assault weapons around the Christmas tree, under the legend, “Merry Christmas! ps. Santa, please bring ammo”?

Gun rights advocates assert that they’re only reflecting the people’s will. Nothing could be further from the truth. The Gallup poll has consistently shown a majority of respondents favoring stricter laws on gun sales over the last three decades; in 2023, the figure was 56%, with only 12% favoring less strict laws and 31% accepting the laws as they are now. Since 2000, only about 34% to 42% reported “having” a gun in their home. That’s a decline since the 1960s through the mid-’90s, when the figure reached as high as 50%.

Those latter figures may be misleading. Researchers at Northeastern and Harvard universities found that only about 28.8% of U.S. adults personally owned firearms in 2021, with an additional 10.4% living in households with guns but not personally owning them.

Research on Americans’ concerns about political violence may be more telling. That includes data assembled by the California Firearm Violence Research Center at UC Davis.

The center reported that in its annual nationwide surveys “nearly one-third of participants (32.8%) considered violence to be usually or always justified to advance at least one political objective.

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But as the center’s director, Garen Wintemute, wrote in an op-ed for the Hill, that support for this notion has been concentrated in the right wing.

Among those “much more likely than others to endorse political violence” are “Republicans and MAGA-supporting Republicans in particular; those who endorse QAnon, the white supremacy movement, Christian nationalists and other extreme right-wing organizations and movements,” he wrote.

Americans overwhelmingly oppose using violence to achieve a political objective, but understand its use for self-defense or the defense of others.

(UC Davis)

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Firearm owners also supported violence for political aims, “but only by a small margin, unless they owned assault-type rifles, had bought firearms during the COVID pandemic or regularly carried loaded firearms in public.”

The center’s 2023 survey added a few specifications to this list, all drawn from the sociopathic spectrum: “Racists, sexists, xenophobes, homophobes, transphobes, Islamophobes and antisemites,” Wintemute wrote.

He added these words of optimism: “Two-thirds of our participants in 2022 and three-fourths in 2023 rejected political violence as never justified — not just in general, but for one specific objective after another. Of the participants who considered violence justified in at least one instance, the vast majority (about 70% in 2022 and 60% in 2023) were unwilling to engage in it themselves. These findings provide grounds for hope and directions for a way forward.”

As Wintemute observed, silence about the implications of these findings won’t quell the potential that a political turn could be achieved by violence.

“It’s a time to mobilize,” he wrote. “The great majority of us who reject political violence need to make our opposition known, over and over and as publicly as possible. We need to create or join movements that do the same. People pay attention to what their family, friends, co-workers, social media contacts and well-known public figures say.

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“Our task is to ensure that violence doesn’t determine the outcome of this year’s elections — that 2024 isn’t the year when the term ‘battleground states’ takes on a new and bloodier meaning. It begins with each of us making and acting on this commitment: Not if I can help it.”

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With 'Prime Day' ahead, here's what to do about porch pirates

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With 'Prime Day' ahead, here's what to do about porch pirates

Amazon’s annual sale starts Tuesday, which means even more impulsive purchases will be packaged and dropped onto porches across the state this week.

Some of those parcels won’t make it into the buyer’s home, however. That’s because package theft is commonplace in California, as well as the rest of the United States.

According to estimates compiled by Capital One, 119 million packages were stolen in 2023 — a big number, although it represents only about 0.5% of the 21.7 billion shipments in the U.S. that year.

With Americans receiving multiple packages per week on average, the odds eventually catch up to many consumers. According to Security.com, 44% of those surveyed last year said they’d had a package stolen at some point.

In California, one out of five people have at least one package stolen every year, Capital One estimated. That makes them a bit more likely to be victimized than other Americans, but their average loss — $40 — is lower than the typical loss for all U.S. consumers, which Security.com put at roughly $50.

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The best defense against package theft is also the least practical one: Be at your door when the delivery person arrives. Short of that, Amazon and other delivery services offer options that are more secure than your porch.

