If Paramount does not accept any of its offers to be acquired, it will face one of the most precarious moments in the studio’s 112-year history. A chaotic week at the company began with the dismissal last Monday of its CEO Bob Bakish.
This abrupt change was confirmed during the company’s first-quarter earnings report on Monday, together with the creation of a new “office of the CEO” position that will be manned by a trio of current executives: Paramount Pictures CEO Brian Robbins; CBS CEO George Cheeks; and Showtime/MTV Entertainment Studios chief Chris McCarthy. While McCarthy will be listed as CEO in Paramount Global’s SEC filings, the eventual successor to Bakish has yet to be determined.
Bakish was tapped in 2016 to be CEO of what was then known as Viacom, with a strong endorsement from the company’s controlling shareholder Shari Redstone. However, that relationship is said to have deteriorated recently, with tensions building over strategic decisions on managing the company’s varied assets and struggles in its Paramount+ streaming business, which has lost over $2 billion since its 2021 launch. Bakish was also against the sale of the company’s Showtime network for $3 billion, viewed later by Redstone as a missed opportunity to raise much-needed capital.
News of Bakish’s departure cast a pall over what would otherwise have been seen as a positive Q1 earnings report. Revenue from Paramount+ was 24% higher than the first quarter of 2023 and the service added more than 3.5 million new subscribers to reach 71 million total.
In its film division, revenue improved at the box office of MEAN GIRLS and BOB MARLEY: ONE LOVE. Ad sales reported by its cable business were also strong, buoyed by record viewership of this year’s Super Bowl.
However, Paramount’s streaming division continues to $100’s of millions every quarter and its numerous cable properties are in terminal decline. Paramount has a relatively weak position as it enters negotiations with cable provider Charter Communications to distribute its channels.
Given these numerous challenges, the S&P agency recently cut Paramount’s credit rating status to “junk”, citing a prevalent “downside pressure rating.” Facing all these challenges, it is unclear whether Paramount will be successful if it decides to go it alone.
