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

Shari Redstone, the controlling shareholder of Paramount, has tried to withstand the erosion of her media empire during the last decade as she confronted the demise of cable TV, the rise of streaming and even a failed boardroom coup from a longtime ally.

By her facet by 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 administration advisor 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 persistence formally ran out on Monday.

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

Mr. Bakish, 60, will likely be changed by an “workplace 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 corporations, Paramount has struggled in recent times to get its streaming enterprise off the bottom as audiences for its cable channels have diminished. Because of this, it has lengthy been thought of an acquisition goal by rivals trying 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. Ms. 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 could enrich Ms. Redstone on the expense of different traders. The personal fairness agency Apollo World Administration and Sony have mentioned making an all-cash bid for Paramount, a suggestion that would give the corporate a critical 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 considerations, Skydance sweetened its proposal in current days. The corporate informed Paramount that it could 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 additionally provided to present 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 point out it’s negotiating the most effective deal for shareholders, stated Jim Woolery, founding father of Woolery & Firm, an advisory agency.

“It creates some extent of leverage,” stated Mr. Woolery, who has suggested many particular committees. He stated the particular committee was now extra prone to open up deal talks with Apollo and Sony or take into account permitting rival bidders to step in after any cope with Skydance was signed and giving Skydance a restricted proper to match a better supply.

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

However Ms. Redstone’s relationship with Mr. Bakish started deteriorating during the last yr, three individuals aware of their interactions stated. Ms. Redstone perceived that he had missed alternatives to strike profitable offers for the corporate, together with a sale of its Showtime and BET cable networks, they stated. In 2021, the personal 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 stated. Paramount didn’t pursue that deal.

The Wall Road Journal reported earlier on Blackstone’s curiosity in Showtime.

Mr. Bakish is in line for an enormous payday. Based on 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 imagine that Mr. Bakish wasn’t transferring with sufficient urgency to get Paramount on firmer footing, the three individuals stated. Mr. Bakish additionally informed the particular committee this yr that he had reservations a few merger with Skydance, one of many individuals stated.

Mr. Bakish’s place turned untenable in current weeks after he introduced a long-term plan to the particular committee that Ms. Redstone believed didn’t adequately replicate the enter of the corporate’s high executives, together with Mr. Robbins, Mr. Cheeks and Mr. McCarthy, the three individuals stated. Ms. Redstone authorised discussions between these executives and representatives of the board, together with Charles Phillips. Throughout the conversations, the executives expressed misgivings in regards to the route of the corporate, the individuals stated.

Mr. Bakish’s departure ends an necessary chapter in Paramount’s historical past. He was a pioneer of a technique 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 advisor 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 turn into head of Viacom’s worldwide channels division, and was tapped in 2016 to succeed Tom Dooley as chief govt.

He received the highest job throughout a deadly time for Viacom. The corporate’s bellicose strategy to negotiations with cable corporations — 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 strategy to negotiations, enhancing the connection with cable suppliers and stabilizing the corporate.

Regardless of these efforts, Paramount’s share worth has continued to sink through the years, reflecting traders’ skepticism in regards to 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 acquired an unceremonious send-off from Paramount. In short remarks on the finish of the corporate’s first-quarter earnings name on Monday, Paramount’s chief monetary officer provided his former boss terse congratulations on navigating “plenty of challenges.”

He didn’t take any questions.