Paramount’s New Top Gun

After two years of drama, David Ellison got his merger with the historic studio. The reward is a company in existential crisis. What’s his plan to save it?  By Lucas Shaw and Hannah Miller

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Episode Transcript

Speaker 1 (00:00):
Paramount's new top gun. After two years of drama, David
Ellison got his merger with the Historic Studio. The Reward
is a company in existential crisis? What's his plan to
save it? By Lucas Shaw and Hannah Miller Read aloud
by Mark Leedorf. On August thirteenth, David Ellison assembled his

(00:24):
leadership team on the Hollywood lot of Paramount Pictures the
start of a new era the one hundred and thirteen
year old studio. One of our biggest priorities is actually
restoring Paramount as the number one destination for the most
talented artists and filmmakers in the world, Ellison said, fiddling
with his aura ring and looking out at the press
huddled in the studio's commissary seated at the front of

(00:47):
the room. Ellison took questions for the next half hour,
deflecting inquiries about his relationship with President Donald Trump while
praising CBS News and boasting of big plans for more
Star Trek and Transformers movies. Then he walked off stage
for lunch, though he didn't get to do much eating
as deputies and pr people tried coaxing reporters to interrogate

(01:08):
Ellison's lieutenants everyone jockeyed for time with Hollywood's newest mogul. Recently,
Ellison completed an eight billion dollar transaction that makes him
the controlling shareholder and chief executive officer of Paramount, the
owner of CBS, M t V and the namesake movie studio.
The deal took two years, spanning two US presidential administrations

(01:31):
and four Paramount CEOs. Sherry Redstone, the previous controlling shareholder,
initially rejected Ellison's outreach, unwilling to part with her family's
prized possession. After Redstone decided to sell her own CEO
and several fellow board members objected to the terms and left,
she pushed ahead, only to waffle at the last minute,

(01:53):
unsure of whether she wanted to make a deal or
whether Ellison was the right buyer. When they finally came
to an in July twenty twenty four, that was only
the beginning of another drama. The Trump administration would go
on to hold up the transaction for months. It approved
it after CBS paid sixteen million dollars to settle a
lawsuit over the editing of an interview with Democratic presidential

(02:16):
candidate Kamala Harris. Ellison never wavered, and the reward for
his patients is a company in a decade long decline.
Redstone's father built his media empire on the cable network's MTV, Nickelodeon,
and Comedy Central, all of which have shed viewers to
streaming services and social media. The movie Studio has withered

(02:37):
from a lack of investment, losing money for the last
two and a half years, and Paramount Plus, the company's
highest profile streaming service, is a fraction the size of
its peers. People spend less time watching Paramount Plus than Amazon,
Disney Plus, Hulu, or Netflix, to say nothing of YouTube.
Some analysts have argued that Paramount should just shut it down.

(03:01):
In between SIPs of diet coke, Ellison said he had
a turnaround plan. Paramount would slash at least two billion
dollars from its budget by identifying inefficiencies. While Ellison didn't
specify exactly how the company is about to fire thousands
of workers and cut back on programming at its cable networks,
according to several people familiar with the company's thinking, it

(03:23):
has also discussed selling real estate and TV networks in
Latin America. Yet at the same time, he said he'd
invest in an overhaul of Paramount plus more. Immediately, he'd
been busy. He closed a seven point seven billion dollar
deal for exclusive rights to the Ultimate Fighting Championship, lured
the creators of Stranger Things from Netflix, and negotiated a

(03:45):
partnership with Legendary, the studio behind the Done and Godzilla franchises.
Having time to line up deals was one of the
benefits of a long close, Ellison told Bloomberg News in
August after the UFC deal. There aren't many, but this
was one of them. Ellison declined to be interviewed for
this article, which is based on interviews with more than

(04:07):
two dozen employees and business partners, many of whom didn't
want to be named, discussing private conversations. Everyone in Hollywood
wants Ellison to inject fresh energy into the storied studio,
part of a company that's suffered from years of mismanagement
and infighting. If he succeeds, he could help revitalize a
reeling industry in the process. Tens of thousands are out

