Paramount owner Shari Redstone has tried to resist the erosion of her media empire over the past decade as she faced the death of cable TV, the rise of streaming and even the failed coup by a long-time ally.
By his side, Bob Bakish, the CEO of Paramount, has always been by his side. For years, she saw him as a loyal lieutenant, capable of navigating the dangerous entertainment business with the financial dexterity of the management consultant he once was. As Paramount’s stock price fell, she was patient with him — even as she steered the company toward a possible sale that he had reservations about.
That patience officially ran out on Monday.
Mr. Bakish is resigning effective immediately, Paramount announced Monday, a stunning shake-up in the company’s upper echelons as it considers a major merger.
Mr. Bakish, 60, will be replaced by a “CEO office” headed by three executives: Brian Robbins, head of the Paramount movie studio; George Cheeks, general manager of Paramount’s CBS division; and Chris McCarthy, CEO of Showtime and MTV Entertainment Studios.
Mr. Bakish’s departure raises 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 audiences for its cable channels declined. As a result, it has long been seen as an acquisition target by competitors looking to build their content libraries and increase their leverage in cable negotiations.
In recent months, the company has been in talks to merge with Skydance, a media company run by tech scion and Hollywood executive David Ellison. Ms Redstone, who is Paramount’s majority shareholder, has already signed a potential deal for her stake, but company directors have yet to reach an agreement for the entire business.
Several shareholders have spoken out publicly against a tie-up with Skydance, saying it would enrich Ms. Redstone at the expense of other investors. Private equity firm Apollo Global Management and Sony have discussed an all-cash takeover offer for Paramount, one that could give the company a serious alternative. But any discussions with other suitors will have to wait until the exclusive negotiation period with Skydance expires in early May.
To allay these concerns, Skydance has softened its proposal in recent days. The company told Paramount it would provide a $3 billion cash infusion to pay down debt and buy back stock, money that would come from private equity firm RedBird Capital and the Ellison family. Sky Dance also offered giving Paramount shareholders a larger stake in the combined company than it previously envisioned.
It is unclear whether the strengths Skydance brings will be enough to convince the special committee of board members evaluating the Skydance merger that the deal treats all shareholders fairly. The rare nature of Mr. Bakish’s departure could put additional pressure on the committee to show that it is negotiating the best deal for shareholders, said Jim Woolery, founder of Woolery & Company, a consulting firm.
“It creates leverage,” said Mr. Woolery, who has advised numerous special committees. He said the special committee was now more likely to open negotiations with Apollo and Sony or consider allowing rival bidders to step in after signing a deal with Skydance and giving Skydance a limited right to align with a higher offer.
Mr. Bakish had been a Paramount employee since 1997 and he and Ms. Redstone had been allies for years. He took over as chief executive in 2016 after a rift opened between the Redstone family and one of his predecessors, Philippe Dauman, and Mr. Bakish was his preferred candidate to run the company after that. merged with CBS in 2019.
But Ms. Redstone’s relationship with Mr. Bakish began to deteriorate over the past year, said three people familiar with their interactions. Ms. Redstone felt he missed opportunities to secure lucrative deals for the company, including the sale of its Showtime and BET cable networks, they said. In 2021, private equity firm Blackstone expressed interest in acquiring cable network Showtime for at least $5.5 billion, a staggering sum for a company in long-term decline, one of the company said. sources. Paramount did not enter into this agreement.
The Wall Street Journal reported earlier Blackstone’s interest in Showtime.
Mr. Bakish is in line for a big payday. He is entitled to a $50.6 million severance package, including $31 million in cash for the two years after his employment ends, according to data firm Equilar.
Ms. Redstone came to believe that Mr. Bakish was not acting with enough urgency to put Paramount on firmer footing, the three people said. Mr. Bakish also told the special committee this year that he had reservations about a merger with Skydance, one of the people said.
Mr. Bakish’s position became untenable in recent weeks after he presented the special committee with a long-term plan that Ms. Redstone said did not adequately reflect comments from senior company executives, including Mr. Robbins , Mr. Cheeks and Mr. McCarthy. , said the three people. Ms. Redstone approved discussions between these executives and board representatives, including Charles Phillips. During the conversations, executives expressed doubts about the company’s direction, the sources said.
Mr. Bakish’s departure ends an important chapter in Paramount’s history. It pioneered a strategy to bring streaming entertainment directly to consumers, creating the streaming service Paramount+ and acquiring Pluto TV, a free, ad-supported streaming service.
Mr. Bakish had an unlikely path to the top of Paramount. A former consultant at Booz Allen Hamilton, he joined Viacom, Paramount’s predecessor, after advising Paramount Communications on the strategy of its Madison Square Garden division. Mr. Bakish became head of Viacom’s international channels division and was named in 2016 to succeed Tom Dooley as chief executive.
He got the top job at a perilous time for Viacom. The company’s belligerent approach to negotiations with cable companies – its most important partners – resulted in its abandonment by the Suddenlink cable system in 2014. Viacom’s stock price plummeted. Mr. Bakish took a more measured approach in negotiations, improving relations with the cable companies and stabilizing the company.
Despite these efforts, Paramount’s stock price continued to decline over the years, reflecting investor skepticism of the cable television industry. Over the past year, the price has fallen 48 percent as the cable package – once an industry juggernaut – continues to lose subscribers.
After more than a quarter century with the company and its predecessor, Mr. Bakish received an unceremonious farewell from Paramount. In brief remarks at the end of the company’s first-quarter earnings conference call Monday, Paramount’s CFO praised his former boss for overcoming “a number of challenges.”
He didn’t answer any questions.
