The chief executive officer of Paramount, Bob Bakish, has announced his immediate resignation, marking a significant change in the company's top leadership as it considers a major merger. Mr. Bakish, aged 60, will be succeeded by an "office of the CEO" consisting of three executives: Brian Robbins, the head of Paramount's movie studio; George Cheeks, the chief executive of Paramount's CBS division; and Chris McCarthy, the chief executive of Showtime and MTV Entertainment Studios.
Mr. Bakish's departure raises broader questions about Paramount's future. Like many other media companies, Paramount has struggled to establish its streaming business while experiencing a decline in viewership for its cable channels. Consequently, Paramount has been viewed as an acquisition target by competitors seeking to enhance their content libraries and leverage in cable negotiations.
The company has been in discussions regarding a potential merger with Skydance, a media company led by tech and Hollywood executive David Ellison. While Shari Redstone, Paramount's controlling shareholder, has approved a potential deal for her stake, the company's directors have not yet reached an agreement for the entire company.
Several shareholders have publicly opposed a merger with Skydance, expressing concerns that it would primarily benefit Ms. Redstone at the expense of other investors. Private equity firm Apollo and Sony have discussed making an all-cash bid for Paramount, providing a viable alternative. However, any discussions with other potential buyers must wait until the exclusive negotiation period with Skydance ends in early May.
In an attempt to address these concerns, Skydance recently revised its proposal to acquire Paramount. Skydance offered a $3 billion cash infusion to reduce debt and repurchase shares, with funding from private equity firm Redbird Capital and the Ellison family. Skydance also proposed giving Paramount shareholders a larger stake in the combined company than previously suggested.
It remains uncertain whether Skydance's revised offer will convince the special committee of board members evaluating the merger. Jim Woolery, founder of advisory firm Woolery & Company, noted that Mr. Bakish's departure adds leverage for the committee to negotiate a better deal for shareholders.
Mr. Bakish has been with Paramount since 1997 and has been an ally of Ms. Redstone for years. He became chief executive in 2016 after a dispute between the Redstone family and his predecessor, Philippe Dauman. Ms. Redstone initially supported Mr. Bakish to lead the company after its merger with CBS in 2019.
However, over the past year, Ms. Redstone's relationship with Mr. Bakish deteriorated, according to sources familiar with their interactions. Ms. Redstone believed Mr. Bakish missed opportunities to secure lucrative deals for the company, including a potential sale of its Showtime and BET cable networks.
Mr. Bakish is set to receive a significant severance package of $50.6 million, with $31 million in cash over two years after his employment ends.
Ms. Redstone grew concerned that Mr. Bakish was not acting urgently enough to improve Paramount's position. Mr. Bakish also expressed reservations about the Skydance merger to the special committee this year.
In recent weeks, Mr. Bakish's position became untenable after he presented a long-term plan to the special committee that Ms. Redstone believed did not sufficiently consider input from top executives, including Mr. Robbins, Mr. Cheeks, and Mr. McCarthy. Ms. Redstone approved discussions between these executives and the board, including Charles Phillips, during which the executives expressed concerns about the company's direction.
Mr. Bakish's departure marks the end of an important chapter for Paramount. He was instrumental in developing a strategy to offer streaming entertainment directly to consumers, creating the Paramount+ streaming service and acquiring Pluto TV, a free, ad-supported streaming service.
Mr. Bakish's path to the top of Paramount was unconventional. A former consultant at Booz Allen Hamilton, he joined Viacom, Paramount's predecessor, after advising Paramount Communications on strategy for its Madison Square Garden division. He later became head of Viacom's international channels division and was appointed chief executive in 2016, succeeding Tom Dooley.
Mr. Bakish took over as Viacom CEO during a challenging period, when the company's confrontational approach in negotiations with cable companies led to it being dropped by the Suddenlink cable system in 2014. He adopted a more diplomatic approach, improving relationships with cable providers and stabilizing the company.
Despite these efforts, Paramount's share price has continued to decline, reflecting investor skepticism about the cable TV business. Over the past year, the price has fallen by 48 percent as the cable bundle, once a dominant force in the industry, continues to lose subscribers.