Paramount-Skydance Merger Approved by FCC, Clearing Way for $8 Billion Deal Close
The federal agency, led by Brendan Carr, said on Thursday that it approved the transfer of Paramount's broadcast licenses to Skydance, the last hurdle in the review of the $8 billion deal.
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With the FCC approving the transfer, Skydance will be able to complete its acquisition of Paramount in short order, transforming the media landscape as Ellison takes charge of the owner of CBS, the Paramount film studio, Paramount+ and cable channels like MTV, Comedy Central and Nickelodeon.
'Americans no longer trust the legacy national news media to report fully, accurately, and fairly,' Carr said in a statement. 'It is time for a change. That is why I welcome Skydance's commitment to make significant changes at the once storied CBS broadcast network.'
At the heart of the approval: potential benefits to the public through Skydance's ability to address Paramount's financial maladies.
'We find that the record indicates that the Transaction will produce some public interest benefits, including enhancing the service of the CBS television network and its owned-and-operated local television broadcast stations and revitalizing Paramount to navigate challenging economic and marketplace conditions,' stated the order.
Due to economic headwinds and a shift in the consumption of media, Skydance said that Paramount's costs are untenably increasing while its traditional sources of revenue are shrinking. These challenges, it said, left Paramount with $14.6 billion in long-term debt by the end of 2023. If the merger is greenlit, it vowed to inject $1.5 billion of new capital into the company, bolstering operations and giving it a pathway to investing in news and keep popular live sports, movies and TV shows.
Ultimately, the FCC agreed with Skydance that the purchase gives Paramount a pathway to emerging as a 'stronger and more vibrant competitor in the modern media landscape.' Key in this finding were the prospects of Paramount+ and PlutoTV under new leadership.
'Revitalizing the technology underlying these streaming services will help to secure their continued success, and, in turn, help stabilize and support the viability of the company's broadcast services,' the order stated.
A key thesis behind the merger was plans by Ellison to expand Paramount's technological capabilities. This includes improving recommendation engines through artificial intelligence so subscribers spend more time on the platform, upgrading advertising technology to give marketers more reach and information, and the unification of cloud providers to slash costs.
Also a factor: Skydance's commitment to eliminating all diversity, equity and inclusion initiatives (DEI) at the company, and to hire an ombudsman at CBS News to monitor for media bias.
The transfer was approved by a 2-1 vote. In a dissent, Anna M. Gomez, a Democratic commissioner on the FCC, said the agency 'used its vast power to pressure Paramount to broker a private legal settlement and further erode press freedom.
'Even more alarming, it is now imposing never-before-seen controls over newsroom decisions and editorial judgment, in direct violation of the First Amendment and the law,' she added.
The Skydance deal has been a year in the making, with Skydance and its partner RedBird Capital beating out other potential suitors last year for the asset, which was controlled by Shari Redstone and her family's National Amusements holding company. Ellison will become CEO of the combined company, with former NBCUniversal CEO Jeff Shell to become its president.
The FCC approval also comes just a few weeks after Paramount settled a lawsuit brought against it by President Donald Trump, over an interview the CBS News show 60 Minutes conducted with former Vice President Kamala Harris last year.
The lawsuit was settled for $16 million, though Trump later told reporters it also included free advertising connected to issues of importance to him. Paramount denied any agreement for commercials.
The settlement led to resentment, anger and disgust inside CBS News, where staff were frustrated that a deal was cut over a lawsuit that they viewed as baseless, though Paramount refused to apologize over the interview and edits in question.
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