Over the summer we noted how the brunchlords in charge of Paramount (CBS) decided to eliminate decades of MTV News journalism and Comedy Central history as part of their ongoing and utterly mindless “cost saving” efforts. It was just the latest casualties in an ever-consolidating and very broken U.S. media business routinely run by some of the least competent people imaginable.
We’ve noted how with streaming subscriber growth slowing, quarterly returns have stagnated. So media giants (and the incompetent brunchlords who usually fail upward into positions of unearned power within them) have turned their attention to all the usual tricks: layoffs, pointless megamergers, price hikes, and weird and costly consumer restrictions to goose quarterly earnings and generate tax breaks.
That of course includes Paramount, which recently announced a major merger with Redbird/Skydance that executives promised would result in untold and amazing new “synergies,” helping transform the company into a next-generation streaming juggernaut. Of course what’s actually happened, as usual, has been a whole bunch of layoffs, the second round of which hit this week:
“Paramount is looking to save some $500 million and plans to lay off 15 percent of its U.S.-based employees. Tuesday’s layoffs were the second round, following a first wave of job cuts in mid-August.”
In a statement, Paramount executives called the mass firings an evolution:
“Like the entire Media industry, we are working to accelerate streaming profitability while at the same time adjusting to the evolving landscape in our traditional businesses. Days like today are never easy. It is difficult to say goodbye to valued colleagues, and to those departing, we are incredibly grateful for your countless contributions.”
The new company is being overseen by Larry Ellison’s son David, who first used family Oracle wealth to purchase his role as a Hollywood producer, then received a $6 billion gift from dad to make the merger possible. Paramount had struggled with its ingenious strategy of charging higher and higher rates for lower and lower quality services, and eyed a merger as an executive escape hatch.
Again, the promise here is that this results in a better, leaner, more interesting company, but when it comes to media deals like this, that’s rarely the case. There’s hardly a single major media merger in the last twenty years that genuinely improved product quality or the fortunes of employees or consumers. And it’s almost never the strategically incompetent higher-level executives that wind up paying the price.
In reality, all the costs of debt-riddled transactions are borne by either consumers (in the form of higher prices, lower-quality services, and annoying new restrictions) or lower and mid-level employees in the form of layoffs. The AT&T–>Time Warner–>Discovery series of mergers was the poster child for the madness and dysfunction caused by this “consolidation for consolidation’s sake” mindset.
Wall Street wants its improved quarterly returns at any cost. It doesn’t care if those short term profits result in a lower quality product, consumer backlash, a loss of our collective history, or permanent damage to the brand. That’s a problem for somebody else to figure out after the extraction class has already made their money on the front end.
It’s a pointless doom loop that’s infected both entertainment media and traditional journalism. By the time any sort of check comes due for executive incompetence, they’ve either retired on the back of outsized compensation, or are off to another company to repeat the entire process all over again, having been financially disincentivized from learning absolutely anything from the experience.