If you do fall victim to package theft, you have a number of different routes to a refund. None of them are guaranteed, however.

Here are answers to some common questions about porch piracy and tips for how to avoid it.

If my package is stolen, how do I get a refund?

Under normal circumstances, no one is legally obligated to cover your losses to porch pirates. One exception would be when the delivery company is responsible for the loss — for example, when the package is stolen by the driver or delivered to the wrong address.

Some retailers will refund your money to keep you happy, and you may be able to wrangle a refund from the delivery company, especially if the package had been insured. Whatever route you take, you’ll have to jump through some hoops.

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Step 1 is determining that the package has actually been delivered. You can (and should) enroll in services from the U.S. Postal Service, UPS and FedEx that let you to track all the packages they’re delivering to your home. In many cases, the services can send you a text as soon as your package arrives.

Be forewarned that the notifications are not 100% accurate; drivers will occasional mark a package delivered prematurely, then bring it to your doorstep a day or two later. Amazon advises people to wait two days before concluding that the “delivered” package has definitely been delivered — and taken.

Don’t assume that a package has been stolen just because it’s not at your front door. Different drivers use different techniques to deter porch pirates, so make sure to look around your property in case the driver found a drop-off spot that was easy to reach but out of sight.

Step 2 is filing a police report. You probably won’t get the “Law & Order” treatment of your lost item; you’re filing a report mainly to create a public record (and because some sellers require it), not to launch an investigation.

Step 3 is contacting the seller. If you ordered from Amazon, the seller often turns out to be a third party selling through Amazon’s Marketplace. How the seller responds will vary. Some will file a claim with the delivery company for the insured value of the package, then use the proceeds to make a refund. Others may simply tell you that it’s your problem to solve.

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Amazon has a reputation for making refunds when items are stolen after Amazon delivers them, especially when the items are from third-party sellers covered by the company’s “A-to-z Guarantee.” But there’s no blanket promise of refunds.

“While the vast majority of deliveries make it to customers without issue, we recognize package theft is a reality all delivery companies contend with, especially during busy times of year,” said Montana MacLachlan, an Amazon spokesperson. “We encourage anyone who’s been a victim of theft to report the crime to law enforcement and notify Amazon’s Customer Service team so we can provide any assistance possible.”

If Step 3 fails, Step 4 is filing a claim with the company that delivered the package — you can do so through its website, and you typically have to file it within 60 days of the scheduled delivery date. You’ll need to provide a receipt, invoice or other proof of the item’s value.

Although FedEx, UPS and other delivery companies pledge to investigate claims, they don’t promise refunds. Packages are routinely insured for up to $100 by FedEx and UPS unless the shipper pays for more insurance, so even if your claim is approved, whether you recover the full value could depend on whether the shipper bought extra insurance. Also, if UPS approves a claim, it typically pays the shipper, not you, so you’ll have to rely on the shipper to reimburse you for your loss.

Your homeowner’s or renter’s insurance covers stolen packages, but chances are your deductible is greater than the value of the sweater or Instant Pot taken from your porch. If you paid for the item with a credit card, you may have a better option: Visa, Mastercard and American Express all offer a form of insurance that covers theft losses, with limits on the types of items and amount of loss covered. You can submit a claim through the relevant card’s website.

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How do I prevent my packages from being stolen?

Delivery companies offer a number of ways to protect your deliveries. The most straightforward (but least convenient) one is having your package delivered to one of the company’s retail outlets or partners, then picking it up from there.

Amazon has self-service lockers at thousands of retailers, groceries, pharmacies and convenience stores across the country. You can search for one near you on Amazon’s website.

UPS allows users of its My Choice service to have all their deliveries made to a nearby UPS Store outlet or retail partner at no extra charge. If they want to change the delivery of just one package, UPS charges a $6 fee unless the customer has a My Choice Premium membership, which costs $20 a year. To select an alternative location, sign into your My Choice account and follow the prompts under Delivery Preferences. To pick up a package there, you’ll need to present an ID that shows an address that matches the one on the shipping label.

