How do you get The Roku Channel to compete with the likes of Pluto TV ? Maybe you buy Pluto TV. And Paramount+. Hell, buy the whole company while you’re at it.
Maybe Don't Cut the Cord Just Yet, Sports Fans
The Wall Street Journal on Thursday reported that Seagram’s heir Edgar Bronfman Jr., the chairman of Fubo, has not yet given up on acquiring control of Paramount Global. And he’s recruiting: In his ragtag group are Fortress Investment Group (private equity, makes sense), “Baby Geniuses” producer Steven Paul (sure, he’s already expressed interest), and Roku, the number 1 manufacturer of streaming devices.
Wait, Roku — where did you come from?
A combination could make some sense here. For starters, Paramount+ is available on Roku platforms already. And they’re probably already hanging out at the Walton Family Christmas parties: Both Paramount and Roku have deals with Walmart. Ad-supported Paramount+ is included with a Walmart+ membership, while Roku is the operating system in Walmart’s own branded TVs. Roku also sells a lot of devices in the big-box store.
Roku operates in nearly 84 million households. Though you may think of the company as a streaming-stick-maker, and it is, less than 15 percent of its revenue comes from those devices; 85 percent of Roku’s revenue comes from advertising, distributing other streaming apps (Roku gets a piece of that monthly membership fee), and the sale of button space on its remote. Look down: Netflix, Disney+, and Apple TV+ pay handsomely for that placement alongside The Roku Channel’s own button.
The Roku Channel is the number 3 app on the Roku platform. From April to June 2024, streaming hours on the channel jumped nearly 75 percent from the same months last year. Roku Channel originals include “The Spiderwick Chronicles,” the adult animated series “Doomlands,” and the parody film “Weird: The Al Yankovic Story.” Add in Pluto’s FAST channels and maybe the on-demand Paramount+ content (or at the very least, the Paramount studios content), and you’ve got a stew going.
Roku could make sense as Bronfman’s tech-forward partner, something he’s been searching for. While he and Fortress are the money here, don’t overlook Roku’s financials. At this point, Roku is actually worth more (by market cap) than Paramount Global.
The WSJ says “a bid could be made in the coming days.”
When reached, a Roku person told IndieWire, “We don’t comment on rumors and speculation.”
Paramount Television Studios, Maker of 'Reacher,' Shuts Down as Layoffs Begin at Paramount Global
At this point in the story you’re probably wondering, “ Didn’t that other billionaire buy Paramount? ” Well, yes and sort of no: Shari Redstone, Paramount Global’s controlling shareholder, has accepted David Ellison’s terms to purchase her National Amusements Inc. and then merge Paramount with his Skydance. Their deal kicked off a 45-day “go-shop” period, in which other interested companies get one last gasp to beat the current offer. The window closes on Wednesday, August 21.
It’d be a big 11th hour shakeup, especially since Skydance is already figuratively moving in , including re-designing the logo and planning $2 billion in cost-savings that have already begun with the $500 million of cuts and layoffs the current CEOs have planned. But if anyone can complicate this saga further, it’s Redstone, who wants to preserve her family’s legacy and walked away from the Skydance deal right at the finish line before she came back a few weeks later.
Fubo has good reason to want Paramount too. The sports-first streaming app would love to have the rights to stream all of CBS Sports’ content. Bronfman is probably feeling himself too. Fubo just won a lawsuit to temporarily block the launch of Venu , the joint-venture sports-streaming service from Disney, Fox, and Warner Bros. Discovery. Fubo argued — and the judge agreed — that live TV streamers like Fubo are forced to carry a bunch of lesser channels in order to keep premium sports, driving up costs in the process. Venu on the other hand could exclusively get a skinny bundle of just sports and cannibalize its own business and other competitors. But if you can’t beat ’em, maybe join ’em.
Bronfman Jr. never formally bid on National Amusements in the first go-around. The only group to do so was private equity firm Apollo with the backing of Sony , and they backed down once Redstone agreed to Ellison’s offer. Former Paramount boss Barry Diller briefly thought about it, but now he’s out too. No other offer has been submitted during the “go-shop” period, that is if you don’t count this one .
Bronfman though, even with his A-team, likely doesn’t have the money Ellison can pony up if he needs to (his dad is Oracle billionaire Larry Ellison). To make the deal, he’d have to match the $1.75 billion offer for NAI and pay Skydance a $400 million breakup fee, as well as $1.5 billion to Paramount’s balance sheet, but he probably doesn’t have any other capital to inject into Paramount the way Ellison can.
Analyst Rich Greenfield with LightShed Partners also speculated in a Friday note that whatever Bronfman has planned, it probably isn’t what Skydance has already laid out. He wrote Bronfman would likely “dramatically scale back streaming” (bye bye Paramount+), sell some assets (BET? All the cable networks?), and turn Paramount into an arms dealer (like Sony). That might not be great for Hollywood creatives, and certainly not the fit of the guy who helped Paramount make “Top Gun: Maverick.”
However, WSJ reports that Bronfman could give current shareholders the option to own a bigger stake of the company than Skydance is currently offering. Greenfield said Bronfman’s bid could pose less legal risk or just be a way to help mitigate a potential shareholder lawsuit over the Skydance deal, but regardless of what the offer ends up looking like, it all boils down to which direction Redstone wants to go.
Redstone has some thinking to do.
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