How David Ellison made Skydance part of Hollywood’s smart bet
The equity deal with RedBird and CJ Entertainment valued Skydance at around $ 2.3 billion. At its current rate of growth – revenues are expected to increase by over 40% this year from last year, the company said – Skydance could be worth $ 5 billion or more in a few years. Mr. Ellison would most likely pursue a sale or initial public offering at that time.
Skydance could quickly become an acquisition target. After Amazon’s purchase of MGM for $ 8.45 billion, content engines with access to established intellectual property, Skydance included, are an exciting prospect. Even if Skydance separates from Paramount next year, the expiring deal gives Skydance an incredible advantage: the continued right to invest in Paramount franchises with which Skydance is already involved. “Star Trek.” “Impossible mission.” “Jack Ryan.” “GI Joe.” “Top Gun.”
Comcast, which needs to boost its Peacock streaming service, could be a buyer. The same goes for Apple, which has considered buying MGM. This spring, Skydance received notices from a Special Purpose Acquisition Company, or SPAC, led by Kevin A. Mayer, the former head of Disney streaming.
“It is true that we have had some interesting conversations lately, but our growth curve is still important and if we continue to work hard and stay adaptive, that should give us a lot of options going forward,” said Mr. Ellison, looking more like an MBA graduate than a budding entertainment mogul.
Skydance has major expansion plans. Amy Hennig, a former senior creative executive at Electronic Arts, is building a video game division. Another department focuses on virtual reality content. Mr. Ellison recently hired Luis Fernández, a 20-year Disney veteran, to start a consumer products business. But Skydance’s future hinges on scripted content and the extent to which it can build pay-TV and movie franchises out of thin air, as it appears to have done with “The Old Guard.”
Some people in Hollywood remain skeptical that Skydance has the creative expertise to make this happen. Mr. Ellison and his team have excelled in editing projects (29 movies and TV series sold to streaming services in two years). But the execution – the quality – has been inconsistent. And quality matters: Skydance-made “6 Underground“, an action comedy directed by Michael Bay, drew the sights of an 83 million Netflix blockbuster in late 2019. But the film also received less than stellar reviews, diminishing Netflix’s interest in a sequel.
A flood of well-reviewed original hits would force Hollywood to finally take Mr. Ellison seriously as a creative powerhouse.