Michelle Yu (MBA ’26) proposes an alternative to Skydance’s deal with Paramount.
After months of will they, won’t they, Paramount and Skydance Media have made it official: they are joining forces in a proposed merger worth $8 billion. The resulting “New Paramount” is valued at approximately $28 billion and spans multiple markets, including film, television, music, home video, streaming, and consumer products. With the couple set to make their debut in the first half of 2025, happily ever after, right? Well, not so fast.
I propose a better relationship exists: one between Apple and Paramount. The premise is simple. Apple should acquire Paramount to grow its streaming business and stay relevant in an increasingly crowded industry. Apple would inherit Paramount’s diverse portfolio of traditional and digital media content, iconic franchises, and intellectual property. Paramount would benefit from improved financial stability, competitive positioning, and expanded streaming capabilities.
With every great love story comes at least some baggage, and Paramount and Apple certainly both have their fair share. While Paramount has been playing the field for far longer — specifically, it has been more than a century since Paramount Pictures was founded in 1912 as the Famous Players Film Company — Apple has been working to bolster its media repertoire following the launch of Apple TV+ in 2019. Much like the Golden Age of Hollywood between 1927 and 1948, when The Big 5 movie studios (Universal, Paramount, MGM, Warner Brothers, and Walt Disney) signed actors to long-term contracts, Apple has been using big names such as Leonardo DiCaprio, Natalie Portman, Julia Louis-Dreyfus, and Prince Harry to draw audiences and generate buzz. Still, Apple has faced weak growth and low subscription numbers relative to its peers, with an estimated 20 million subscribers compared to Netflix’s 278 million.
Paramount is not much better off, reporting a 2.8 million decline in subscribers during its most recent quarter, bringing the total to 68 million. More concerning, however, is revenue for its TV Media and Filmed Entertainment departments, falling by 17% and 18%, respectively, during the quarter. Cord-cutting and the decline of theatrical releases during and after the pandemic have been the biggest drags on profit industry-wide, and these headwinds have been amplified by delays and production issues with Paramount’s content pipeline. Paramount’s transition from traditional media to digital and streaming platforms has lagged industry trends, and the high costs of creating original content have strained the company financially.
Enter Paramount’s knight-and-shining armor, Skydance Media, a production company founded in 2006 by David Ellison (son of Oracle co-founder Larry Ellison). Skydance and Paramount are old friends, first inking a five-year co-financing, production, and distribution agreement in 2009. Though smaller in scale than Paramount, Skydance is a respectable player in the movie industry and has worked with Sony, Netflix, Apple, and Amazon on movies within the Mission: Impossible, Jack Ryan, Terminator, Star Trek, Transformers, and Top Gun franchises, just to name a few. In total, its films have yielded more than $8 billion in the global box office.
Still, even the most successful companies will likely have to rethink their long-strategies as the media industry inevitably consolidates over the next five to 10 years. The proliferation of streaming platforms has resulted in an oversaturated and fragmented market — one with which consumers are becoming increasingly disenchanted. Forbes says 45% of users have canceled a streaming subscription within the last year because prices were too high. Similarly, a PwC survey shows 57% of Entertainment and Media CEOs, compared to 45% of all CEOs, believe their current business path will not be feasible in 10 years. And a report by Bain finds that media companies are pivoting more towards M&A as shareholders become less forgiving about unprofitable subscriber growth.
The merger between Skydance and Paramount, therefore, makes sense at this point in time, regardless of how messy negotiations got over the last year (see the competing bid from Sony and Apollo Global Management and the resignation of Bob Bakish as Paramount CEO). The two companies have a strong working relationship, and, by partnering more closely, can share production costs, minimize risks, and accelerate the pace of development. In a joint press release, Paramount and Skydance also highlighted the “creative-first destination for storytellers” that the new entity will foster, offering independence to artists who are “dedicated to top-quality content.”
But what if that “top-quality” content could be even better? What if Paramount could trade in Tom Cruise for Steve Carrell, Baywatch for Ted Lasso, and old school media for high-flying tech? An acquisition by Apple could offer all of that and more.
As the largest public company by market cap, Apple has billions of dollars in free cash flow and could provide Paramount with the necessary capital to invest in first-rate content production and marketing. This financial backing would reduce its debt burden, alleviate budget constraints, and allow Paramount to produce more ambitious projects without the volatility of a traditional studio model. While the cost of production might increase, the potential for higher box office returns and streaming revenues could lead to improved overall profit margins on successful projects. Additionally, Apple’s one-of-a-kind ecosystem would give Paramount’s content a much wider reach, especially if it adopts a cross-promotional strategy across Apple’s services and products.
