Bob Bakish, Paramount CEO, Steps Down as Firm Weighs Merger

Shari Redstone, the proprietor of Paramount, has tried to withstand the erosion of her media empire over the past decade as she confronted the dying of cable TV, the rise of streaming and even a failed boardroom coup from a longtime ally.

By her aspect via all of it has been Bob Bakish, Paramount’s chief govt. For years, she noticed him as a loyal lieutenant who might navigate the treacherous leisure {industry} with the monetary dexterity of the previous administration guide he as soon as was. As Paramount’s share worth sagged, she was affected person with him — whilst she steered the corporate towards an eventual sale that he had reservations about.

That endurance formally ran out on Monday.

Mr. Bakish is stepping down efficient instantly, the corporate introduced on Monday, a surprising shake-up within the high ranks of the corporate because it considers a significant merger.

Mr. Bakish, 60, will likely be changed by an “office of the C.E.O.” run by three executives: Brian Robbins, head of the Paramount film studio; George Cheeks, chief govt of Paramount’s CBS division; and Chris McCarthy, chief govt of Showtime and MTV Leisure Studios.

Looming over Mr. Bakish’s exit are broader questions on the way forward for Paramount. Like many media firms, Paramount has struggled in recent times to get its streaming enterprise off the bottom as audiences for its cable channels have diminished. Consequently, Paramount has lengthy been thought-about an acquisition goal by rivals seeking to construct up their content material libraries and enhance their leverage in cable negotiations.

In current months, the corporate has been in discussions to merge with Skydance, a media firm run by the tech scion and Hollywood govt David Ellison. Redstone, who’s Paramount’s controlling shareholder, has already signed off on a possible deal for her stake, however the firm’s administrators have but to achieve an settlement for the entire firm.

A number of shareholders have come out publicly in opposition to a mixture with Skydance, saying it might enrich Ms. Redstone on the expense of different traders. The non-public fairness agency Apollo and Sony have mentioned making an all-cash bid for Paramount, a suggestion that would give the corporate a severe various. However any talks with different suitors should wait till the unique negotiation interval with Skydance lapses, in early Might.

In an effort to assuage these issues, Skydance in current days sweetened its proposal to accumulate Paramount. The corporate instructed Paramount it might present a $3 billion money infusion to pay down debt and purchase again shares, cash that might come from the private-equity agency Redbird Capital and the Ellison household. Skydance also offered to provide Paramount shareholders a bigger stake within the mixed firm than it beforehand contemplated.

It’s unclear if Skydance’s sweeteners will likely be sufficient to persuade the particular committee of board members evaluating the merger with Skydance that the deal treats all shareholders pretty. The uncommon nature of Mr. Bakish’s departure might put additional strain on the committee to indicate they’re negotiating one of the best deal for shareholders, mentioned Jim Woolery, founding father of Woolery & Firm, an advisory agency.

“It creates a point of leverage,” mentioned Mr. Woolery, who has suggested many particular committees. He mentioned it was now extra doubtless that the particular committee would open up deal talks with Apollo and Sony or contemplate permitting rival bidders to step in after any cope with Skydance is signed and giving Skydance the suitable to match the next provide.

Mr. Bakish has been an worker of Paramount since 1997, and he and Ms. Redstone have been allies for years. He took over as chief govt in 2016 after a rift opened between the Redstone household and one in all his predecessors, Philippe Dauman, and Mr. Bakish was her most well-liked candidate to run the corporate after it merged with CBS in 2019.

However Ms. Redstone’s relationship with Mr. Bakish started deteriorating over the past yr, three individuals aware of their interactions mentioned. Ms. Redstone perceived he had missed alternatives to strike profitable offers for the corporate, together with a sale of its Showtime and BET cable networks, they mentioned. In 2021, the non-public fairness agency Blackstone expressed curiosity in buying the Showtime cable community for not less than $5.5 billion, an eye-watering sum for a enterprise in long-term decline, one of many individuals mentioned. Paramount didn’t pursue that deal.
The Wall Road Journal earlier reported on Blackstone’s curiosity in Showtime.

Mr. Bakish is in line for an enormous payday. In line with the info agency Equilar, he’s entitled to a severance bundle of $50.6 million, with $31 million of that within the type of money for the 2 years after his employment is terminated.

Ms. Redstone got here to consider that Mr. Bakish wasn’t transferring with sufficient urgency to get Paramount on firmer footing, the three individuals mentioned. Mr. Bakish additionally instructed the particular committee this yr that he had reservations concerning the firm’s merger with Skydance, one of many individuals mentioned.

Mr. Bakish’s place grew to become untenable in current weeks after he offered a long-term plan to the particular committee that Ms. Redstone believed didn’t adequately mirror the enter of the corporate’s high executives, together with Mr. Robbins, Mr. Cheeks and Mr. McCarthy, the three individuals mentioned. Ms. Redstone authorized discussions between these executives and representatives of the board, together with Charles Phillips. Through the conversations, the executives expressed misgivings concerning the course of the corporate, the individuals mentioned.

Mr. Bakish’s departure marks the tip of an necessary chapter in Paramount’s historical past. He was a pioneer of a method to supply streaming leisure on to customers, creating the Paramount+ streaming service and buying Pluto TV, a free, ad-supported streaming service.

Mr. Bakish had an unlikely path to the highest of Paramount. A former guide at Booz Allen Hamilton, he joined Viacom, Paramount’s predecessor, after advising Paramount Communications on technique for its Madison Sq. Backyard division. Mr. Bakish rose to develop into head of Viacom’s worldwide channels division, and was tapped in 2016 to succeed Tom Dooley as chief govt.

He obtained the highest job throughout a deadly time for Viacom. The corporate’s bellicose method to negotiations with cable firms — its most necessary companions — resulted in its being dropped by the Suddenlink cable system in 2014. Viacom’s share worth tumbled. Mr. Bakish took a extra measured method to negotiations, bettering the connection with cable suppliers and stabilizing the corporate.

Regardless of these efforts, Paramount’s share worth has continued to sink over time, reflecting traders’ skepticism concerning the cable TV enterprise. During the last yr, the worth has fallen 48 p.c because the cable bundle — as soon as an industry-defining juggernaut — continues to lose subscribers.

After greater than a quarter-century on the firm and its predecessor, Mr. Bakish’s send-off from Paramount was unceremonious. In short remarks on the finish of the corporate’s first-quarter earnings name, Paramount’s chief monetary officer supplied his former boss terse congratulations on navigating “a number of challenges.”

He didn’t take any questions.