Paramount’s CEOs Say Bankers Have Been Hired to Sell Assets, Talk Job Cuts in Town Hall
Paramount Global’s newly appointed co-CEOs opened the company’s employee town hall Tuesday by addressing the elephant in the room: the ongoing M&A speculation surrounding the media conglomerate.
“We know what a difficult and disruptive period it has been,” co-CEO Brian Robbins told staff on Tuesday. “While we cannot say that the noise will disappear, we are here today to lay out a go-forward plan that can set us up for success no matter what path the company chooses to go down.”
Earlier this month, controlling shareholder Shari Redstone revealed she would scrap a potential merger transaction with David Ellison’s Skydance Media after months of discussions. The two-step plan would’ve seen Ellison acquire Redstone’s National Amusements, which controls 77% of Paramount’s class A voting stock, before merging his studio with the media conglomerate to create a combined company. An individual familiar with the matter previously told TheWrap that while both sides agreed to the economic terms of the deal, there were outstanding issues that they did not agree on – most notably, giving all shareholders a consent vote on the sale.
In addition to Skydance, Sony Pictures Entertainment and Apollo Global Management have submitted a joint $26 billion all cash offer. Allen Media Group founder Byron Allen also placed a $30 billion bid including debt, though it is unclear how that bid would be financed. Additionally, Warner Bros. Discovery CEO David Zaslav met with former Paramount CEO Bob Bakish about a potential merger, though those talks were later halted. Separately, NAI has received two separate expressions of interest from “Baby Geniuses” producer Steven Paul and former Warner Music Group CEO and chairman Edgar Bronfman Jr.
Tuesday’s town hall was initially scheduled for June 5, but was postponed due to “ongoing speculation regarding potential M&A.” 500 employees attended in person at the Paramount Theatre on the lot, while thousands more tuned in remotely.
In addition to the comments on M&A, the trio offered a few updates on their long-term strategic plan, which was first unveiled at Paramount’s annual meeting on June 4. That plan, which has received support from Redstone, includes streaming partnerships, divesting assets and $500 million in cost cuts.
Management said that work is already underway to transform the cost base of the company in areas such as legal and corporate marketing, though they declined to offer a specific timeline or how many employees would be impacted when asked during the event’s Q&A portion.
To accelerate streaming profitability, the executives previously said they would take an “alternative” approach to the company’s international strategy to boost profits and increase content licensing.
“We are advancing talks with potential partners that will significantly transform the scale and economics of the service making it profitable and driving long term value,” co-CEO Chris McCarthy said of the international strategy on Tuesday. “This approach could also serve as a model for the U.S.”
Four individuals familiar with the matter previously told TheWrap that possible assets that could be put up for sale include Pluto TV, BET, VH1 and the Paramount lot, which would be leased back for the studio’s use.
“We’ve already hired bankers to assist us in this process – and we’ll use the proceeds to help pay down debt and strengthen our balance sheet,” co-CEO George Cheeks added.
The town hall comes as Paramount’s stock price briefly hit a new 52-week low last week. Shares of the company, which reported a market capitalization of $7 billion as of Tuesday afternoon, have fallen 16% in the past month, 32% in the past six months, 30% year to date and 35% in the past year.
In addition to the decline in its stock price, Paramount faces $14.6 billion in longterm debt and a credit rating that has been downgraded to junk status. While Paramount’s revenue has grown 13% between 2018 and 2023, its operating income has fallen 61% over the same period.
“Let me be clear, a 61% decline in profits is simply unacceptable,” McCarthy said. “We need to act now to reverse this trend.”
In addition to the town hall, Robbins, Cheeks and McCarthy will address Wall Street during Paramount’s second quarter earnings call in August.
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