Paramount CEO Bob Bakish will step down effective immediately, the company announced Monday in a surprising shake-up at the top of the company as it considers a major merger.
Bakish, 60, will be replaced by a “CEO office” run by three executives: Brian Robbins, head of Paramount Picture Studios; George Cheeks, CEO of Paramount's CBS division. Chris McCarthy, CEO of Showtime and MTV Entertainment Studios.
Bakish's departure looms large over broader questions about Paramount's future. Like many media companies, Paramount has struggled in recent years to get its streaming business off the ground as viewership for its cable channels has declined. As a result, Paramount has long been considered a takeover target by rival companies looking to build content libraries and gain leverage in cable negotiations.
In recent months, the company has been in merger talks with Skydance, the media company run by tech heir and Hollywood executive David Ellison. Paramount's controlling shareholder Shari Redstone has already signed off on a potential deal for her stake, but the company's directors have yet to reach a company-wide agreement.
Several shareholders have publicly opposed the merger with Skydance, saying it would enrich Mr. Redstone at the expense of other investors. Private equity firms Apollo and Sony are in talks to make an all-cash bid for Paramount, which could give the company a significant alternative. However, negotiations with other suitors will have to wait until early May, when the exclusive negotiation period with Skydance ends.
To allay those concerns, Skydance has softened its offer to buy Paramount in recent days. The company has told Paramount it plans to inject $3 billion in cash to pay down debt and buy back stock, with funding coming from private equity firm Redbird Capital and the Ellison family. Skydance also proposed giving Paramount shareholders a larger stake in the combined company than previously contemplated.
It's unclear whether Skydance's sweetener will be enough to convince a special committee of board members evaluating the Skydance merger that the deal will treat all shareholders fairly It is. Jim Woolley, founder of advisory firm Woolley & Co., said Bakish's resignation was of a rare nature and could put more pressure on the committee to show it was negotiating the best deal for shareholders. He said there is.
“That's what creates influence,” said Woolley, who has advised numerous task forces. He either allows the special committee to begin deal discussions with Apollo and Sony or that rival bidders step in after the Skydance deal is signed, allowing Skydance to accept a higher offer. He said there was an increasing possibility that he would consider granting such rights.
Mr. Bakish has been an employee of Paramount since 1997, and he and Mr. Redstone have a long-standing partnership. He became CEO in 2016 after a rift between the Redstone family and one of his predecessors, Philip Dorman, and Bakish became CEO after the company merged with CBS in 2019. He was her preferred candidate to run the company.
But relations between Mr. Redstone and Mr. Bakish began to deteriorate last year, three people familiar with their interactions said. Mr. Redstone said he realized he had missed opportunities to close deals that were lucrative for the company, including the sale of Showtime and the BET cable network. Private equity firm Blackstone has expressed interest in acquiring the Showtime cable network for at least $5.5 billion in 2021, one of the people said, an eye-opening deal for a long-term depressed business. It is said to be a similar amount. Paramount did not pursue the deal.
The Wall Street Journal earlier reported on Blackstone's interest in Showtime.
Bakish is in line for a big payday. He will be entitled to a $50.6 million severance package, of which $31 million will be paid in cash over the next two years after his employment ends, according to data firm Equilar.
The three people said Mr. Redstone came to believe that Mr. Bakish was not moving with enough urgency to secure a foothold at Paramount. Mr. Bakish also told a special committee meeting earlier this year that he had concerns about the company's merger with Skydance, one of the people said.
Bakish's position became untenable in recent weeks after he submitted a long-term plan to the special committee. Mr. Redstone believed that the views of the company's executives, including Mr. Robbins, Mr. Cheeks and Mr. McCarthy, were not properly represented. said the three. Ms. Redstone approved discussions between these executives and representatives of the Board, including Mr. Charles Phillips. In the conversations, executives expressed concerns about the company's direction, the people said.
Bakish's departure marks the end of an important chapter in Paramount's history. He pioneered the direct-to-consumer strategy of streaming entertainment, founding the Paramount+ streaming service and acquiring Pluto TV, a free, ad-supported streaming service.
Mr. Bakish worked his way to the top of Paramount. A former Booz Allen Hamilton consultant, he advised Paramount Communications on strategy for its Madison Square Garden division before joining Paramount's predecessor Viacom. Bakish was promoted to head of Viacom's international channels division and was selected to succeed Tom Dooley as CEO in 2016.
He took the top job at a critical time for Viacom. The company's combative approach to negotiations with its most important partner, the cable company, resulted in Sudden Link being eliminated by his cable system in 2014. Viacom's stock price fell. Bakish took a more measured approach to negotiations, improving relationships with cable providers and stabilizing the company.
Despite these efforts, Paramount's stock price continued to decline over the years, reflecting investor skepticism about the cable TV business. Once an industry-defining juggernaut, the cable bundle continues to lose subscribers, with prices dropping 48% last year.