‘There is no must-have for us’ in the field of mergers and acquisitions
David Ellison downplayed Paramount’s need to buy Warner Bros. Discovery during a conference call with Wall Street analysts on Monday after the company reported earnings numbers that reflect the upward climb the company faces as it revitalizes its film and TV assets.
“It’s important to know that there is no must-have for us. We really view this as buy versus build, and we absolutely have the ability to build to get where we want to go,” Ellison told Wall Street analysts when pressed about Paramount’s pursuit of Warner Bros. Discovery. “We believe we can achieve our streaming goals, drive business efficiencies, and create value and long-term free cash flow throughout the building.”
Ellison also vowed to be “disciplined” in his approach to pursuing additional possessions. It is understood that Paramount has made two offers to acquire Warner Bros. in recent weeks. to fully acquire Discovery, including its linear cable networks.
“When it comes to M&A, everything for us is going to come back to the question of, does it accelerate these three core principles for us,” Ellison said. “We are fortunate that we have the balance sheet to be opportunistic when we think M&A will accelerate our goals, but we are also disciplined owners over the long term. We will always approach things through the lens of: how do we maximize shareholder value? And from an M&A perspective it will always be: how can we accelerate and enhance our North Star principles?”
Ellison hammered home his key points about investment, innovation and the housecleaning still underway at Paramount for the new regime. The fine print of Paramount’s earnings report reveals plans for a $500 million restructuring charge in the fourth quarter.
Ellison has emphasized the importance of upgrading Paramount’s technological infrastructure and capabilities since closing the sales agreement with former owner Shari Redstone in July 2024. During Monday’s call, he mentioned the need in more urgent terms amid an arms race with Silicon Valley companies. That’s a world he knows well as the son of software billionaire Larry Ellison, co-founder of Oracle.
“Our goal is to accelerate innovation by making technology the core competency of our business. Silicon Valley competitors have rapidly expanded into media and broader forms of entertainment, and if we want to remain competitive in the long term, we must strengthen our technology to do what it takes to position ourselves as the most technologically capable media company in the industry,” Ellison promised. “Once again, I want to emphasize that technology at Paramount is not and never will be a substitute for human creativity. Rather, it serves as a powerful multiplier, improving performance, elevating the consumer experience and equipping our creative teams with the tools to tell even better stories more efficiently and effectively.”
Other highlights of the call:
**Paramount President Jeff Shell reaffirmed that the company has no plans to offload its linear cable channels, at least not for the near term. “We are not going to spin off any cable assets. This company has a history of spinning off assets, and it hasn’t gone well for us and we think for others,” Shell said. “One of the biggest reasons is that when companies stand alone, they can focus on increasing the value of the brands that they have in a more specific way. We’re going to do that, but we’re going to do that within our company so that our shareholders get the value of that. We think we have some pretty good brands on the cable side,” he said, citing Nickelodeon, MTV and Comedy Central.
** As expected, Paramount has divested from TV operations in Latin America, Argentinian broadcaster Telefe and Chile’s Chilevision. Shell was blunt about why: “We have enough to do and invest in without investing in things that aren’t core to what will take us to global streaming scale.”
** Ellison and Shell were also effusive about the importance of the new $7.7 billion rights deal with UFC for the future of Paramount+ and CBS. Shell told analysts that the UFC’s year-round schedule will be a boon, especially for CBS, which has clustered its major sports investments around the fall and winter NFL schedule and the spring NCAA tournament.
“If you’re going to design a sport for us, UFC is perfect in many ways,” Shell said. “We had a real desert of sports that ended with the Masters [golf tournament in April] and, you know, starting over in the NFL. And we saw a lot of churn over the summer as people dropped out [Paramount+] and then turned it back on for NFL. And this is a sport that is played all year round, which is very unusual for major sports.”
