Skydance’s merger with Paramount Global wins FCC’s approval

PARAMOUNT Global’s merger with Skydance Media was approved by the US Federal Communications Commission, which backed the deal after the Trump administration extracted concessions on the news and entertainment company’s political coverage and diversity practices.

As part of the accord, Skydance vowed to ensure that the new company’s programming embodies a diversity of viewpoints from across the political and ideological spectrum, FCC Chairman Brendan Carr said on Thursday in a statement. Paramount will employ an ombudsman for two years to evaluate complaints of bias.

“I welcome Skydance’s commitment to make significant changes at the once storied CBS broadcast network,” Carr said in the statement. FCC members voted 2-1 to approve the deal, with Democrat Anna Gomez opposing.

Skydance Media, led by David Ellison, agreed last July to take control of Paramount, the parent of CBS, MTV and its namesake Hollywood film studio, after months of tumultuous negotiations with Shari Redstone, whose family has run the business for decades.

Ellison, the son of Oracle Corp. co-founder Larry Ellison, beat out other suitors including Sony Group and liquor heir Edgar Bronfman Jr.

As part of the approval, the company recently committed to ending diversity, equity and inclusion practices. That will ensure “the combined business will enact policies and practices consistent with the law and the public interest,” said Carr, who was appointed by President Donald Trump.

Shares of Paramount rose about 1.5 per cent in extended trading after the announcement.

The vote concludes a review that dragged on due to opposition from other interested buyers and the Centre for American Rights, a nonprofit law firm that has accused Paramount’s CBS News division of skewing its coverage to benefit the political left.

The group suggested that approval require an independent ombudsman to field news bias complaints – which Paramount agreed to voluntarily – and the staffing of editorial operations in cities other than New York and Los Angeles.

Carr, a vocal supporter of Trump, had suggested his review would include a look at how CBS handled the Kamala Harris interview that prompted a lawsuit by the president.

Carr also said he would look at “invidious” forms of discrimination reflected in media companies’ diversity, equity and inclusion policies.

Ellison met personally with Carr this month to pitch the deal, arguing the transaction has “significant public interest benefits.” 

The FCC has jurisdiction over the merger because it involves the transfer of broadcast licenses.

Gomez, the lone Democrat among the FCC members, has been an outspoken critic of the commission’s current stance on the media and argued against any approval conditions that would constrain independent journalism.

Government approval allows Ellison to move forward with plans for the new company, where he will become chairman and chief executive officer.

With backing from RedBird Capital Partners, Skydance will merge into Paramount and make an investment of more than $8 billion in the company.

Ellison inherits a financially struggling company. Last year the company’s three co-CEOs pledged to cut costs by US$500 million and the company said it planned to reduce its work force by 15 per cent, or about 2,000 employees. Last month it announced plans to cut another 3.5 per cent. 

Chris McCarthy, one of the co-CEOs, will leave. Bloomberg News had reported earlier that he was expected to depart, along with film chief Brian Robbins.

While Paramount’s traditional TV business has lost viewers and advertising dollars as consumers shift to streaming services like Netflix, Skydance has promised to inject fresh capital and technology into the business.

Ellison, 42, has vowed to increase Paramount’s slate of films for theatres, building on Skydance’s history of collaboration on movie franchises such as Top Gun, Star Trek, Transformers and Mission: Impossible.

He also plans to build on popular TV titles such as Yellowstone and Nickelodeon’s SpongeBob SquarePants. The new company will start off with at least one popular lucrative franchise under a new contract: South Park. The creators of Comedy Central’s cartoon satire reached a new 5-year-deal with Paramount this month to continue to make the long-running series.

In voting against the deal, FCC Commissioner Gomez accused the Paramount of “cowardly capitulation” to the Trump administration, saying “it is the American public who will ultimately pay the price.”

She also said the “once-independent FCC used its vast power to pressure Paramount to broker a private legal settlement and further erode press freedom.”

Senators Elizabeth Warren and Bernie Sanders previously called for investigations into the terms of Paramount’s US$16 million settlement of the Trump lawsuit, saying it smacks of bribery.

Paramount also attracted fierce criticism in recent days over its decision to cancel CBS’s The Late Show with Stephen Colbert. While media industry observers speculated that broadcasters may be under pressure from corporate parents looking to avoid the administration’s ire, late-night programming has been losing viewers and is costly to produce. BLOOMBERG