Yahoo Finance Paramount Leaders Outline Stand-Alone Plan Including Layoffs, With No Word on Skydance Deal
Investors in Paramount Global are waiting for word on whether the latest merger offer from Skydance Media is a go. But they didn’t get any update at the media conglomerate’s awkwardly timed annual shareholders meeting Tuesday.
Shari Redstone, Paramount Global’s chair and controlling shareholder, in her introductory remarks at the virtual shareholders meeting, did not mention the pending Skydance offer. Instead, she touted the company’s content assets and leadership across CBS, Paramount Pictures and its cable networks — and turned the floor over to the three members of its “Office of the CEO,” who took over at the end of April for the ousted Bob Bakish: CBS’s George Cheeks, Paramount Pictures’ Brian Robbins and Chris McCarthy, head of Showtime/MTV Entertainment Studios.
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“While we recognize this is not a traditional management structure,” Redstone said, the three-in-a-box leadership team is intended to help the company “move quickly” and drive a turnaround in Paramount’s financial results. The overarching goal for Paramount, Redstone said, is “driving value for all our shareholders.”
Cheeks, Robbins and McCarthy presented “their shared vision” for Paramount Global, as Redstone put it — and the trio spoke at the shareholder meeting as if the company will not have a new owner in the near future. The execs sketched out initiatives to reduce costs “to be consistent with industry standards,” per Redstone, as well as drive revenue and profitability.
The new strategy includes job cuts and will result in a “leaner and more nimble” company, according to Cheeks. Paramount’s execs have already identified $500 million in annual cost savings, he said. Layoffs will target “duplicative teams and functions across the organization, real estate, marketing and other corporate overhead categories.”
“To be clear, $500 million in cost savings is just the beginning,” Cheeks said, saying Paramount Global will provide more details on the company’s Q2 earnings call in August.
The company also has scoped out certain assets it can divest to bolster the balance sheet, Cheeks said, although he didn’t say what those are.
McCarthy acknowledged, “We all agree that Paramount is not where we want it to be.” Among other things, he touted the growth trajectory of Paramount+ despite being the last major media company to launch into streaming.
On the streaming front, Paramount Global is “working on exploring options with both [subscription video-on-demand] players and the leading technology platforms with the goal of forming a joint venture or a long-term strategic partnership to maximize our momentum and take advantage of our combined strengths,” McCarthy said. Such partnerships would not be “marketing bundles” but would be “a deep and expansive relationship,” he said. Paramount has discussed merging Paramount+ with NBCUniversal’s Peacock in some way.
Prior to the meeting’s Q&A portion, McCarthy briefly alluded to the Skydance offer without mentioning it by name but said “we cannot comment” on “speculation” about a potential M&A event.
At Paramount’s online-only shareholders meeting, which last just under 45 minutes, Class A stock owners voted on several matters, including the re-election of six directors to its board. There wasn’t much suspense here: Redstone’s vote was the only one that mattered. But the composition of the board will change if the revised bid from David Ellison’s Skydance and his private-equity partners gets the thumbs-up from Redstone — who on Tuesday didn’t offer any guidance about her next move in the months-long sale process.
Not discussed by the executives was the new offer submitted to Redstone’s National Amusements Inc. over the weekend. Under those terms, Skydance and its financial backers would own two-thirds of Paramount’s shares. Current Paramount Class B shareholders (who do not have voting rights) would be offered to cash in nearly half their shares for $15 per share, while the Skydance consortium would pay Redstone $2 billion to acquire National Amusements, which owns 77% of the voting shares in Paramount.
For the record, Paramount’s Class A shareholders (i.e., Redstone) re-elected six directors the board: Redstone; Barbara Byrne, former vice chairman of Barclays; Linda Griego, CEO of business management company Griego Enterprises; Judith McHale, CEO of investment firm Cane Investments; Charles Phillips Jr., chairman of enterprise software company Infor; and Susan Schuman, executive chair of consulting firm SYPartners.
One director candidate taken off Tuesday’s ballot was Bakish, who was ousted as CEO and from the board on April 30, after he reportedly clashed with Redstone over his opposition to a deal with Skydance. He was replaced by the three-executive Office of the CEO seemingly as a stopgap measure while Paramount’s M&A talks have continued.
In addition, four directors did not stand for re-election to Paramount’s board; the company didn’t provide an explanation for that. Those were: Dawn Ostroff, former chief content and advertising business officer of Spotify; Nicole Seligman, former president of Sony Entertainment; Frederick Terrell, vice chairman of investment banking at Wells Fargo; and Rob Klieger, partner at Hueston Hennigan LLP, who had served as legal counsel to Sumner Redstone.
The meeting kicked off with a sizzle reel of Paramount programming, including a clip of SpongeBob SquarePants exclaiming, “I am so excited, I think I’m gonna explode!”
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