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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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In a first for the country, voters in Monterey Park ban data centers

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In a first for the country, voters in Monterey Park ban data centers

Residents of Monterey Park voted overwhelmingly to ban data centers on election day, making the San Gabriel Valley city the first in the nation to do so by public vote.

As of Wednesday, 86% of votes were in favor of Measure NDC, the city ban, according to the Los Angeles County registrar-recorder/county clerk.

Other cities and towns have passed moratoriums on data centers, as a wave of opposition sweeps the country. But the Monterey Park vote can only be overturned by another ballot measure, making it the most permanent data center ban in a jurisdiction.

Monterey Park’s City Council had already banned data centers by ordinance, after a proposed 247,000-square-foot data center met an outpouring of public anger and concern. The developer withdrew that plan.

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That facility would have been less than 500 feet away from the nearest home, and would have used three times the electricity of the entire 60,000-person city. Residents said it would have caused noise and air pollution and driven up electricity rates.

“This ensures long-lasting protections for current and future generations,” Amy Wong, co-founder of the group San Gabriel Valley Progressive Action, said of the vote. “It means that future city councils cannot overturn a data center ban, even if data center developers wanted to spend money to fund pro-data center candidates.”

The measure had no formal opposition. The developer of the proposed facility, investment firm HMC StratCap, said it wouldn’t engage in the ballot fight when it withdrew in March.

The Data Center Coalition, an industry trade group, expressed disappointment in the vote.

“It sends a signal that the area is closed for business, both for data centers and for other significant economic development projects,” state policy director Khara Boender said.

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“It deprives local residents of the opportunity to compete for jobs and investment, while also causing the area to relinquish substantial long-term economic investment, high-wage jobs, and critical tax revenue to neighboring areas or other states.”

SGV Progressive Action worked with hyperlocal groups including No Data Center Monterey Park to rally support for the measure.

The group is now focused on stopping data center proposals in the City of Industry and fighting a move by City of Industry, Santa Fe Springs, Vernon and City of Commerce to welcome data centers and other industry with fast-tracked permitting and tax incentives.

City of Industry, in the San Gabriel Valley, and Vernon, south of downtown L.A., are primarily industrial areas, each with around 300 permanent residents. They are employment centers, and tens of thousands of workers commute in daily.

There has been little vocal opposition to data centers among the few residents of these cities. Wong said the protest is primarily coming from the surrounding neighborhoods.

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“If a data center gets built in City of Industry, residents across the region would bear the brunt of pollution and increased utility costs,” Wong said, noting that it is surrounded by 16 other cities and unincorporated communities.

Data center proposals have been limited in California compared to Virginia, Texas, Georgia, Illinois and Arizona, which sit at the center of a recent boom in hyperscaler facilities to power artificial intelligence.

California has the third-most data centers in the country, with 300, but high electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in other hotspots.

That doesn’t mean opposition hasn’t been fierce. In Coachella and Imperial County, residents are showing up in droves to protest local proposals.

In the San Gabriel Valley, Montebello, El Monte and Baldwin Park have all enacted temporary moratoriums, and Alhambra recently banned data centers as part of a zoning code update.

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Wong said she hoped the ballot measure vote would galvanize the opposition. “The vote is a testament to the people power of our region,” she said. “Our region is worth protecting, and we won’t let data centers determine our future.”

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Rent-hike ban to protect fire victims ends despite gouging concerns

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Rent-hike ban to protect fire victims ends despite gouging concerns

A rule intended to prevent rent gouging in the wake of the Eaton and Palisades fires has lapsed in Los Angeles County, possibly exposing some renters to hikes.

The executive order that blocked rent increases was issued by Gov. Gavin Newsom amid the devastating wildfires last year. Under the order, landlords couldn’t increase rents by more than 10% above their prefire levels.

The rule, which was supposed to be temporary and was repeatedly extended, ended Friday after a vote to extend it again failed to garner enough votes. Supervisor Lindsey Horvath, whose district includes Pacific Palisades, sounded the alarm in a motion to extend price protections that failed to pass at the Board of Supervisors’ May 19 meeting.

“These price gouging protections continue to be necessary as construction and rebuilding continue, and as thousands of people remain displaced,” the motion said. “Families which signed short-term leases could face drastic price increases of 50% or more without further price gouging protection.”