(04:30):
of work in Hollywood because of the decline of cable
TV productions moving overseas, two labor stoppages, and the pandemic
studios that once defined culture have surrendered their power to
interlopers from Silicon Valley, such as Instagram, Netflix, and YouTube.
It's very important for Ellison to succeed, says Ari Emmanuel,

(04:52):
CEO and executive chair of TKO Group, a sports and
entertainment promoter and agent to the stars. Then you have
another student udio in the system, a company that deeply
cares about movies and TV and sports, and another bidder
with deep pockets. Ellison was born and raised in Woodside, California,
a tony town just a few miles from the epicenter

(05:13):
of Silicon Valley. He's forty two, making him the youngest
CEO of a major media company and the only one
who came of age with the Internet. He's new blood
in a town run by a jar intocracy. I've been
around this business a long time, says Jeff Shell, Paramount's
president and the former CEO of NBC Universal Media. He

(05:34):
thinks different and he talks different. Not everyone is so confident.
Ellison has no experience leading a company of this scale,
and his promises about overhauling its technology are vague. Ellison's
UFC deal stunned rivals, none of whom came close to
his offer. Paramount paid the league more than twice as
much as it was getting under its previous deals. Before

(05:57):
he even took control of the company, Ellison few in
public with the creators of south Park, one of the
company's most valuable assets, over a new contract. Members of
his news division are worried that Ellison is going to
tilt coverage to the right to placate Trump. The company
will be taking prominent Trump critic Stephen Colbert off the air,
a decision that was made before Ellison took over. When

(06:20):
pressed for details on his plans at the press conference lunch,
Ellison fell back on the same response. We're less than
a week in, he said, a bowl of grains, seaweed
and cucumber in front of him. We're just getting our
arms around the company. One of the biggest reasons to
believe in Ellison may be his last name. He financed
the deal with money from his father, Larry, the second

(06:43):
richest man in the world as of mid September, according
to the Bloomberg Billionaires Index and Redbird Capital, a private
equity firm led by former Goldman Sachs banker Jerry Cardinale.
Paramount appears to be just the first step in the
Ellison family's vision for a new kind of media giant.
On September eleventh, Bloomberg News reported that the family was

(07:04):
preparing a bid for rival Warner Brothers Discovery, according to
people with knowledge of the matter. Paramount and Warner Brothers
decline to comment. Trump has also floated the idea of Larry,
the co founder of Oracle, buying TikTok, a suggestion neither
Larry nor Oracle has officially responded to. Family control of
the company allows them to think long term rather than

(07:26):
fixate on quarterly results. Our largest shareholder is the second
richest person in the world. Shell says that seems like
a good thing. David is cagey about discussing his father's involvement,
though Oracle and Paramount are already in talks about a
one hundred million dollar software deal that would make the
media company one of Oracle's top customers. Larry has avoided

(07:49):
the press in recent years, and the deal is structured
so David is officially in control. Then again, Larry isn't
worth roughly three hundred and sixty billion dollars because he's sentimental.
Larry and Barbara Booth. David's mother divorced in nineteen eighty
six when David was three. Booth encouraged David's Cenophelia, taking

(08:10):
him and his sister, Meghan to the theatre on the weekends. David, Meghan,
and their mom amassed more than three thousand VHS tapes.
Star Wars and The Terminator were Booth household favorites. David
interned at Oracle in high school, but he eventually enrolled
at the University of Southern California's School of Cinematic Arts
to pursue a Hollywood career. He dropped out. Ellison has

(08:33):
spent his career trying to prove he's not a NEPO baby.
A lot of aspiring filmmakers moved to Los Angeles to
chase stardom. Most of them don't get to start off
by financing and acting in a sixty million dollar movie
about World War One pilots starring future Oscar nominee James Franco.
Nor do most twenty seven year olds get to raise
three hundred and fifty million dollars from JP Morgan Chase

(08:57):
for a production company after that first movie. Flyboys is
a box office bomb. The names of both his company,
sky Dance and the film were inspired by Ellison's love
of planes. He's been a pilot since he was a teenager.
When I first started, I got asked all the time,
so does he come into the office, says Dana Goldberg,
who joined sky Dance in twenty ten to oversee its films.

