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Bob Bakish steps down as Paramount CEO amid deal talks

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Paramount Global CEO Bob Bakish is officially out of the company.

The entertainment conglomerate is turning to a handful of top executives – in the middle of a sales process – to run the company.

Chris McCarthy, George Cheeks and Brian Robbins will form the Office of the CEO, which will temporarily manage Paramount. The three executives will work with Paramount's board and CFO Naveen Chopra.

According to Paramount's quarterly earnings report, Bakish will officially resign on Tuesday and has agreed to remain with the company as a “senior advisor” until October 31.

The dramatic change comes as Paramount is in the midst of an exclusive negotiating window with a potential buyer group consisting of David Ellison's Skydance, RedBird Capital and KKR, with talks circling around a plan that would see Paramount keep public but with Skydance and RedBird executives finalizing the business manage effectively. and implementing a new strategy.

At the same time, private equity firm Apollo has been in talks with Sony Pictures about possibly making a joint bid for a deal that would take Paramount private in a merger with Sony and Apollo.

During the company's earnings call, McCarthy said of the collaboration with Robbins and Cheeks that “it's a true partnership. We have a deep respect for each other and we will lead and manage this company together.”

“In that regard, we are finalizing a long-term strategic plan to best position this legendary company to reach new and greater heights in our rapidly changing world. The plan focuses on three pillars: First, get the most out of our popular content; Second, strengthen our balance sheet; And third, optimize our streaming strategy.”

“We look forward to coming back to you soon to share our plan and discuss it all in detail,” Robbins added.

The company did not answer questions during the call, but executives provided only prepared comments.

Bakish received a compensation package worth $31.3 million in 2023, a difficult year for the industry given the twin Hollywood strikes. He has encouraged staff this year to focus on “execution” amid talk of deals surrounding the company, calling “containing costs” and profit growth the top priority for 2024.

While Bakish has largely declined to comment on deal talk, he told analysts on the company's fourth-quarter earnings results that he was focused on creating value for all shareholders (emphasis his), which suggests there is some daylight between him and Shari Redstone, Paramount's controlling shareholder.

“Paramount Global has exceptional assets and we strongly believe in the company's future value creation potential,” Redstone said in a statement. “I have enormous confidence in George, Chris and Brian. They have both the ability to develop and implement a new strategic plan and to work together as true partners. I am extremely excited about what their combined leadership means for Paramount Global and the opportunities that lie ahead.”

Wall Street analysts have said in recent weeks that Paramount has lost investors over concerns that controlling shareholder Redstone would benefit from a Skydance deal while regular shareholders would be diluted.

But Wolfe Research analyst Peter Supino recently changed his rating from “underperform” to “peer perform,” while dropping the use of a stock price target. “While fundamentally real risks remain to Paramount's business in the form of declining linear profitability and a direct-to-consumer segment that we expect to remain unprofitable for years to come, the increasing prospect of a sale of the company to an owner “The opportunity to leverage Paramount's intrinsic value outweighs short-term financial concerns,” he argued.

The CEO's resignation comes after days of recurring talk about Bakish's future at the company and ahead of Paramount's first-quarter earnings conference call after the market closed on Monday.

Bakish has long had a reputation for being popular at Paramount for his more collaborative leadership style that empowered his executives and was open to new ideas. He was also praised for focusing earlier than his peers on high-profile distribution deals that went beyond traditional pay-TV deals to include streaming, mobile and other platforms. And Bakish encouraged a global mindset with local execution.

He also long appeared to have a constructive relationship with Redstone whose father, Sumner Redstone, held the title of CEO at Paramount predecessors CBS Corp. and Viacom had entrusted to Leslie Moonves and the controversial Philippe Dauman respectively.

“I would like to take a moment to thank Bob for his leadership of the company during a period of tremendous change for us and the industry,” Chopra said during the call. “Not only has Bob helped us overcome a number of challenges, but I am proud of everything we have accomplished and it has been a privilege to work with him.”

“Because employees faced years of uncertainty as Redstone battled Dauman and Moonves, there is no doubt that Bob Bakish was the right CEO to lead Viacom in 2016,” LightShed Partners analyst Rich Greenfield and colleagues wrote in a report of March. “Bakish has been with Paramount and predecessor Viacom for 27 years and was instrumental in improving Viacom's relationships with distributors that Dauman had largely destroyed, while also significantly improving internal morale.”

But the LightShed team then called for new leadership. “Unfortunately, after making meaningful progress in 2019 and steering the merger over the target line, Bakish and his management team made a critical strategic error in the spring of 2020 that ultimately crippled the company financially,” they argued, talking about the creation of streamer Paramount+. .

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