In 1994, when Sumner M. Redstone bought Paramount Pictures for about $10 billion, the equivalent of about $22 billion today, he did more than just take over a company. He ascended a cultural throne.
Studios like Paramount — founded in the 1910s, operating soundstage complexes and controlling vast film libraries — were valuable businesses on the verge of hitting a mother lode: the DVD. Perhaps more important, however, they gave their owners a precious identity as certified members of the cultural elite.
Movies still towered above everything. Top ticket sellers in 1994 included touchstones like “The Lion King,” “Schindler’s List,” “Interview With the Vampire,” “Mrs. Doubtfire,” “Philadelphia,” “Speed” and “Pulp Fiction.” In 1995, when “Forrest Gump” — a Paramount release — won the Oscar for best picture, more than 48 million Americans tuned in to watch.
Those days are over.
On Sunday, the Redstone family reluctantly relinquished Paramount, passing the studio to David Ellison, the tech scion behind a 14-year-old entertainment company called Skydance. If the complex deal closes, Mr. Ellison and his backers, which include RedBird Capital Partners, will spend roughly $8 billion on a collection of assets that include Paramount, CBS, two streaming services and a portfolio of cable networks, such as MTV, Nickelodeon, BET and Comedy Central.
Considering the movie studio alone was worth $22 billion in 1994, it was not exactly a celebratory moment in Hollywood. Rather, it was another example of harsh reality intruding on a world that still likes to fantasize about recapturing its golden age. (Universal recently renovated its lot, adding a sign over one of its entrance gates that reads, “Welcome all who change the world.”)
Sure, Mr. Ellison, 41, now ranks as a bona fide Hollywood mogul. But what does that even mean in 2024? His ascendance bears no resemblance to the robber barons like Mr. Redstone who came before him, partly because there is precious little left to rob.
With a few exceptions — notably animated movies — the box office has been a relative wasteland; Memorial Day weekend was the worst in almost 40 years, after adjusting for inflation. Most streaming services have been financial disasters; Paramount+ alone has lost nearly $4 billion since the start of 2022. Metro-Goldwyn-Mayer and 20th Century are little more than logos. Warner Bros. is on its fourth superhero reboot strategy in eight years.
“We cannot in good conscience encourage you to pursue our profession,” the Art Directors Guild, which represents set designers and other film specialists, said in May, when it suspended its training program. A recent column on Deadline, an entertainment trade publication, described Hollywood — battered by the coronavirus pandemic, two lengthy union strikes and the still-climbing popularity of TikTok — as “something postapocalyptic, with zombies and lots of smoking ruins.”
Artificial intelligence is threatening jobs, particularly in visual effects and animation. Streaming has made it easier to pirate content.
The Oscars have been on life support. This year’s Academy Awards ceremony drew 19.5 million viewers, down 60 percent from 1995.
In contrast to the gilded Redstone glory days, the era that is beginning at Paramount will be defined by Mr. Ellison’s skills as a fix-it man. On Monday, he acknowledged as much, telling analysts on a conference call that he intended to remake the collection of assets into a “tech hybrid.” He would do that, he said, by drawing on his experience as a Skydance producer of movies like “Top Gun: Maverick” and “The Tomorrow War” while tapping relationships in Silicon Valley; Mr. Ellison is the son of the Oracle founder Larry Ellison.
“If you went into a lab and designed the perfect executive for the next-generation Hollywood company, you would literally spit out David Ellison, because he not only can go to a table read, but he can go to the next room and code, too,” Jeff Shell, Mr. Ellison’s top lieutenant at the new company, said on the call. Mr. Shell was previously a chief executive at NBCUniversal, where he was known for shaking up long-held Hollywood business practices, including theatrical release patterns. (Mr. Shell left NBCUniversal last year after acknowledging “an inappropriate relationship with a woman in the company.”)
Gerry Cardinale, founder of RedBird Capital, said Mr. Ellison would turn Paramount into “the pace car for how these incumbent legacy media businesses will need to be run in the future.”
They were vague on specifics, with two exceptions: Mr. Ellison plans to overhaul Paramount+ while slashing and burning through older businesses to find more than $2 billion in “cost efficiencies and synergies.” (To put that number in context, the company’s previous management team said last month that $500 million in cuts were aggressive enough.)
Mr. Ellison has run Skydance as an ultra-lean operation. Larry Ellison has also demonstrated a lack of tolerance for Hollywood largess, forcing an overhaul at his daughter’s money-losing Annapurna Pictures in 2018. Annapurna largely exited the movie business and has found success with independently produced video games.
Paramount has endured boom-and-bust cycles before. In the 1960s the studio’s owner, the conglomerate Gulf & Western Industries, very nearly sold a badly struggling Paramount for its real estate value. Talks began with a cemetery that borders the studio. More burial plots were envisioned.
That was when Paramount’s young production chief, Robert Evans, turned a macabre drama, “Rosemary’s Baby,” into a box office juggernaut. Mr. Evans went on to make the studio a showcase for culture-defining cinema, serving up “The Godfather,” “Chinatown” and “Urban Cowboy,” among others. Barry Diller took over, delivering hits like “Raiders of the Lost Ark,” “Grease” and “Beverly Hills Cop.” Sherry Lansing kept Paramount healthy in the late 1980s and ’90s with movies like “Fatal Attraction,” “Braveheart,” and “Titanic,” a co-production with Fox.
Mr. Ellison has a reverence for Paramount’s history. On Monday’s call with analysts, he repeatedly said he wanted to rekindle the studio’s status as a haven for storytellers. But he also clearly said that nostalgia would no longer cut it.
“This is a defining and transformative time for our industry,” Mr. Ellison said. “We are committed to energizing the business and bolstering Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich generations to come.”