(09:19):
Late people, she says, thought Ellison was a walking checkbook
that hung out on fancy boats. For the first fifteen
years of his career. David wasn't even the most prominent
of Larry's kids in Hollywood. Megan founded Anna Purna Pictures
in twenty eleven and financed artistically daring films from directors
such as Paul Thomas Anderson, Catherine Bigelow, Spike Jones, and

(09:42):
David O. Russell. These movies earned Megan Oscar nominations, including
four for Best Picture, Bigelow's Zero Dark Thirty, Jones's Her,
Russell's American Hustle, and Anderson's Phantom Thread. Anna Perna's Large
Ass quickly turned Megan into the toast of Hollywood. David,
in contrast, funded big action movies such as Jack Reacher,

(10:04):
an adaptation of the best selling Lee Child book series,
starring Tom Cruise, and World War Z, a science fiction
thriller starring Brad Pitt. The day before, Megan earned her
fourth Oscar nomination for Phantom Thread, Ellison's remake of Baywatch
competed for five prizes at the Razzies, an awards show
recognizing the year's worst movies. It captured just one, the

(10:27):
Razzie nominee So Rotten You Loved It, which is given
to the film voters thought was unfairly nominated. Meghan treated
Annapurna like a benefactor of the arts and went to
her father when she needed money. David treated his dad
like a real investor, raised outside money and hosted regular
calls with the board. Larry's friend David Geffen, set both

(10:48):
kids up with lawyers at one of Hollywood's top firms,
Ziffren Brittenham. It was Skip Brittenham who helped Skuidance Media
secure a deal in twenty ten to co finance movies
produced and released by Paramount Pictures. Ellison's first collaboration was
True Grit, which grossed two hundred and fifty two million
dollars and earned ten Oscar nominations. It remains sky Dance's

(11:11):
most nominated film to date. There's no question that at
first people felt like he was gifted a head start,
says Rob Moore, who was then vice chairman of Paramount Pictures.
There was skepticism. There was also reason to believe Ellison
wouldn't be around long. Co financiers such as sky Dance
typically put up a minority percentage of the budget and

(11:32):
have little creative say. The studios use them to offload
risk on movies in which they have less confidence. That's
why most movie financiers eventually go out of business. Yet
Ellison made it clear that he wasn't going to just
write a check. He wanted creative input and targeted the
studio's biggest franchises like Mission Impossible, G I. Joe, and

(11:54):
Star Trek. At the time, the bet on Mission Impossible
and Tom Cruise was a risk. The third movie in
the series grossed just three hundred and ninety eight million dollars,
the lowest total in its history. Cruz looked as if
he could be a fading star. While Paramount was debating
the future of the Mission Saga, Ellison vouched for Cruise

(12:15):
and helped negotiate his deal for a fourth film. Mission
Impossible Ghost Protocol, which grossed six hundred and ninety five
million dollars and revived the franchise. Cruz later attended Ellison's
wedding to Sandra Modick, where he won a break dancing competition.
David believed in Tom more than anyone else at Paramount,
More says Ellison's strategy was less sexy than his sister's,

(12:39):
but it made his business more successful. Megan didn't respond
to a request for comment. After Paramount re upted its
deal with sky Dance in twenty thirteen, Ellison diversified his
company beyond the volatile movie business. In twenty fourteen, Skydance
expanded into TV, producing Manhattan, a drama about the project

(12:59):
to Bill b the Atomic Bomb that aired on WGN America.
The show got good reviews, but the network couldn't deliver
a big audience. Its next show, the sitcom Grace and Frankie,
became one of the longest running hits on Netflix. Skydance
began producing a couple of TV shows every year, including
both hits Jack Ryan and Missus science fiction series Altered Carbon.

