Press Reports Undergo Rewriting - Paramount's sales crisis intensifies following the switch in leadership.
Paramount, known for producing gripping blockbusters like "The Godfather," is now creating its own drama with a sales thriller. Yesterday, Bob Bakish, their long-time boss, was replaced by a trio of managers in the middle of sales negotiations.
The shakeup may influence the future of Paramount's film and series offerings. This media giant owns the iconic Hollywood studio as well as TV channels like CBS, MTV, and Nickelodeon, and recently received a merger offer from film production company Skydance. However, there's a dispute among investors, particularly over Shari Redstone, the most significant shareholder.
Redstone's father, Sumner Redstone, had built the media empire, which she united under the Paramount umbrella after his death. Some shareholders feel disadvantaged by the Skydance offer, causing tension between Redstone and Bakish.
A Vote on the Voting Shares
The share structure is the source of this dispute. There are close to 41 million shares with voting rights, while over 600 million shares don't have voting rights. Of the voting shares, about 31 million are held by Shari Redstone. Her stake is more than enough to gain control of the entire company.
Skydance wants to benefit from Redstone's position. Initially, Skydance's plan was to buy Redstone's National Amusements company, which also holds her Paramount shares with voting rights, for around $2 billion. Afterward, the Paramount Group, now under Ellison's control, would buy Skydance for $5 billion in shares. This way, Ellison would control Paramount and the two companies would be united, without spending much money on the non-voting shares.
Additional Offers on the Table
Since then, there have been other offers. The holders of the non-voting shares criticized the initial plan, which has also caused tensions between Bakish and Redstone.
Over the weekend, Skydance allegedly improved the offer for them. Paramount also received a $26 billion offer from the financial company Apollo. According to reports, Sony is interested in joining the deal. However, negotiations will continue solely with Skydance until early May.
Skydance's involvement in the recent blockbuster "Top Gun: Maverick" may help their case. According to the plans, Ellison will take over the management of Paramount after the merger. His father, Larry Ellison, the billionaire founder of Oracle, will help finance the deal.
Losses at Paramount+
Under Bakish's leadership, Paramount produced several hits and made significant revenue from advertising during the American football final Super Bowl. However, the group suffered substantial losses with its streaming service Paramount+. In the recent quarter, Paramount+ gained 71 million users worldwide, but still generated an operating loss of $286 million.
In total, Paramount's revenue increased by 5.8 percent year-on-year to nearly $7.7 billion in the last quarter. However, the bottom line was a loss of $554 million, compared to a $1.12 billion loss in the previous year's quarter.
Possible Cost-Cutting Measures
Investors questioned the financials and the change in management. The stock dropped about three percent during early US trading. According to the "Wall Street Journal," Paramount is considering cost-cutting measures if no takeover deal comes through. They consider reducing costs by $2 billion, like selling some US channels, and operating Paramount+ as a joint venture.
Breaking up with Skydance could have consequences for the film offerings: Skydance not only produced "Top Gun: Maverick" but also "Mission: Impossible" and "Transformers," among others. Elsewhere in the industry, cost-cutting measures are already affecting programming: Disney's boss Bob Iger announced they would produce fewer and cheaper series and films to help their streaming service turn a profit.
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Source: www.stern.de