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Los Angeles County is home to more than 1 million rental properties, though not all of them needed protection from the new rule. There are already stricter rent increase caps for many residences, depending on the location, type and age of the building. Despite the rent control in the region, the people of Los Angeles pay among the highest rents in the country.

It is uncertain whether renters will face rapidly rising rents now that the protection has lapsed. But some real estate experts and policymakers said there was no need for the temporary rule that was part of the governor’s state of emergency.

Supervisors Kathryn Barger, Janice Hahn and Holly Mitchell abstained from voting on the motion to extend the protection, while Supervisors Hilda Solis and Horvath supported it.

“I abstained because I did not see sufficient evidence to justify extending this emergency ordinance, nor did I see evidence to eliminate it entirely,” Hahn said.

Barger’s office said she supported allowing the protections to sunset while waiting to see whether new information emerged.

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“Market data already shows countywide rents are only about 2% above pre-emergency levels and rental inventory has grown,” Barger representative Helen E. Chavez Garcia said. “The Supervisor is also mindful of the burden these ongoing protections place on small property owners throughout the county.”

Mitchell did not immediately respond to a request for comment.

There haven’t been steep rent hikes in neighborhoods within three miles of the Palisades fire, according to a Times analysis of data from Zillow, the property listing company.

In ZIP Codes within three miles of the Palisades fire, rent increased 4.8% from December 2024 to April 2025. In areas around the Eaton fire, which destroyed swaths of Altadena, rent jumped 5.2% in the same period.

In L.A. County, ZIP Codes farther from the fires saw only about a 2% increase.

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A landlords representative, Jesus Rojas of the Apartment Owners Assn. of Greater Los Angeles, told the supervisors during public comment at the meeting that the county’s rent-gouging rules have “long outlived the emergency they were intended to address” and are now being “wrongfully used to harm thousands of rental housing providers throughout the county.”

“There is no proof that multifamily rental housing providers are hugely increasing rents for impacted homeowners,” Rojas said.

Indeed, there are strong signs that the property market in the Los Angeles area has at last begun to cool.

L.A. metro-area rent prices recently fell to a four-year low, with the median rent slipping to $2,167 in December.

Meanwhile, condominium sales had their slowest start of the year in decades. Condo sales in Los Angeles have plummeted to a 20-year low, with fewer than 2,000 units sold in January and February — the worst start to the year since 2005.

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Newsom defended the price-gouging protections shortly after they went into effect.

“In the days following the Los Angeles firestorms, we worked quickly to protect Los Angeles survivors from any form of exploitation,” he said in February 2025. “The state has the tools in place to not only block price gouging during this emergency, but also to prosecute bad actors.”

The Los Angeles County Department of Consumer and Business Affairs said it received more than 2,000 complaints after the fires, alleging that retailers and landlords were taking advantage of people put in hardship by their losses, and sent out more than 2,000 cease-and-desist letters to businesses and landlords for alleged price gouging, said Morine Merritt, who oversees department investigations into consumer and real estate fraud.

“Close to 90% of the complaints that we received involved allegations of rent increases,” Merritt said in an interview. Now that the fire-related protections have expired, existing laws and “regular market conditions determine price increases for goods and services, including rents,” she said.

Crackdowns on fire-related rent gouging have been rare, said Chelsea Kirk of the activist organization the Rent Brigade, which analyzed L.A. County’s rental market in the year after the fires. It reported 18,360 potential examples of price gouging in listings but said that few lawsuits had been filed by authorities so far.

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Last week, Rent Brigade announced what it said was the first private civil lawsuit brought by a family that claimed to be rent-gouged in the aftermath of the wildfires. Plaintiffs Randall and Candy Renick, whose Altadena home was damaged, said they were charged nearly three times the maximum permitted rate for nearly 10 months. They seek restitution of $96,000 plus civil penalties and attorneys’ fees.

The rental market has probably stabilized since the fires, Kirk said, but other families may still be “locked into illegal rents” that they agreed to pay when they were in a rush to find housing after they were displaced.

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Read Nick Bilton’s Letter to Scott Pelley

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Read Nick Bilton’s Letter to Scott Pelley

Dear Mr. Pelley:

I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.

Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.

Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.

Sincerely,

Nick Bilton

Executive Producer, 60 Minutes

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