Paramount Global’s Bob Bakish became the latest corporate CEO bagged by Shari Redstone, though his unsurprising departure Monday after getting crosswise with his company’s controlling shareholder likely will create further complications as she seeks to sell her family media empire.
Bakish stepped down from his job after the bell, just before Paramount held one of the shortest, least informative public-company earnings calls in memory. The three division chiefs who take over running an “Office of the CEO” in Bakish’s place will be tasked with shepherding the company through two very different buyout proposals, a highly motivated controlling shareholder, and a hugely important cable carriage renewal with Charter. Or it’s also remotely possible that Redstone decides not to sell after all, and they have to remake the company themselves.
Bakish’s departure simplifies one thing, should a deal happen. He was almost certain to depart with a change of control regardless of who won control over the storied media company. Now that’s one less severance package to draw up among the many, many “synergies” expected to be exacted in coming months, regardless of whether Paramount goes to the group led by David Ellison’s Skydance Media or the one led by Apollo Global Management
Apollo Global Management
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Ellison’s group includes RedBird Capital and Ellison’s father, Oracle
Oracle
founder Larry Ellison, one of the world’s wealthiest people. Their complex proposal – whose “final and best” offer was reportedly submitted over the weekend – buys out Redstone’s family company National Amusements, which controls Paramount, for $2 billion and merges it with Skydance. In turn, the merged company would buy out all the other shareholders for a few billion dollars more. Then, let the shareholder lawsuits begin, probably.
Ellison fils has touted that the resulting company will remain public, extract a couple of billion dollars in “synergies” (that’s investment banker talk for layoffs), pay down some debt, and unlock value in Paramount’ collection of aging though still premium assets. Let margin expansion ensue too!
The competing $26 billion Apollo proposal includes Sony and Apollo subsidiary Legendary Entertainment as capable partners. It is the cleaner proposal, buying out all shareholders, both those with voting and those with non-voting shares. Redstone is not interested in that proposal, however, to the chagrin of all those other shareholders.
Whomever eventually takes over Paramount eventually will have plenty of reshaping to do, in part because Bakish didn’t do enough. That was allegedly part of Redstone’s complaint about Bakish, along with his lack of support for the Ellison deal. But soon will come the hard work of crafting some sort of sustainable company amid a collapsing media ecosystem. Several big items are undoubtedly on the to-do list for whomever wins:
- Deals to sell off BET and Showtime never quite come together under Bakish. Both, or what’s left of those cable networks amid accelerating cord-cutting, will surely be back on the market soon after the deal is in place. The question is who will buy, and for what price after years of further decline in subscribers/viewers and programming.
- Also ahead is the fate of Paramount+, the “mountain of entertainment” subscription streaming service that’s also generated a mountain of losses. Last year, the service lost $1.7 billion, for a company with a market capitalization around $8 billion, and junk-bond-rated debt of $14 billion.
- Some have suggested the service remains sub-scale, with 70 million subscribers, against far bigger and better capitalized competitors, and should get shut down, so Paramount can concentrate on the more lucrative role as studio for hire, making shows for all the places with money. Another possibility: Paramount+ operations merge with Comcast’s
Comcast
even more sub-scale Peacock, for more synergies and possibly more competitive scale. - And then there’s those Charter negotiations, to renew a carriage agreement that expires Tuesday night. Charter played extremely hardball with Disney last fall, extracting previously unheard-of concessions such as Disney agreeing not to include eight of its lesser cable channels in the agreement, likely consigning them to imminent perdition. Charter CEO Chris Winfrey has since said the Disney deal would be a guide for all of its studio renewals going forward. If he’s able to hold to that, it’s bad news for a bunch of Paramount’s Viacom family of cable channels. The core brands such as Nickelodeon and Comedy Central likely survive, but many lesser networks seem doomed.
- A bunch of broadcast TV stations and theaters will need to be dealt with, too. Redstone’s NAI has hundreds of theaters that no one is lining up to buy in a post-pandemic world where domestic box office remains 20% below pre-lockdown levels. It’s not clear who’d buy those, or why.
- And the broadcast group led by a still profitable CBS network will need to figure out the fate of its skein of owned & operated stations, many in major markets such as Los Angeles and New York. There are buyers (such as Apollo, which already has about 30 stations) for such things, but not many of them, and they’ll be handcuffed by outdated federal laws on media concentration and ownership that haven’t caught up to the ways Americans entertain themselves these days.
All of which should keep the new occupants of Paramount’s Office of the CEO very busy for months to come. If they had any spare time, maybe the three new bosses-in-parallel could commission an episodic series similar to HBO/Max’s hit Succession, which thinly disguised its tale of Rupert Murdoch’s media family dynamics.
For Redstone, as she sells off father Sumner’s patrimony after years of boardroom intrigue and maneuvering, perhaps they should call it Deaccession. I don’t know, maybe we can workshop the title later.
