Paramount Global’s new trio of co-CEOs laid out their vision for the Hollywood studio as the controlling shareholder, Shari Redstone, mulls a sweetened takeover offer from a buyer consortium led by Skydance and RedBird Capital.
Redstone addressed the investors as the meeting began, indicating the company’s most important goal was “driving value for all our shareholders,” which would come by reducing overall debt to strengthen the balance sheet and continue to invest in “best-in-class content.”
Redstone also addressed the new leadership structure at the studio with three co-CEOs. “While we recognize that this is not a traditional management structure, we are confident that it will enable them to move quickly to implement best practices throughout the company to drive improved performance,” Redstone added.
This opened the way for the new trio of executives – George Cheeks, president and CEO of CBS; Chris McCarthy, president and CEO of Showtime/MTV Entertainment Studios; and Brian Robbins, president and CEO of Paramount Pictures – to outline a “shared vision” for the studio.
“Our plan looks forward to build back the best of Paramount by delivering higher revenue with lower costs, which translates to higher earnings and better returns,” Robbins told shareholders. He added the studio had a strength in franchises that did not rely on superheroes to address an increasingly crowded streaming landscape that was “frankly more confusing for the consumer.”
“What sets Paramount’s franchises apart from the rest of the industry is that we aren’t dependent on any one genre. We saw the downsides of betting on a single genre like superheroes and comic books. So we built our billion dollar brand strategy with a focus on real life heroes and, yes, a little yellow sponge named Bob,” Robbins told investors.
He added Paramount could hardly rest on its laurels. “We know we need to do more. We need to accelerate our path to profitability. And that’s why we’re hard at work on a plan that’s going to do exactly that, but first reducing our expenses, integrating our teams more closely and reducing redundancies,” Robbins explained.
Cheeks added Paramount would be “transforming streaming,” to get closer to profitability, “reduce non-content costs,” by eyeing around $500 million in annual cost cutting. He added Paramount was “in talks to divest some of our assets to unlock value,” which could include negotiations to sell BET Networks.
That theme was also taken up by Robbins, who said “we’ll optimize our asset mix and use the proceeds to pay down debt. Taken together, these actions will drive shareholder value by improving profitability and returning the company to investment grade metrics over time.”
The meeting took place against the backdrop of Redstone and her National Amusements vehicle looking at a revised deal for the studio, and her own options. Cheeks, McCarthy and Robbins have led the studio since the previous CEO, Bob Bakish, left Paramount in April when the company began exclusive merger talks with Skydance.
If Redstone rejects the revised offer from Skydance, she could continue to have the new triumvirate run the company, look at other deals (like Sony/Apollo), or sell National Amusements outright to someone else and let the buyer figure out what to do with Paramount.
Jamie Morris, head of investor relations at Paramount, addressed the current takeover talks during the AGM. “We cannot comment on the speculation. What I can tell you is that the presentation that you just saw was built to improve the company’s balance sheets, to best set it up for growth and to drive shareholder value, regardless of the speculation,” he said.
McCarthy added during the Q&A portion of the meeting: “We’re aggressively pursuing all options to make the most of our content and drive the greatest value for the company, in both the short and long term.”
Short of an overall takeover of the studio by Skydance, the trio of co-CEOs pointed to a stepped-up drive towards joint ventures and other initiatives to drive growth at Paramount, especially on the streaming front. “We’ve already had a great deal of in-bound interest coming in and people wanting to partner with us because of the strength of that big broad hit content,” McCarthy added.
And Cheeks addressed the proposal for $500 million in annual cost savings. “Look, we’re prepared to move quickly on the cost reductions, we’re confident that the business can be run much more efficiently,” as he pointed to a management streamlining and reducing costs in real estate, technology, marketing and other studio roles.
Cheeks also talked up the benefits of streaming bundles after Paramount+ and Showtime were earlier packaged together. “Bundling our streaming and linear products has many benefits. It expands the reach and engagement of our Paramount+ ad-supported tier, lowers customer acquisition costs and yields much lower churn,” he argued.