(13:23):
In twenty sixteen, the company raised an additional seven hundred
million dollars to expand into video games and animation. Ellison
is an avid gamer whose favorite titles include Assassin's Creed
and Red Dead Redemption two. In twenty eighteen, he sold
a minority stake in sky Dance to Chinese technology giant Tencent,
and two years after that he raised money from Redbird

(13:46):
and South Korean entertainment conglomerate CJANM. The fresh capital let
Ellison invest in original movies that weren't for paramount namely
action films and animation for Amazon Prime Video, Apple TV
Plus and Netflix. All things considered, Ellison appeared to most
employees and colleagues to be a regular guy. He remained

(14:08):
close with a small group of college friends and asked
employees about their weekends. He made sure he knew everyone's name.
He splurged on his staff, nice offices, holiday parties at
the best restaurants, good health care, but exhibited few outward
signs of his wealth. He wore James Purse t shirts
casual elegance that befit a young producer. Still, he also

(14:31):
wore a Richard Meal luxury watch and drove Ferraris and
Lamborghinis to the original office in Santa Monica, which was
located in a hangar that housed his cars and planes.
He and his wife would take a helicopter from the
Santa Monica Airport to get lunch at a restaurant in
Camarillo that made their favorite burger. He was a regular
at Nobu Malibu, part of the chain of high end

(14:52):
Japanese restaurants. Larry has invested in and a fixture at
Indian Wells Tennis Garden, the facility near Palm Springs his owns.
David liked to tell people stories about learning from Pixar
Animation Studios co founder Ed Catmill and Apple co founder
Steve Jobs. It didn't feel like a name drop to him.
Jobs in particular, was one of his father's closest friends

(15:15):
and a mentor. Although David rarely mentioned his father and
sky Dan's employees would avoid bringing him up, Larry made
the occasional appearance at a movie premiere and lent his
sprawling two hundred and thirty acre since a Porcupine Creek
resort for Skydance corporate retreats. The two had been distant
while David was growing up, but they became closer when

(15:36):
he was a teenager, taking trips around the world on
Larry's supriyacht. Larry fretted often that his son didn't hire
private security to protect him. During sky Dance's early days,
David insisted on appearing normal. This has from day one
been David's company. Goldberg says, I am not saying they
haven't had conversations, but in day to day business, it's

(15:57):
always David's company. When streaming services started to pull back
on spending in twenty twenty two, sky Dance, like a
lot of large independent production companies, was left exposed. Its
investment in gaming hadn't yielded many titles, let alone hits.
Its animated movies didn't draw large audiences. It made money

(16:18):
producing films and TV shows for streamers, but had developed
a reputation for making commercially viable projects that were often
over budget. Sky Dance lost more than eighty million dollars
in twenty twenty one and posted a narrow profit in
twenty twenty two. Ellison would need to consider strategic options
to live up to his investors lofty expectations. In October

(16:40):
of that year, he raised four hundred million dollars in
an investment round that valued the business at more than
four billion dollars. When sky Dance employees discussed the future
of the company, they offered three possibilities. It could go public,
sell to a larger company such as Apple, or buy
a studio. Ellison had long had his own on Paramount.

(17:01):
In theory, it made sense. Paramount is a storied studio
that means a lot to filmmakers, and it had been
Ellison's first home as a producer. It's not as if
Walt Disney or NBC Universal were up for sale, but
in reality it seemed laughable. Sky Dance was a fraction
of its size. With the support of investors, however, including

(17:21):
his dad, Ellison started reaching out to Redstone in twenty
twenty three. We'll be right back with Paramount's new top gun.
Welcome back to Paramount's new top Gun. Hellison is now
trying to solve a problem that's bedeviled many of Hollywood's
sharpest minds. Paramount's cable networks, the foundation of the business,

