Paramount drama swirls as CEO steps down amid merger talks

What major entertainment company and movie studio doesn’t have a little drama? paramount global (NASDAQ:PARA) has certainly had its share of shares in recent months, and the drama continued on Monday.

On Monday afternoon, Paramount announced that CEO Bob Bakish would step down and be replaced by a CEO office with three co-CEOs. This news comes as the stock has been weak over the past six months and merger and acquisition (M&A) discussions continue.

Paramount merger drama heats up

Bakish has been with Viacom since 1997 and became CEO in 2016. In 2019, he assumed the role of CEO of the combined company formed by the merger of CBS and Viacom. In 2022, the company rebranded as Paramount Global.

Paramount has struggled in recent years as its film business took a hit from the COVID-19 pandemic and its streaming and TV businesses struggled to generate revenue in the new streaming era.

The company has been in merger talks for several months and is looking for a partner to strengthen its fortunes. Paramount has been in exclusive merger talks with Skydance Media since early April. The company’s board decided to negotiate with Skydance, the film studio run by David Ellison, instead of private equity firm Apollo Global Management, which had made a $27 billion all-cash offer.

The decision reportedly became a source of conflict between Bakish and Shari Redstone, chairman of Paramount Global’s board of directors and president of National Amusements, a holding company that controls about 80% of Paramount Global’s voting rights. . The dispute had put the writing on the wall that Bakish could leave, and on Monday it was announced that he was resigning.

“The Board and I thank Bob for his many contributions during his long career, including his successful efforts to build the combined company and rebuild the great culture for which Paramount has long been known. We wish him the best,” Redstone said in a statement.

CEO office

Bakish will be joined by George Cheeks, President and CEO of CBS; Chris McCarthy, President and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, president and CEO of Paramount Pictures and Nickelodeon.

The CEO’s Office is responsible for developing long-term plans to accelerate growth, develop popular content, streamline operations, strengthen the balance sheet, and optimize streaming strategies.

“I have tremendous confidence in George, Chris and Brian,” Redstone said. “They have both the ability to develop and execute new strategic plans and the ability to work together as true partners. I am very excited to see what their combined leadership means for Paramount Global and the opportunities ahead. “Paramount Global has outstanding assets and we strongly believe in the company’s potential to create future value.”

Season finale?

Paramount also reported first-quarter results Monday, which beat sales and earnings forecasts even though its stock price fell about 4%. It was actually a solid report, with revenue up 6% year over year while operating loss was down 66% to $417 million. Paramount Global also increased direct-to-consumer revenue by 24%, including a 51% increase in revenue from its Paramount+ streaming service, which added 3.7 million subscribers in the quarter.

But this solid performance was overshadowed by CEO and merger drama. The exclusive 30-day negotiation period with Skydance is set to expire this week, so new news may or may not come out.

Skydance closed the deal on Sunday, offering a $3 billion cash injection to repay debt and repurchase shares, according to various news sources. Skydance is also reportedly exploring giving Paramount shareholders a larger stake in the combined company than previously thought, allaying concerns from many shareholders that this was a better deal for Redstone than before.

News reports say this is Skydance’s best and final offering. With the 30-day negotiation period with Skydance ending on May 3, we’ll need to know something one way or another by then.

Analysts thought Monday’s post-earnings conference call would provide some insight, but there was another twist. McCarthy, one of the new CEOs, reviewed the quarter’s results and then abruptly ended the call after just nine minutes, without the usual Q&A session with analysts.

Instead, the company: impossible mission According to several reports, there is a recurring theme song for analysts. of course, impossible mission It is one of Paramount’s biggest movie franchises.

Please stay tuned as the drama unfolds this week.