The Paramount/Skydance deal is this industry in microcosm
Opinion
The coming together of tech and media, cost savings, the future of TV, AI efficiencies… the merger encapsulates many of the ad industry’s themes and concerns.
There’s no shortage of things going on before silly season, including Cannes — creative awards, of course; lots of DE&I; but less about the business of business: where it’s going wrong and the difficulty of making creative pay.
Talking of the business of business, the industry rightly spends much time obsessing about value creation. But what about its nemesis, value destruction, via the hash that the “world’s richest man” is making of Twitter amid his appearance with WPP’s Mark Read at Cannes. Where he sought to recast his words: “I only told some advertisers to f*** off.”
This was in the wake of his chief lieutenant’s recent world tour/charm offensive. Linda Yaccarino is clearly capable enough to know what she’s got herself into, but even she must be nonplussed by the scale of self-initiated value destruction.
The charabanc trundles on
I’ve participated in enough of these uniquely American things. Top person decides it’s time to get on the road, show their face and offer some reassurance at a time of turbulence, while also getting a bit of shopping in. (And perhaps a Cotswolds estate agent visit too — those whopping bonuses need a home.)
The word comes down to local teams, who then scrabble around at short notice to cobble together as many senior media buyers as possible for the state visit. A splendid lunch is served in an even more splendid location, with zealous hype and soothing platitudes uttered.
Everyone goes back to work and more or less forgets about it as the charabanc trundles on to the next capital city. The serious issues — like questionable effectiveness and safety and trust that are particularly germane to Twitter — are brushed aside pro tem.
Serious questions
Twitter may now be called X to pave the way for its owner’s grand vision of a universal enabler app, but when people use it, they still tweet. Our learned colleagues in the branding discipline doubtless have a view on this blunder.
And those very serious questions as to its effectiveness, brand safety, trust and critical trading mass just won’t go away.
Its much-questioned paid-for certified blue tick is now under investigation by the EU. (So is Google, which sought to “deprecate” third-party cookies before throwing in the towel, yet is still on the hook. It never rains…)
Meanwhile, they also offer a glimpse into how wealthy owners and the money people at the top of corporations think — and how disconnected they often are from the revenue.
Dynastic drama
Which takes me to the on/off/on/off/on acquisition — sorry, “merger” — of Paramount by Skydance Media.
Considering it was becoming something of a Cinderella as the other large studios coalesced, it certainly appears that Shari Redstone, daughter of Viacom founder Sumner, and her team played her controlling interest well, extracting an $8bn price.
About $6bn of this is coming from mega-wealthy Oracle founder Larry Ellison, whose son David (pictured, top) leads the smaller media and production company Skydance. (Private equity firm RedBird Capital Partners is stumping up the remainder.)
It’s all rather dynastic. Ellison the younger has a number of very high-profile executive producer credits for box office hits and is being touted as the ultimate tech and media polymath.
Having witnessed tech’s infiltration, subsumption and corruption of advertising, this rings alarm bells for me and some of the language around the deal doesn’t reassure. Nor does Variety’s excellent piece on it.
Amid the usual blah blah about “rebuilding streaming into a differentiated platform” and “boosting engagement, reducing churn and driving lifetime value”, there’s little mention of the human and creative assets themselves, without which…
Targeted $2bn savings. A likely sale of Paramount Pictures. Uncertainty over the future of CBS.
AI remains inconsistent
There is, however, the now-obligatory reference to AI to “enhance creativity and efficiencies”.
AI seems to be rather more enduring as a flavour du jour than some other recent industry fixations. It has certainly impressed with its ability to permeate the internet’s main thoroughfare, porn. It’s also got impressive songwriting capabilities, which frankly exceed mine if not Taylor Swift’s by a million miles.
However, while it’s seldom incompetent, nor is it yet consistent. Witness something as everyday and prosaic as your text autocorrect, where AI-powered programs’ contextual sensitivities are still pretty infantile and frequently offer up complete gibberish.
I’d argue that such consistency and reliability are the keys to really universal adoption, world domination, untold wealth and so on.
But it’s the way the Skydance deal is already talking about wholesale redundancies and Paramount’s creative focus that’s most concerning. Which yet again begs the question: why on earth would you buy something only to eviscerate it?
A wise insider told me long ago that some 90% of mergers and acquisitions somehow fail.
Perhaps they should ask Elon Musk…
Bob Wootton spent 40 years working in advertising, first as a media buyer at some of the UK’s leading agencies before joining the trade body ISBA in 1996, where he was advertising and media director for 20 years. He is also the founder of Deconstruction, a media and tech consulting business, and presents The Guitar Show on YouTube.