Ariel Investments co-founder John Rogers Jr. isn’t mincing words about the months-long drama surrounding Paramount Global, calling the scrapped deal between Shari Redstone’s National Amusements and David Ellison’s Skydance Media the “most screwed up sale and governance I’ve ever seen.”
“It’s just a once in a generation kind of screw up,” the executive, whose firm owns a 1.8% stake in Paramount, told TheWrap in an interview on Wednesday. “It just doesn’t make any sense. You have all these great assets, great IP, great history and they’ve found a way to destroy value. It’s just pretty extraordinary.”
On Tuesday, National Amusements informed a Paramount special committee evaluating bids that it was ending discussions with Skydance. Redstone’s company noted that the two parties were not in agreement and “didn’t anticipate a path forward” on a potential transaction. An individual familiar with negotiations told TheWrap that while the parties had agreed to the economic terms of a deal, there were outstanding issues not agreed upon, including whether to give both voting and non-voting shareholders a consent vote.
“NAI is grateful to Skydance for their months of work in pursuing this potential transaction and looks forward to the ongoing, successful production collaboration between Paramount and Skydance,” the company said in a statement.
The decision comes after Paramount, which has a market capitalization of $7.7 billion as of Wednesday afternoon, saw its stock price fall 15% in the past month, 27% in the past six months, 23% year to date and 33% in the past year.
It also faces $14.6 billion in long-term debt, a credit rating that’s been downgraded to junk status, a declining linear television business and an unprofitable streaming business.
In the midst of negotiations, four board members — including three who were on the special committee — stepped down at the company’s annual meeting last week. Longtime CEO Bob Bakish stepped down in April and was replaced by a three-headed Office of the CEO.
As the future of Paramount Global remains more uncertain than ever, Rogers Jr. believes the company should look to make a deal with Sony Pictures Entertainment and Apollo Global Management, who previously made a joint $26 billion all-cash offer, or a “similarly situated strategic or financial buyer.”
“After all that’s gone on, they just owe it to the shareholders to put us out of our misery,” Rogers said. “Enough is enough. There’s so much private equity money out there. There’s going to be so many mergers in this industry because of the challenges that we all know the industry faces, and if they wait five years from now, all of your options are going to be closed. All the pathways to success will be shutting down systematically over the next five to 10 years.”
Rogers added that small, independent media companies will “never be able to negotiate another NFL contract 10 years from now,” but “if you come together and you do creative things, you build a partnership and get deep pockets that are interested in this field, then you can have success based upon the wonderful set of assets that are there.”
Redstone also has the option of selling National Amusements on its own. She has received two separate expressions of interest, from former Warner Media Group chairman and CEO Edgar Bronfman Jr. and “Baby Geniuses” producer Steven Paul.
As Redstone mulls what to do next, Paramount will be run by top executives Brian Robbins, Chris McCarthy and George Cheeks. The trio laid out the broad strokes of a long-term strategic plan last week at the company’s annual meeting. Their plan includes streaming partnerships, $500 million in cost cuts and divesting assets. They plan to address employees at a town hall on June 25 and will lay out additional details of the plan to shareholders during the company’s second quarter earnings call in August.
NAI said it supports the Office of the CEO’s plan as well as their ongoing work with the company’s board of directors to “continue to explore opportunities to drive value creation for all Paramount shareholders.”
But Rogers argued that Paramount can’t operate in an “untenable situation” indefinitely and that Redstone has her own financial challenges to resolve with National Amusements. He hopes to have an opportunity to connect with the Office of the CEO going forward as they execute on their strategy.
“We had access to the prior leadership team and they were always straightforward with us and available,” he said. “So I would hope we could meet the new team.”