Though Paramount’s merger with Skydance does have some attractive qualities, it comes with limitations. Skydance does not have the same financial resources as Apple, so if Paramount merges with Skydance, it may miss opportunities for technology-enabled productions (think virtual and augmented reality, powered by artificial intelligence) and marketing initiatives that an acquisition by Apple would facilitate. Moreover, whereas Apple already has a streaming platform to which Paramount+ users can migrate, Skydance does not. An increase in subscribers, therefore, is more likely if Apple acquires Paramount and shares its existing user base. Finally, while Skydance is focused on producing blockbuster action films, an acquisition by Apple could expand Paramount’s already-rich content portfolio across genres and platforms, appealing to a broader set of customer segments.
Paramount’s library of legacy films and television shows is exactly what makes it an enticing target for Apple as the tech giant seeks to compete more effectively in the crowded streaming landscape. With access to Paramount’s recognizable brands, Apple could run targeted marketing campaigns that highlight the exclusive content available on Apple TV+. This would better position it against competitors like Netflix and Disney as consumers get more selective with their platform subscriptions. As the second oldest movie studio in the U.S. and the sole member of the Big Five still located in Los Angeles, Paramount also has established relationships with talent and industry executives that could help Apple enhance its own production capabilities and expand its creative partnerships.
At the core of Apple’s inability to grow its streaming business has been its domineering reputation as a tech, not entertainment, company. As the willingness-to-pay for dozens of streaming sites dwindles, consumers will employ the LIFO accounting method (last in, first out) when choosing which platform to drop and end up picking the one that is least like the others (hint: the first to go will be a company named after a fruit that has minimal experience in Hollywood). Apple has already invested millions of dollars in both original and legacy content in an attempt to turn around the business, but like a band-aid on a bullet wound, that solution is likely unsustainable long-term. Acquiring Paramount would give Apple new and improved street cred primed for the future, rather than at the behest of the past.
Apple would not be the first tech company to purchase a movie studio. Amazon bought Metro-Goldwyn-Mayer (MGM), a leading motion picture studio in old Hollywood with more than 4,000 movies and 17,000 television shows in its catalog, for $8.45 billion in 2021. Since then, Amazon and MGM have released several critically-acclaimed films, including Saltburn, American Fiction, The Boys in the Boat, and Challengers, both theatrically and via Prime Video. The entertainment industry at large is also no stranger to M&A. Paramount itself is the byproduct of a merger between CBS and Viacom and, along with its namesake studio, owns CBS, MTV, Comedy Central, Nickelodeon, and Showtime, among others. Discovery and Warner Brothers merged in 2022 to form Warner Bros. Discovery, whose properties include HBO, CNN, DC Comics, and TNT. And in 2019, Disney purchased 21st Century Fox’s key assets, adding to properties like Pixar, Marvel, ABC, Searchlight Pictures, Freeform, National Geographic, and Lifetime.
I am sure that Skydance will treat Paramount well — that the two will make each other very happy. But why settle when there is something even bigger and bolder out there? As streaming takes hold of media consumption patterns, the bar for quality content will continue its meteoric rise, making capital investments into productions all the more critical. The creative freedom that comes with the “New Paramount” is something that Apple can also offer, as it is known for giving talent more leeway when pursuing unique projects. At a time when movie theaters appear ready to shutter their doors and viewers grow tired of the umpteenth sequel, remake, and spin-off, a new avenue for innovation and creative risk-taking would be warmly welcomed.
Like any romantic tale, the merger between Skydance and Paramount feels like a relationship built on familiarity and shared history. But while comfort and predictability may lead to stability, there is always the allure of something bigger and more ambitious. Paramount and Skydance have the potential to be a functional couple, merging their strengths to navigate the challenges of an evolving industry. However, an acquisition by Apple could elevate Paramount in ways that Skydance cannot, offering not just financial security, but also the chance to expand creatively and strategically on a global scale.
Apple’s immense resources and tech-driven approach could transform Paramount’s legacy into something cutting-edge, much like a partner who pushes you out of your comfort zone to realize your full potential. Together, they could bridge the gap between old Hollywood and new media, blending classic storytelling with the latest technology to create a more dynamic future. Sometimes the greatest partnerships come from the most unexpected complements.
Bearing in mind that all thoughts within this opinion piece are entirely speculative and not reflective of any legal or regulatory proceedings — Paramount, if you are out there listening, it is not too late to reverse course. Apple could still be your Prince Charming.
Michelle Yu (MBA ’26) is passionate about all things media, with experience in business news, documentary film, broadcast journalism, and television. She graduated from Columbia University with a degree in Film and Media Studies and was a producer for CNBC prior to HBS.
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