Paramount Considers CEO Change Amid Skydance Merger Talks and $14.6B Debt

Paramount Global is considering removing CEO Bob Bakish amid merger talks with Skydance Media, with Skydance's David Ellison potentially taking over as CEO. The company is also exploring a $26 billion all-cash offer from Sony Pictures Entertainment and Apollo Global Management.

author-image
Aqsa Younas Rana
New Update
Paramount Considers CEO Change Amid Skydance Merger Talks and $14.6B Debt

Paramount Considers CEO Change Amid Skydance Merger Talks and $14.6B Debt

Paramount Global is reportedly considering the removal of CEO Bob Bakish as the company continues discussions with Skydance Media about a complex multi-step merger. If exclusive talks with Skydance bear fruit, Bakish is unlikely to have a role in the combined company, with Skydance chief David Ellison slated to serve as the new entity's CEO.

Why this matters: The potential sale of Paramount and the subsequent management changecould have significant implications for the media industry, affecting the production and distribution of content. Moreover, the deal's outcome could influence the broader entertainment landscape, potentially leading to a shift in the balance of power among major media conglomerates.

Bakish's leadership has been criticized by controlling shareholder and non-executive chairwoman Shari Redstone and some board members. Redstone initially championed Bakish's appointment as Viacom CEO in 2016 but has since soured on his leadership. His perceived missteps include declining to pursue interest in Showtime from prospective acquirers and failing to aggressively pursue other strategic options.

Paramount and Skydance are expected to extend their 30-day exclusive window for hammering out a deal. The company is also approaching a deadline with major distribution partner Charter Communications, which could seek a similar deal to its recent carriage battle with Disney. Paramount is poised to report first-quarter earnings on Monday, with Wall Street scrutinizing the financials in its advertising business and progress toward profitability in streaming.

Meanwhile, Paramount has terminated its deal with Skydance and is now opting for a $26 billion all-cash offer from Sony Pictures Entertainment and private equity firm Apollo Global Management. The company's board of directors will continue to explore the initial deal proposed by Skydance founder David Ellison, but will also consider the Sony-Apollo joint deal.

The newly formed Office of the CEO at Paramount, comprising Brian Robbins, George Cheeks, and Chris McCarthy, has presented a plan to address the company's $14.6 billion debt and turn it around over the next three years. The plan involves aggressive cost-cutting, raising cash by selling assets like the Paramount lot and potentially Pluto TV, reducing headcount, exploring strategic options for streaming including a potential joint venture, and aiming to achieve profitability by the end of 2025.

The plan has received a positive reception from the board, and the CEO triumvirate's stewardship offers a compelling argument against selling Paramount to either Skydance or Apollo. However, there is growing tension between Wall Street and Hollywood over the potential sale. While shareholders oppose the Skydance deal, Hollywood insiders like Endeavor CEO Ari Emanuel and director James Cameron have come out in favor, suggesting it might revitalize the film industry.

The Sony-Apollo deal faces regulatory barriers due to Sony, a Japanese company, being restricted from owning a U.S. broadcast channel like CBS. The deal would involve Sony being the controlling shareholder, with Apollo owning a minority stake. The bidding group would likely push for Apollo to hold the rights to the CBS broadcast license, with the option to sell its minority share back to Sony in a few years.

The saga of Paramount's next phase is unlikely to be resolved in the short term, with multiple options still on the table. The company's debt burden, management change, and potential sale continue to weigh on its stock price, which has declined by 25% over the past year. Paramount's annual shareholder meeting on June 4 looms as a key date in this ongoing corporate drama.

Key Takeaways

  • Paramount Global considers removing CEO Bob Bakish amid merger talks with Skydance Media.
  • Skydance chief David Ellison may become CEO of the combined company if the deal goes through.
  • Paramount's board is also considering a $26 billion all-cash offer from Sony and Apollo Global Management.
  • The company's CEO office has presented a plan to address debt and turn around the company in three years.
  • Paramount's stock price has declined 25% over the past year due to debt and management uncertainty.