While a merger between Paramount Global and David Ellison’s Skydance Media will not be moving forward, the media conglomerate’s board of directors remain “open to exploring strategic alternatives that create value for shareholders.”
Meanwhile, co-CEOs Brian Robbins, Chris McCarthy and George Cheeks told staff in a memo on Wednesday that they continue to focus on executing their long-term strategic plan, which the group is “confident will set the stage for growth for Paramount.”
The Office of the CEO plan focuses on three pillars: transforming streaming, streamlining the organization to reduce non-content costs and “optimizing” its asset mix to pay down debt. During the meeting, the trio said they have already identified $500 million in near-term cost reduction opportunities in areas including real estate, technology, marketing and other corporate overhead. They also are in talks to divest some assets to unlock value, though they did not elaborate on which assets. Additionally, the group is exploring forming a joint venture or a longterm strategic partnership with SVOD players and the leading technology platforms.
“As we advance each of these initiatives, we will continue to prioritize investment in our world class franchises, films, series and sports, which are the core of our business,” the group added in the memo.
On Tuesday, controlling shareholder Shari Redstone’s National Amusements informed Paramount’s independent special committee that it was ending discussions with Skydance, noting 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.
In the midst of negotiations, four board members — including three who were on the special committee — stepped down at the company’s annual meeting. Longtime CEO Bob Bakish also stepped down in April, making way for the Office of the CEO.
“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.
NAI added that it supports the Office of the CEO’s strategic plan, as well as its ongoing work with the board to “continue to explore opportunities to drive value creation for all Paramount shareholders.”
Paramount, which has a market capitalization of $7.7 billion as of Wednesday afternoon, has seen 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 longterm debt, a credit rating that’s been downgraded to junk status, a declining linear television business and an unprofitable streaming business.
Robbins, Cheeks and McCarthy will provide more updates on the strategic plan during Paramount’s second quarter earnings call in August. They will also hold a town hall with employees on June 25.
“Importantly, we want to thank you for your hard work and your continued focus. We recognize that the last several months have not been easy as we manage through ongoing change and speculation. And, we should all expect some of this to undoubtedly continue as the media industry and our business continue to evolve,” the memo concluded. “As we look ahead, we are confident about what’s in store for Paramount. We believe in you and we believe in Paramount. We have the content, the people and the right plan to ensure a strong future.”
