Paramount–Skydance Merger in Crisis: Trump Lawsuit and Cost Cuts Jeopardise Deal

In what is considered one of the most significant developments in recent years within the media and entertainment sector, the proposed merger between Paramount and Skydance has captured widespread attention among business analysts. From severing ties with long-time advertising partners to facing a high-stakes legal dispute with former US President Donald Trump, the deal is unfolding as a complex saga marked by cost-cutting strategies and regulatory delays.

Battling Legal Woes

The Paramount–Skydance merger now hangs in the balance, beset by a delayed FCC review and legal complications stemming from a $20 billion (£14.73 billion) lawsuit filed by Donald Trump against CBS.

Analyst Rich Greenfield has warned that the deal could fall apart, as Paramount's board remains hesitant to approve a settlement that might be perceived as a bribe while awaiting federal clearance. Political figures and watchdog groups have raised concerns over potential violations of bribery and press freedom laws.

Should the merger fail to close by 7 July, the timeline may be extended until October. However, both companies would retain the option to walk away without triggering a $400 million (£294.55 million) breakup fee.

The lawsuit in question claims CBS' 60 Minutes deliberately edited a 2020 campaign interview with Kamala Harris to misrepresent Trump's views. Mediation efforts have so far failed, and no resolution has been reached.

Saying Goodbye to Long-Term Advertising Partner

Paramount Global has reportedly ended its decades-long partnership with WPP Media (formerly GroupM) as part of a broader $500 million (£368.18 million) cost-saving strategy ahead of its potential merger with Skydance Media.

This move is aligned with Paramount's ongoing push to streamline operations, including cuts in marketing, communications, finance, legal, and technology departments.

Meanwhile, WPP is undergoing its own restructuring, rebranding GroupM to WPP Media and merging agency brands EssenceMediacom, Mindshare, and Wavemaker into a unified profit-and-loss model. This transformation has resulted in significant staff reductions, affecting up to 45% of WPP's US workforce.

Paramount's decision to cut ties with WPP Media reflects a mutual emphasis on operational efficiency and cost optimisation in a media landscape that is rapidly changing.

A Complicated Merger History

The path to merging Paramount Global with Skydance Media has been fraught with negotiation breakdowns, revised terms, and regulatory scrutiny. Initially valued at $8 billion (£5.89 billion), the deal was set to combine the two entities into a powerhouse worth around $28 billion (£20.62 billion).

Talks initially collapsed in June due to disputes over key terms. However, discussions resumed in July 2024, resulting in a revised deal in which Skydance would acquire National Amusements—Paramount's controlling stakeholder—for $1.75 billion (£1.29 billion).

Subject to regulatory approval, the merger is expected to finalise in the first half of 2025. Skydance CEO David Ellison will helm the new entity, with former NBCUniversal CEO Jeff Shell as president. The merger is seen as a strategic effort to rejuvenate Paramount's position amid growing competition.

Consolidating Media Powerhouses

The merger combines Paramount's storied legacy—including assets like Paramount Pictures, CBS, Nickelodeon, MTV, Paramount+, and Pluto TV—with Skydance's modern production success in franchises such as Top Gun, Mission: Impossible, and Star Trek. Skydance also brings experience in animation, gaming, and virtual reality.

The collaboration is expected to amplify both companies' content creation and distribution strengths.

Nonetheless, the merger is not without challenges. Regulatory scrutiny continues, and concerns over market consolidation and reduced content diversity persist. The deal's implications for theatre owners and the wider entertainment industry are also under the microscope.

Despite these obstacles, the proposed merger signals a bold move to stay competitive in a landscape increasingly dominated by streaming giants. If completed, it could redefine the next chapter of global media leadership.