Bob Bakish is ousted as CEO of Paramount Global as internal struggles explode into public view
Paramount Global’s months-long internal struggles spilled into full view Monday as Chief Executive Bob Bakish was ousted and pressure mounted for the company’s directors to accept — or reject — a takeover bid by David Ellison’s Skydance Media.
Moments before the company announced its first-quarter earnings, Paramount issued a statement announcing Bakish’s departure. The company said three of its top entertainment executives would run the firm: Paramount Pictures CEO Brian Robbins; CBS CEO George Cheeks; and Showtime/MTV Entertainment Studios chief Chris McCarthy.
Bakish’s firing comes during a tumultuous period for the company as its traditional TV and movie studio businesses decline amid head winds for the media industry. Bakish also was at odds with controlling shareholder Shari Redstone, who is seeking an exit.
Redstone, who has presided over the steep decline of her family’s media heirloom, is in a bind. She doesn’t want the company built by her father, the late, ferocious mogul Sumner Redstone, carved up and sold for parts at auctions. Paramount includes the CBS television network, MTV, Nickelodeon, BET and the Paramount Pictures movie studio on Melrose Avenue.
But Paramount’s common shareholders are wary of the two-phased deal with Skydance because Redstone will get a premium for her family’s shares.
Paramount is in the midst of a 30-day exclusive negotiating period with Ellison, a tech scion whose Skydance Media has teamed up with investment firms RedBird Capital and KKR to acquire Redstone’s National Amusements holding company. On Sunday, Skydance sweetened its offer by $1 billion, with money earmarked for Paramount’s B-class, or nonvoting, shareholders, according to three people familiar with the deal but not authorized to comment. National Amusements holds 77% of Paramount’s voting shares.
The exclusive negotiating period ends Friday. It is unclear whether Skydance and RedBird have given Paramount’s board a deadline to accept its revised offer. Skydance and its partners have been wrangling with Paramount’s independent board members over how much money will go to common shareholders, two knowledgeable people said. Skydance and its partners have pressed for more of the proceeds to pay down Paramount’s debt.
The company’s credit last month was downgraded to “junk” status by ratings agency S&P Global.
Bakish was opposed to the Skydance transaction, a stance that infuriated Redstone, who in 2016 handpicked Bakish to run the company, then known as Viacom. In recent weeks, senior company executives also raised questions about Bakish’s leadership and the strength of his long-range plan in their conversations with board members — a development that expedited Bakish’s departure from the company, the sources said.
Bakish was more open to another proposed deal, favored by smaller shareholders, with private equity firm Apollo Global Management, which has offered $26 billion, including the assumption of Paramount’s debt. Sony Pictures Entertainment has been negotiating with Apollo to join that effort. Most insiders expect that Apollo and Sony would break the company apart, a scenario that Redstone does not want to allow.
Redstone, according to one person familiar with the matter, has also been frustrated with some of Bakish’s decisions, including not selling Showtime, the premium cable network that the company folded into its television networks and streaming effort. Bakish had dismissed a recent offer of $3 billion for the channel from investors, including former Showtime head David Nevins.
Paramount, meanwhile, has lost more than $2 billion on its streaming service, Paramount+.
“Paramount Global includes exceptional assets and we believe strongly in the future value creation potential of the Company,” Redstone said in a statement. “I have tremendous confidence in George, Chris and Brian. They have both the ability to develop and execute on a new strategic plan and to work together as true partners. I am extremely excited for what their combined leadership means for Paramount Global and for the opportunities that lie ahead.”
In addition, the company faces a crucial Wednesday deadline to strike a new deal with cable distribution giant Charter Communications, which runs the Spectrum TV service.
Paramount entered the Charter negotiations with a weak hand — its cable television channels have suffered from falling ratings amid consumers’ shift to streaming. Paramount relies heavily on the revenue it receives from Charter, Comcast, DirecTV and other distributors.
“Paramount still has a popular network, an esteemed studio, and solid streaming services, but its business prospects look tenuous as it looks to sell,” EMarketer senior analyst Ross Benes wrote Monday in an emailed statement. “Arranging a new quixotic leadership structure may appease those looking for new blood. But the dramatic removal evokes a feeling of rearranging deck chairs on the Titanic.”
Less than two minutes after Paramount announced Bakish’s departure, the company reported its earnings results.
At the beginning of a call with analysts, company executives said they would not take questions after reporting their financial results. The call lasted slightly less than 10 minutes.
After Cheeks thanked Bakish for “his many years of leadership and steadfast support for all Paramount Global businesses, brands and people,” McCarthy tried to calm concerns about the new triumvirate leadership structure, saying that he, Cheeks and Robbins have worked together for years.
“It’s a true partnership,” McCarthy said. “We have a deep respect for one another, we’re going to lead and manage this company together.”
He said the company’s long-term strategic plan would be focused around three pillars — making the most of the company’s popular content, strengthening its balance sheet and optimizing its streaming strategy.
Paramount reported $7.68 billion in revenue for the three-month period that ended March 31, up almost 6% compared with the same period a year earlier. Paramount reported a net loss of $554 million, but that was less than its loss of more than $1 billion from a year earlier.
The company’s streaming division saw increased revenue of nearly $1.88 billion, up 24% compared with a year earlier. The segment’s quarterly loss was $287 million.
The company’s TV media revenue was aided by CBS’ February broadcast of the Super Bowl, which drew a massive audience. Revenue for the television networks division totaled $5.23 billion, up 1% compared with a year earlier. Paramount’s film division revenue totaled $605 million, up almost 3% compared with a year earlier.
The media empire now known as Paramount Global was formed in 2019 from the merger of Viacom Inc. and CBS Corp. But the combination never convinced Wall Street of its promise. In the last year alone, Paramount Global’s stock has lost nearly half of its value.
“While the mighty Viacom empire declined tremendously under Bakish, who profited handsomely personally, it isn’t clear that another appointed leader would have changed Paramount’s fortune,” Benes of EMarketer wrote in a note to investors. “With a mountain of debt and its primary assets, namely TV, continually losing value, the deep problems facing the company extend beyond any single executive.”
Bakish, who joined Viacom in 1997, was named CEO of Viacom in 2016, after the company’s stock had fallen 45% in two years due to falling ratings at some of its key networks, including Comedy Central and MTV, as well as struggles at its Paramount Pictures film studio.
After Redstone orchestrated the merger of Viacom with CBS, Bakish became CEO of the combined enterprise.
“The Board and I thank Bob for his many contributions over his long career, including in the formation of the combined company as well as his successful efforts to rebuild the great culture Paramount has long been known for,” Redstone said in her statement.
Paramount’s B-class stock rose 3% to $12.25 a share Monday before Bakish’s departure was officially announced. The shares continued to gain slightly in after-hours trading.