(17:45):
have been losing viewers for a decade. The company was
years late to streaming, and its online business isn't profitable
enough to offset the falling profits from cable. Ellison could
abandon his main streaming services either by selling or merging them.
But he didn't buy Paramount to surrender to Amazon, Netflix
and YouTube. He wants to win. Ellison described this challenge

(18:08):
in aquatic terms at the press conference. Paramount swam to
the middle of a lake and wasn't sure how to
get to the other side. It's too late to turn back,
so how do you get across a Dramatic corporate overhaul
will begin in November, according to the people familiar with
the company's plans. In addition to the firings, the people
say the company's main streaming services, Paramount Plus, bet Plus,

(18:32):
and Pluto, which are running on three technology platforms, will
move to one. This, they add, will streamline data collection
and in turn improve viewing recommendations, reduce cancelations, and make
for more efficient marketing. Ellison will shift Paramount's relationship with
Amazon Web services, they say, to a cloud computing platform

(18:52):
Oracle is developing, you actually have to make sure that
you have tech products that are competitive with some of
the best coming out of Silicon Valley, he said at
the press conference. We want to be the most technologically
forward media company. Dramatic changes are also coming to Paramount's programming.
Ellison has pledged to increase movie output to fifteen titles

(19:13):
a year and in a few years as many as twenty.
Paramount released ten movies last year and eight the year before.
The company won't premiere movies on its streaming services, but
it wants to use those films to drive customers to
Paramount Plus. He's also been discussing buying the Free Press,
the digital media operation built on substack by Barry Weiss,

(19:34):
a former New York Times columnist. According to people familiar
with the company's thinking, Weiss would be a controversial hire
at CBS given her right leaning politics and active support
for the state of Israel, but in Ellison's thinking, she
could infuse new energy into the news division. Now that
he's CEO of a company with nineteen thousand employees, Ellison

(19:56):
will have to delegate. He's tasked George Cheeks, a well
regarded TV lifer who was already running CBS and served
briefly as Paramount co CEO, with managing the TV networks.
He put the studio in the hands of two old friends,
Goldberg and Josh Greenstein, a marketing savant who met Ellison
in the early days of his partnership with Paramount he

(20:18):
recruited Cindy Holland, who worked at Netflix for nearly two decades,
to run the streaming business. Holland was responsible for many
of Netflix's earliest hits and has strong relationships with filmmakers.
The previous ownership leaned on shows produced by Taylor Sheridan,
the creator of Yellowstone. The Sheridan Verse helped Paramount Plus

(20:38):
grow to more than eighty million customers, but the service
suffers a higher cancelation rate than industry average and accounts
for less than two percent of TV viewership. According to Nielsen,
YouTube accounts for thirteen percent. Netflix hovers between eight percent
and nine percent. Holland wants to make Paramount Plus a
daily habit for customers that won't be cheap. Even though

(21:01):
he's a billionaire, Ellison doesn't have the money to fund
a media company valued at thirty billion dollars. His father does,
but the extent of Larry's engagement is unclear. Larry hasn't
been involved in the integration of the two companies or
strategic planning, and has made few requests of management. Saffra
kats Oracles CEO, and Paul Marinelli, who leads Allison's family office,

(21:24):
have joined Paramount's board. He and his dad speak regularly,
says Emmanuel, who's advised Allison for years. His father has
full trust in David. Ellison has never been shy about
offering an opinion from the moment he set foot on
the Paramount lot. Ellison talked about reviving Top Gun. It
was the first movie I said I wanted to make

(21:46):
when we signed our original deal with Paramount Pictures in
twenty ten. Ellison told Bloomberg News in twenty twenty two,
Paramount didn't believe in the idea, projecting it would be
a box office dud Ellison spent years working with crews
and producer Jerry Bruckheimer to find the right story. Top
Gun Maverick became the second highest grossing movie in Paramount history,

(22:08):
trailing only Titanic. It further cemented his partnership with crews.
Other interactions haven't gone as smoothly. Under the terms of
the merger, Ellison had the right to approve transactions of
a certain size and any changes to contracts with select talent.
Earlier this year, the creators of South Park, Trey Parker
and Matt Stone, accused him of trying to suppress the

