Paramount CEO Bob Bakish resigns

Viacom President and CEO Bob Bakish attends day four of the annual Allen & Company Sun Valley Conference July 11, 2023 in Sun Valley, Idaho.

David A. Grogan | CNBC

Paramount Worldwide CEO Bob Bakish is stepping down, the company announced Monday, as merger negotiations with Skydance Media continue.

Bakish rose through the corporate ranks after joining Viacom in 1997, eventually becoming CEO of the company in 2016. Following the merger of Viacom and CBS, he became CEO of the combined company in 2019 , which was later renamed Paramount Global. He is also leaving the company’s board of directors, Paramount announced Monday.

Bakish will be replaced by what the company calls an “Office of the CEO.” Paramount will now be led by CBS Chairman and CEO George Cheeks; Chris McCarthy, president and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, head of Paramount Pictures and Nickelodeon. The company said the three executives would work closely with Paramount Chief Financial Officer Naveen Chopra and the board of directors.

In the statement released Monday, Paramount said the new management was “working with the board of directors to develop a comprehensive long-term plan to accelerate growth and expand popular content, significantly streamline operations, strengthen the review and continue to optimize the streaming strategy. “

Paramount also reported its first-quarter results after the bell Monday and held an earnings conference call during which the newly appointed company chiefs gave a brief statement and said they would be back “within as soon as possible” to share details on future projects.

Chopra led the call, which lasted less than 10 minutes and did not include questions from analysts.

Boost to streaming

The company reported mixed results for the first quarter, rising on the profit front but lacking on the revenue front. Paramount reported 62 cents per share for the period, excluding items, compared with an estimate of 36 cents per share, according to analysts surveyed by LSEG. In terms of revenue, the company recorded $7.69 billion, compared to $7.73 billion estimated by analysts, according to LSEG.

Overall revenue was up 6% from the same period last year, propelled by streaming and the Super Bowl.

The company’s direct-to-consumer streaming segment, which includes flagship services Paramount+, Pluto TV and BET+, saw revenue increase 24% to approximately $1.88 billion.

Paramount said it added 3.7 million Paramount+ subscribers during the quarter, bringing the total to 71 million. Streaming losses narrowed to $286 million, compared to losses of $511 million during the same period last year.

Advertising revenue in the streaming segment increased, largely due to the Super Bowl broadcast in February on CBS, cable TV channel Nickelodeon and Paramount+.

Similarly, advertising revenue at Paramount’s TV media unit, which includes broadcaster CBS and cable TV channels such as MTV and Nickelodeon, rose 14% because of the Super Bowl.

The major NFL event provided a boost in a sluggish advertising environment for traditional television networks. Still, streaming platforms and digital companies have reported growth in advertising revenue, indicating that the market is rebounding, at least in these areas.

Overall, television media revenues increased 1%, to $5.23 billion. Membership and subscription revenue fell 3% as cord-cutting continued, and licensing and other revenue fell 25%, including the impact of Hollywood writers’ and actors’ strikes on the content available under license.

Revenue at Paramount’s filmed entertainment unit rose 3 percent, to $605 million, thanks to the releases of “Mean Girls” and “Bob Marley: One Love.”

Departure from Bakish

Bakish’s ouster comes as Paramount and Skydance Media move closer to a possible merger, CNBC previously reported. The companies are in exclusive talks to continue the deal until May 3, and a special committee is already in place.

Bakish spoke privately against the merger, saying it would dilute common shareholders, CNBC reported. Under the proposed deal, nearly 50% of the combined company would be owned by Skydance and its private backers, while common stockholders would own the remainder of Paramount, which would remain publicly traded.

On Saturday, CNBC reported that Bakish could step down as CEO as early as Monday, and before earnings are released, after losing the trust of Paramount Global’s majority shareholder, Shari Redstone, who may view his removal as a way to expedite a deal with Skydance, CNBC reported. Monday.

The departure also comes as Paramount is in negotiations with cable company Charter Communications for the distribution of its television networks, including CBS and MTV. The deadline for these negotiations is Tuesday.

The special committee, responsible for accepting or rejecting transactions, and Skydance, backed by private equity firms. KKR and RedBird Capital Partners, looked into how to value Skydance’s assets in a merger, as well as how much equity to add to the company, CNBC previously reported.

Skydance intends to name its CEO, David Ellison, to head Paramount if the deal goes through, CNBC previously reported.

—Alex Sherman of CNBC contributed to this report.

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