David Ellison’s goal for Paramount: make it a ‘media and technology’ company

To compete in today’s tumultuous entertainment industry, Paramount Global will need to evolve into a “media and technology” company, tech scion and soon-to-be Paramount Chief Executive David Ellison told investors and financial analysts Monday, a day after the company’s board approved a merger deal with his Skydance Media.

“When you look at the landscape that exists today, there are a lot of technology companies that are rapidly expanding into media companies,” Ellison said during the hour-long call. “It is essential for Paramount to be able to expand its technological prowess to be both a media and technology enterprise.”

Part of that plan involves improving the algorithmic engine and ad technology capabilities of Paramount’s streaming service, Paramount+, he said. Making Paramount+ profitable is a key goal for Ellison, and reworking the algorithm that powers user recommendations should increase the time viewers spend on the platform and how content is delivered, he said. That, in turn, should help reduce churn.

On Sunday, the two companies announced that Paramount’s board of directors had approved the $8.4 billion bid for Ellison’s Skydance Media and its backers to buy the Redstone family’s Massachusetts holding firm, National Amusements Inc., giving Ellison control over Paramount and allowing Skydance to merge with the storied media company.

But the company still faces major challenges due to its heavy linear TV presence, as well as a heavy debt load. With all that in mind, the company needs to adapt to new technology, both to stay relevant and to become more efficient.

Ellison noted the partnership that Skydance Animation has with Oracle — which was co-founded by his father — to build a so-called “studio in the cloud.” Though animation has long been seen as an on-premise industry, Ellison said Skydance’s newest animated film, “Spellbound,” was partially produced in the cloud, which reduced costs.

“It really is that combination of art and technology that we believe is the cornerstone of this business and is going to be essential towards our future,” Ellison said.

But market investors may not have been convinced. Shares of Paramount were down about 5% to $11.21 around 7:30 a.m. Pacific time.