FedEx offers to hold your packages for up to seven days at one of its retail partners, including FedEx Office locations, Walgreens, Office Depot and Dollar General. You can search for a location on the FedEx website.

For no additional charge, you can arrange for all of your deliveries to go to an alternative location, or just set them one at a time. You’ll pick the package up by showing a government-issued photo ID and proof of address, or you can provide a QR code to someone else so they can pick it up for you.

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To get started on the FedEx site, either log into you FedEx Delivery Manager account or enter the tracking number for the package you’re expecting.

Alternatively, all three of those companies allow you to redirect a package to a neighbor you know will be home to receive the delivery. They also allow you to specify potentially safer spots on your property or in your building for packages to be dropped off. And if you’re away on vacation, UPS and FedEx allows you to delay your deliveries for one to two weeks.

Amazon offers another option in certain parts of the country if you’re enrolled in Amazon Prime and have an internet-connected garage door opener: Its drivers can deliver packages inside your garage. Going this route, however, requires you to give Amazon the ability to open your garage, which will be encoded into the label on your package for one-time use. It’s a leap of faith, although the company says it has a number of safeguards, such as verifying “the driver, package and package location via multi-step authentication before granting them temporary, one-time access to your garage.”

When ordering something online, try to have the shipper require a signature for delivery. You won’t be given that option often, though; it’s typically used to protect expensive items, such as laptop computers.

Some security consultants recommend installing a security camera or a doorbell with a built-in webcam, which can record porch thieves in the act. That may help you obtain a refund from the shipper; whether it will drive off thieves is another story. One study found that security cameras had a “modest but significant effect” on crime rates, leading to a roughly 13% decrease. But there’s not a lot of data from published studies that suggest doorbell cameras deter porch pirates.

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Some less conventional solutions have found their way onto the market as well.

Parcel Vault sells a kit that can put a package door in your wall so packages can be dropped inside your home (it also sells full-size doors with built-in package doors). And Package Guard sells a Frisbee-sized, internet-connected device that you place on your porch to receive packages; it sends you an alert when deliveries are placed on it, and it emits a loud alarm if they are removed without your authorization.

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Mod Pizza is 'actively working' to avoid bankruptcy filing as restaurants struggle

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Mod Pizza is 'actively working' to avoid bankruptcy filing as restaurants struggle

Mod Pizza, a fast-casual restaurant chain with more than 40 locations in California, may soon file for bankruptcy after 16 years in business. The company could seek court protection as early as this week, Bloomberg reported recently.

The company’s plans have not been finalized and could change, a spokesperson for Mod said. “We are actively working toward strategic alternatives that would avoid a Chapter 11 filing,” he said. “We intend to provide further information in the near future.”

Mod Pizza first opened in Seattle in 2008 and announced plans in 2021 for an initial public offering, but did not follow through on them. The privately held company, which currently operates more than 500 locations across the country, helped popularize a personalized approach to pizza, allowing customers to customize their pizzas with toppings and sauces of their choosing.

Mod is the latest in a string of restaurant chains to land in financial trouble this year amid rising inflation, high labor costs and a decrease in customer demand. The popular seafood chain Red Lobster filed for bankruptcy in May, and Rubio’s Coastal Grill did the same in June after closing nearly 50 locations.

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In its bankruptcy filing, Red Lobster said its number of customers each year had dropped by nearly a third since 2019. The company also attributed its troubles to inflation and above-market rates for rent at several locations.

But Red Lobster wasn’t purely a victim of circumstance — experts say the chain’s 2023 Ultimate Endless Shrimp promotion contributed significantly to an operating loss of about $11 million in one quarter. The shrimp deal, which initially cost $20, didn’t lead to an increase in loyal customers or larger bills as the restaurant had hoped.

Rubio’s said the closures of several locations in June were due to the rising cost of doing business in the state. The closures came two months after a $20 hourly minimum wage requirement took effect for fast-food employees — an additional cost that restaurant owners have said makes staying afloat significantly more tenuous.

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