PARAMOUNT Global, the parent of CBS and MTV, is considering joint-venture options for its streaming service and has identified US$500 million in annual savings to boost profitability even as it prepares for a probable sale.
The company has received a “great deal of inbound interest” from potential partners for its Paramount+ streaming business, the leadership team of three co-chief executive officers said on Tuesday (Jun 4). As discussions continue, the company plans to reduce expenses, refine its international strategy and license more titles, they said. They also plan to pay down debt.
“We are confident our business can be run more efficiently by adjusting to the realities of the environment today,” co-CEO George Cheeks said.
Paramount chair Shari Redstone is weighing a takeover offer from independent film producer David Ellison. A special committee of Paramount board members recommended Ellison’s latest proposal, a complicated transaction that involves him buying the Redstone family’s National Amusements and merging his business, Skydance Media, into the company.
The Redstone family controls 77 per cent of Paramount’s voting stock through National Amusements.
Opposition to the transaction from some prominent investors prompted Ellison to change the terms in recent weeks. He plans to invest billions of US dollars more in the business, for debt reduction and through a tender offer for shares not held by the Redstones. He’s lowered the amount he’s offering to pay for National Amusements by US$250 million, to US$2.25 billion, and reduced the valuation of Skydance by a similar amount to US$4.75 billion, according to sources familiar with the latest terms.
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The executives declined to comment on sale talks on Tuesday. Redstone, who is now mulling Ellison’s offer, told shareholders she believes the plan articulated by management will improve the company’s finances and allow it to continue to invest in programming.
“Our confidence in the office of the CEO stems from what this team has been able to accomplish with a reduced budget over the last several years,” she said.
At the annual meeting, shareholders formally rejected proposals to require investor approval for certain executive severance packages. They also rejected a proposal for a report on the company’s use of artificial intelligence and elected a pared-down six-member board.
The company postponed the date for an employee town hall, originally scheduled for Wednesday, until Jun 25.
“Given the ongoing speculation regarding potential M&A, we want to be able to speak to you with as much candour and transparency as possible,” the company said. “By moving the date, our hope is to do just that.”
Paramount previously announced in April that its board would shrink by four members. The company subsequently announced the departure of chief executive officer Bob Bakish, who was also a board member.
The New York-based media giant, which traces its roots back more than 100 years through its ownership of the Paramount Pictures film studio, has faced a change in the way consumers watch TV and films. Its traditional TV channels have lost viewers and advertisers, while its Paramount+ streaming service is still not profitable. BLOOMBERG