(22:30):
value of their show. Parker and Stone had been negotiating
a new deal with Paramount, as well as a new
deal to license their show to streaming services. Ellison intervened.
He didn't want to sign a ten year streaming deal
and thought Paramount was paying Parker and Stone too much.
The South Park Guy's sense was that Ellison had overstepped,

(22:50):
and they later mocked Paramount settlement with Trump. In the
first episode of the new season, Paramount, Parker and Stone
resolved their differences. Ellison also intervened with Taylor Sheridan, the
company's biggest hit maker. Warner Brothers had decided to produce
a movie Sheridan wrote before he worked at Paramount. Ellison
asked about securing distribution rights for Paramount in certain markets

(23:13):
that made Sheridan uncomfortable, according to two people familiar with
the negotiations, Although Paramount leadership didn't love the idea of
Sheridan spending time working on a project for someone else,
they agreed. Sheridan didn't respond to a request for comment.
It's easy to dismiss these contre thomps as the result
of a trying and drawn out merger. He's a very

(23:34):
artist friendly executive. Emmanuel says he wants to be in
business with artists who have a voice. Ellison has publicly
praised Sheridan, Parker and Stone, and this season of South
Park has been its buzziest in years. The show has
mercilessly parodied Trump, including animating him in the nude and
depicting him as Satan's lover. Ellison's refusal to pose for

(23:56):
photoshoots or grant exclusive interviews suggests he's learned from other's mistakes.
He knows that even with the industry wishing him success,
he faces a steep challenge. He's not taking a victory
lap before he's accomplished anything, like Warner Brothers Discovery CEO
David Zaslof did Zaslov posed for a Vanity Fair cover
story that hailed him as the new king of Hollywood

(24:19):
months before his acquisition of Warner Brothers closed. Then he
laid off thousands of people. Nor is Ellison claiming to
have a formula guaranteeing a movie's success, as many bankers
and technologists who arrive in Hollywood say they do. He's
fond of saying the best idea wins, it doesn't matter
who proposes it or how the company operated in the past.

(24:41):
Trump nearly derailed Ellison's life changing deal, and Ellison is
eager to put those controversies behind him. As CBS struggled
with how best to resolve its lawsuit with the president,
Ellison spoke with Trump at a UFC match. Immanuel, whose
represented Ellison and Trump at various points, sat nearby. Ellison
wasn't directly involved in mediation talks, nor was he supposed

(25:04):
to talk about them, and it's not clear what was said.
Trump has since said he has a side deal with
Ellison for twenty million dollars in advertising and public service
announcements to promote causes he likes. Ellison has said that
he wasn't involved in the settlement in any way and
that Paramount followed anti bribery laws. Ellison wants to declare

(25:25):
Paramount open for business and a home for artists. He
has pushed employees to adopt the mantra lets effing go.
Many employees have taken to signing their emails LFG or
LG if they want to censor themselves. In early September,
he signed a deal with Westbrook Will and Jada Pinkett
Smith's entertainment company to develop franchises, and he told employees

(25:48):
that starting next year, they'd be expected back in the
office five days a week. But nothing captures Ellison's ambition
better than his interest in Warner Brothers. Less than two
months after swallowing one ailing media giant, he's now looking
to take down another worth twice as much. Combining Warner
Brothers in Paramount would put Ellison in charge of two

(26:08):
of Hollywood's oldest studios and dozens of cable networks, including HBO,
and potentially give him the scale to compete in streaming.
What he doesn't want is to politicize things, though that
might be hard. Paramount said it will no longer edit
interviews on its CBS news show Face the Nation following
criticism from the Trump administration, and it has hired the

(26:31):
former head of the conservative Hudson Institute as an ombudsman
for the network. At the press conference, he said, we're
an entertainment company first. Everyone left, right, young, old is
its audience. I'm not going to be in the position
of making political statements about anything.