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Now on to some Skydance-adjacent news…

Jeff Shell is back! I know, it hardly seems like the former Paramount president has been out of the spotlight very long. It was only April when I reported that Shell would step down from the Ellison-owned studio amid a bizarre scandal involving company secrets that he may or may not have disclosed to a notorious Vegas gambler/semiprofessional whistleblower whose wife wanted a TV show. That rise and fall followed Shell’s previous exit as C.E.O. of NBCUniversal, in 2023, after an investigation into an allegedly inappropriate relationship with a female subordinate.

Now, after a summer in the severance-pay wilderness, Shell is plotting his next next move—and doing it with some familiar faces. Per four sources, he’s planning to launch a stand-alone investment vehicle to acquire and manage linear television assets. Not a roll-up, per se, but Shell will identify and either acquire or invest in cable TV networks, individual stations or station groups, and other formerly valuable brands that have withered in the streaming age. Think BET, MTV, HGTV, History Channel—the networks that managed to mean something to cable viewers—plus stations like those owned by Sinclair or Nexstar, or maybe some owned-and-operated stations that the broadcast networks want or need to sell. Declining assets, almost all of them, and hardly the sexiest corner of the entertainment business, but still quite valuable, at least based on the annual revenue they generate. And not exactly positioned well inside publicly traded media conglomerates whose shareholders demand quarterly growth and a future-proof narrative.

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According to sources familiar with his thinking, Shell believes moving linear assets to a private vehicle will allow him to ride out the slow decline of TV while using the cash to build ancillary businesses. Sort of like Versant, the Comcast spinoff of its linear networks run by Shell’s old NBCU colleague Mark Lazarus, which recently bought the sports technology company Full Swing to pair with its Golf Channel. But Versant is still a public company, subject to the whims of investors and analysts, and ShellCo would be private, presumably free to extract water from the melting ice cubes without having to articulate, say, a coherent streaming strategy for CNBC—though CNBC and other channels will likely have some streaming future, giving Shell the possibility of further upside. And not coincidentally, working outside the public sphere might help Shell avoid the tight regulations and scrutiny that led to his previous defenestrations.

And to fund the whole thing? I’m told Shell is negotiating with RedBird Capital, the media investment firm that backed Paramount, now Skydance, and employed him before he went to work directly for Ellison after the Paramount deal closed. Shell and RedBird’s Gerry Cardinale have stayed in contact, I’m told, and when Shell pitched his plan, Gerry agreed to write the checks.

The size of the financial commitment will be substantial but is dependent on the deals Shell identifies. He could go after groups of networks or stations, or pursue smaller transactions for distinct brands or businesses. The venture likely won’t launch until the first or second quarter of 2027, after Shell’s noncompete with Paramount expires in April—though he doesn’t plan to compete directly with his former employer. Both Shell and reps for RedBird and Paramount declined to comment. (Usual disclosure: RedBird is also an investor in Puck.)

It’s an interesting move, especially given how little the investor and analyst communities seem to value linear assets. That’s actually part of the Shell thesis—that traditional TV, while shrinking, isn’t disappearing anytime soon. The U.S. pay TV business lost 885,000 subscribers in the most recent quarter—not great, but a marked improvement compared to the 1.34 million lost during the same quarter last year, per MoffettNathanson. The firm suggests that the sub count across cable, satellite, and virtual providers like YouTube TV could stabilize at around 50 million subscribers by 2030.

That would be off about half from Peak Cable in 2010 and down from the 62 million that currently pay for a linear bundle. And while skinnier and sports-specific packages will further chisel away at channel carriage, the networks business will continue to generate revenue for years—or at least as long as the NFL airs its games on broadcast. Fox’s Lachlan Murdoch basically threatened to mobilize the family’s political allies and push for an end to the league’s antitrust exemption unless a big chunk of games remain on broadcast, so the full transition to streaming is still a ways away. Or at least, so the theory goes.

Still, despite all the chatter about Disney and Paramount and Versant offloading their zombie cable networks, we haven’t seen any activity. In fact, Ellison pledged the opposite with CNN, vowing to keep the influential news network and its $700 million in profit last year to help pay for the Warner Bros. Discovery merger. But now that the merger is done, and Skydance is loaded down with about $80 billion in debt, the strategy could change with respect to other networks. I’ve heard of at least one potential buyer for Comedy Central, and Tyler Perry was circling BET at one point.

For RedBird, the Shell venture could even act as a complement to the Skydance investment. If Ellison wants or needs to sell assets, Shell could be sitting there eager to take networks or stations off his old boss’s hands. I think Shell and his potential operational partners would probably be happy to buy BET, and maybe Nickelodeon. Disney, with its share price under pressure and investors clamoring for a growth narrative, just sold its 50 percent interest in A+E Networks to Hearst, suggesting that new C.E.O. Josh D’Amaro might be open to further offloading of the “non-core” channels like Freeform or even FX. (Hearst, while private, might also want to think about jettisoning Lifetime or History while they’re still pretty valuable.)

Shell plans to be waiting with open arms, hoping to get a discount on the cashflow. Look at how much value the P.E. firm TPG is squeezing out of DirecTV since acquiring the 70 percent owned by AT&T, whose shareholders were practically demanding it be sold due to cord-cutting. Fitch estimated this summer that DirecTV is generating about $3 billion in free cashflow a year. (Disclosure: TPG is an investor in Puck.)

Cable TV may be dying, but one of the genius things about that business is how easy it is to use and how hard it is to cancel, especially for old people. There’s likely still a whole bunch of money to be made based on that factor alone.

See you Monday,
Matt

Got a question, comment, complaint, or a prayer for the Dodgers? Email me at Matt@puck.news or call/text me at 310-804-3198.