Paramount Office of the CEO Plan Includes Streaming Partnerships, Cost Cuts and Divesting Assets

The executives’ presentation comes as controlling shareholder Shari Redstone decides whether to accept a takeover offer from David Ellison’s Skydance Media

Paramount office of the CEO; George Cheeks, Chris McCarthy and Brian Robbins, with Shari Redstone
Paramount Office of the CEO: George Cheeks, Chris McCarthy and Brian Robbins, with Non-Executive Chairwoman Shari Redstone (Chris Smith/TheWrap)

Paramount’s Office of the CEO laid out its highly anticipated long-term strategic plan on Tuesday designed to help the struggling media conglomerate reduce its $14.6 billion in long-term debt, return to investment grade metrics after a credit downgrade to junk status, and drive revenue and earnings growth.

The broad strokes of the plan, which were unveiled by Chris McCarthy, Brian Robbins and George Cheeks at Paramount’s annual shareholder meeting, focuses on three pillars: transforming streaming, streamlining the organization to reduce non-content costs, and “optimizing” its asset mix to pay down debt.

“Our plan looks forward by building back the best of Paramount, delivering higher revenue with lower costs, which translates to higher earnings and better returns,” Robbins said. “We will be thoughtful in how we deploy capital, with our world class content always being the first priority. That’s the way we can maximize shareholder value and return Paramount to delivering consistent earnings growth.”

Leadership revealed that 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 said that they are in talks to divest some assets to unlock value, though they did not elaborate on which assets.

When it comes to accelerating streaming profitability, executives said they would integrate the company’s teams more closely and eliminate redundancies, take an “alternative” approach to its international strategy to boost profits and increase content licensing. Management has previously said they expect Paramount’s streaming business to reach domestic profitability in 2025.

“At the same time we’re working on exploring options with both SVOD players and the leading technology platforms with the goal of forming a joint venture or a long term strategic partnership to maximize our momentum and take advantage of our combined strengths,” McCarthy said. “Now let me be clear, I’m not talking about marketing bundles either. This is a deep and expansive relationship, one that would make the most of our hit content while improving the customer offering, which together will help reduce churn and reduce expenses, which will accelerate profits.”

Four individuals previously confirmed the Office of the CEO plan to TheWrap last month. At that time, they said possible assets that could be put up for sale include Pluto TV, BET, VH1 and the Paramount lot, which would be leased back for the studio’s use.

The Office of the CEO’s presentation comes as controlling shareholder Shari Redstone is currently reviewing a takeover offer from David Ellison’s Skydance Media that would see the latter acquire her holding company National Amusements, which controls 77% of Paramount’s voting stock. The second step of the plan would then see Skydance merge with Paramount to create a combined company.

Redstone could also decide to pursue a deal with Sony Pictures Entertainment and Apollo Global Management, who submitted a joint, non-binding $26 billion all-cash offer for Paramount, or she could decide to have Paramount go it alone under the Office of the CEO’s strategy.

“We recognize that this is not a traditional management structure,” Redstone acknowledged during the annual meeting. “We are confident that it will enable them to move quickly to implement best practices throughout the company and to drive improved performance.”

The Office of the CEO said it would provide more updates on its strategic long-term plan during its second quarter earnings call in August. In addition to their presentation at the annual shareholder meeting, the trio will hold a town hall with employees on Wednesday.

Paramount shares fell over 3% following the annual meeting. The company, which has a market capitalization of $8.5 billion, has seen its stock price fall 22% in the past six months, 14% year to date and 18% in the past year.

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