As Paramount Global prepares for a change in ownership, it is also confronting the realization setting in at all traditional media companies: Direct-to-consumer streaming is hard.On an earnings call this month, management essentially acknowledged as much, though flagship service Paramount+ helped the direct-to-consumer unit show a small profit and is projected to be in the black for the full year in 2025. Even so, as part of a broader push to slash costs, the company is exploring a wide range of strategic options for the outlet, which has 68 million subscribers.Co-CEO Chris McCarthy told Wall Street analysts on the call that the company has received “lots of interest from many different partners” in a potential joint streaming venture. Skydance Media, which outlasted a rival bid from a group led by Edgar Bronfman Jr. last week, is remaining at arm’s length from the current maneuvers but has expressed optimism about the longer-term viability of Paramount+. Strategic talks have been especially active outside of the U.S. Paramount is already a partner with NBCUniversal in SkyShowtime, which serves nearly two dozen countries in Europe. Domestically, too, the company has also been in active discussions.Jeff Shell, the former NBCUniversal CEO who is poised to run the combined Skydance-Paramount operation as president when the deal closes in the first half of 2025, told investors on a call in July that he and CEO David Ellison would look at many options. “To be a winner in DTC really means being in the ultimate bundle that’s coming,” he said. “We’ve got a bunch of inbound from a number of people about partnerships that could involve a partnership with another player or players.” Ellison, whose offer for Paramount is backed in part by his father, Oracle billionaire Larry Ellison, talked on the call about turning the merged company into a “tech hybrid” and putting financial resources into “rebuilding” Paramount+.Multiple insiders have told Deadline the company has held active talks about joining forces with a rival, with Warner Bros Discovery and Amazon specifically cited, though it’s unclear what form such a collaboration might take. Streaming likely factored heavily in a statement last week from the special committee of Paramount’s board established to steer M&A discussions. After the process of extending the “go-shop” period in the Skydance agreement to allow more time to consider the Bronfman offer, the committee said it had “contacted more than 50 third parties to determine whether they had an interest in making a proposal to acquire Paramount.”A Fully Merged Service?Some industry observers and Wall Streeters view Paramount+ as perhaps the most likely candidate for a fully merged, jointly operated service akin to a reconstituted, pre-Disney Hulu. “We think Paramount+ has a lot to gain from opting to partner and putting the costly business of going it alone behind it,” MoffettNathanson analyst Robert Fishman wrote in a recent note to clients. “As a standalone company, we do not think its balance sheet allows Paramount+ to keep investing in the necessary content to reach scale globally.”Instead of what streaming heads call “synthetic” bundles, like the teaming of Max, Disney+ and Hulu, or vertical bundles by Disney and other companies, the true leap forward could be a true consumer-friendly blend into a single app. Viewers would no longer have to toggle back and forth or struggle to find programming – chocolate and peanut butter would come in the same tasty package. Paramount is the largest company yet to pull off a version of this internally, bringing Showtime’s app together with Paramount+ earlier this year. The company has also had a successful teaming with Walmart, offering Paramount+ at no cost to members of the Walmart+, the retail giant’s answer to Amazon Prime.Is a commingled dream even achievable, though? Possibly, streaming veterans agree, though it would not be a simple undertaking. One prominent Paramount alum, Marc DeBevoise, told Deadline in an interview that a melding of services is “a little challenging” in terms of technology as well as sorting out the financial hierarchy. DeBevoise speaks with specific knowledge, having capped a nine-year run at CBS and ViacomCBS (which later rebranded as Paramount Global) in 2020. He departed as chief digital officer before taking on his current post as CEO of streaming tech provider Brightcove in 2022.“That’s potentially a lot of work, functionally and technologically, to do something you could do with joint pricing or with one of the big aggregators unless you simply contribute the content from one to the other,” DeBevoise said. “Taking two big media co-streaming apps and trying to make them one is actually a little challenging, given the complexity of the rights, but it’s possible. The other way could be, for one, to say, ‘Hey, send me all your content, and I’ll just make a place in my app for you.’ You can imagine how that conversation might be complicated between competitors. Bottom line, unless you can actually save them money, you haven’t really done much for the consumer.”One former top media exec who ran another company’s streaming service says the quest would be worth it. “Some kind of combined offering to satisfy frustrated consumers,” the exec tells Deadline, “would be like cable TV at its height. What a beautiful thing if we could re-create that. Today, the only thing that comes close to that is Netflix. What the rest of the industry should think about is, could we do something together?”Another media vet who held a senior post at one of the top streamers, sees a mega-licensing deal in which Paramount “sends their whole catalog to Max” as “a feasible solution” to the challenge of funding direct-to-consumer business. “You could pretty easily do that. There’s absolutely a way that Paramount sends its content and then shuts down its entire tech stack,” he said, with resulting savings in the hundreds of millions based on the company’s recent financial reports.Big Tech Ties:Big Tech aggregators like Amazon, Google and Apple, or select MVPDs or vMVPDs, seem best positioned to pull off a full combo, DeBevoise believes. They could “probably go to the media companies and actually get them to the table together to have a legitimate conversation about who takes what discount. While the media companies can do one-to-one negotiations, it likely gets very complicated when you try to get three or four or more negotiating.” While it is “encouraging” that Hulu and select other JVs have taken shape, “this feels different, given their streaming services are the core of each of their businesses now,” DeBevoise said.DirecTV Chief Content Officer Rob Thun says his company, which is now a privately held entity controlled by AT&T and private equity firm TPG, hopes to be able to bring multiple services together through its systems. While its traditional satellite holdings have dwindled to 11 million subscribers and the company’s portfolio doesn’t include broadband service as do those of cable operators like Charter and Comcast, its online service DirecTV Stream is positioned for the future, he says. “We do believe we have a role to play” as Paramount+ and other services look to merge. “We call it superaggregation. We are already aggregating linear and can do more in digital.”There are “two layers of complexity” to a merged offering: participants’ financial circumstances and the regulatory environment, according to the former top streaming exec. The Biden administration has seen a stiffening of regulators’ backbones and new scrutiny of tech giants. A recent federal court ruling against Venu Sports, a streaming offering blending 15 sports-centric networks from Disney, Warner Bros Discovery and Fox Corp., is also casting a shadow over would-be joint efforts. If a JV were to plant a flag, its member companies could be seen as favoring their new venture and unfairly disadvantaging other business partners, as the court found in the Venu ruling granting a preliminary injunction. The ruling indefinitely sidelined Venu, though the defendants plan to appeal the decision.As Paramount navigates all of these cross-currents, the company is poised to mark a milestone in the first half of 2025, when the Redstone family cedes control to Skydance after controlling the Paramount roster of assets for more than 25 years. Ellison and his backers, including RedBird Capital, plan to invest $8 billion in a two-step transaction. The acquisition of Shari Redstone’s National Amusements Inc., which owns nearly 80% of Paramount’s voting shares, will be followed by a full merger of Skydance and Paramount.On the call with investors, Shell linked the streaming future to the industry’s prosperous linear past. “Eventually, the streaming world is going to look very similar to the way that the multi-channel world looked in the past,” he said. And viewers are “going to want a one-stop shop with a nice EPG and a nice technological way to find what they want to look for so they can start watching something, as opposed to sorting their way through the muck of the way it’s delivered right now. So, that’s our view. And if you’re in that bundle, you’re going to win and if you’re not in that bundle, you’re in real trouble.”
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