Instant Reaction: Paramount CEO Bob Bakish Is Out

Bloomberg Audio Studios, podcasts, radio news. 0:00:07.000 --> 0:00:10.200 We're getting some news that the Paramount Global is announcing 0:00:10.320 --> 0:00:13.760 new leadership changes. CEO Bob Gatbackish stepping down from his 0:00:13.840 --> 0:00:15.840 role at CEO. Not a surprise to those who've been 0:00:16.000 --> 0:00:20.840 following over the last few days. Again, Paramount Global just 0:00:20.920 --> 0:00:23.040 out with the press release saying that Global CEO Bob 0:00:23.079 --> 0:00:24.239 Backish stepping down. 0:00:24.480 --> 0:00:24.680 Yeah. 0:00:24.680 --> 0:00:28.280 Apparently he and Shari Redstone were not seeing eye to eye. 0:00:28.280 --> 0:00:30.480 There are a lot of offers made for different parts 0:00:30.560 --> 0:00:34.800 of Paramount that he at different points rejected, and as 0:00:34.840 --> 0:00:37.080 a result, they are not going with any one CEO 0:00:37.400 --> 0:00:40.520 as his replacement. They're establishing an office of CEO. Which 0:00:40.720 --> 0:00:42.720 does that inspire confidence when the company's trying to I 0:00:42.720 --> 0:00:43.159 don't even know. 0:00:43.120 --> 0:00:43.680 What that means. 0:00:43.840 --> 0:00:45.720 Well, I mean, but look at who it is. I mean, no, 0:00:45.800 --> 0:00:48.240 it doesn't inspire confidence. Answer your question though, I will 0:00:48.240 --> 0:00:49.839 say this, And when you look at who it is, 0:00:49.880 --> 0:00:52.760 you're basically talking about Great Cheeks, who is running CBS. 0:00:52.880 --> 0:00:55.720 You're talking about Chris McCarthy who was running the Showtime 0:00:55.800 --> 0:00:58.840 and MTV Networks, and then they're bringing in Brian Robbins, 0:00:58.960 --> 0:01:00.920 who was I guess heading up Nickelodeon and some of 0:01:00.960 --> 0:01:03.160 the kids programming here, So it's kind of a cross 0:01:03.160 --> 0:01:06.760 section of all the major broadcast properties there. So maybe 0:01:06.800 --> 0:01:09.120 that provides some confidence that the people running this company 0:01:09.120 --> 0:01:11.560 now are probably more on the content side rather than 0:01:12.880 --> 0:01:14.520 just on sort of the financial side. 0:01:14.560 --> 0:01:16.720 But what does it mean for the future of Paramount 0:01:16.720 --> 0:01:18.960 Global as a standalone public company? 0:01:19.040 --> 0:01:20.920 It makes its fund to be sold and I'm sold soon. 0:01:21.319 --> 0:01:24.759 That's that's where I'm going with this. So Jay Redstone 0:01:24.800 --> 0:01:28.320 chaired the board, saying that it Paramount Global includes exceptional 0:01:28.360 --> 0:01:30.720 assets that we believe strongly in the future of value 0:01:30.720 --> 0:01:33.640 creation potential of the company. The question is where does 0:01:33.680 --> 0:01:35.639 that value come from. Does it come from a new 0:01:35.720 --> 0:01:38.560 ownership or does it come from staying independent. 0:01:38.640 --> 0:01:40.000 Well that's the other thing too, I mean we talk 0:01:40.040 --> 0:01:41.880 about I mean, to Scarla's point, I mean, whether this 0:01:41.920 --> 0:01:44.800 is a good idea to have basically three CEOs thing. 0:01:45.160 --> 0:01:46.920 But like, let's face it, this isn't going to last 0:01:46.920 --> 0:01:48.440 long one way or the other. This is sold, They're 0:01:48.440 --> 0:01:51.280 going to have to find some different management structure, and 0:01:51.560 --> 0:01:53.960 so this seems to be much more of a stopgap. 0:01:53.680 --> 0:01:55.880 I mean, end of an era. Though for Bob Backings, right. 0:01:55.920 --> 0:02:00.480 He's been at Viacomp since nineteen ninety seven, CEO of 0:02:00.560 --> 0:02:02.920 I come back in twenty sixteen, CEO of the combined 0:02:02.920 --> 0:02:04.520 company back in twenty nineteen. 0:02:04.640 --> 0:02:06.480 Yeah, and one reason why he was able to rise 0:02:06.520 --> 0:02:09.079 and stay in his position was because he did get 0:02:09.080 --> 0:02:11.120 along with Sharry Redstone once upon a time, a long 0:02:11.160 --> 0:02:13.600 time ago. That is no longer the case. And this 0:02:13.680 --> 0:02:15.720 is definitely a company Romaine as you were putting it 0:02:16.000 --> 0:02:18.800 set up to be sold. The question is whether it 0:02:18.840 --> 0:02:21.960 will be sky Dance that is the actual acquirer, and 0:02:22.000 --> 0:02:26.080 of course that's the Redstone family's preference, or Apollo and Sony, 0:02:26.320 --> 0:02:29.239 or maybe there might even be another dark horse candidate 0:02:29.240 --> 0:02:29.800 coming in here. 0:02:29.960 --> 0:02:31.760 I do find it interesting if you just look at 0:02:31.760 --> 0:02:34.080 the three that are taking over, and you guys pointed 0:02:34.080 --> 0:02:35.520 this out, But as we're spending some time on it, 0:02:35.520 --> 0:02:37.280 as we're also waiting for the numbers to come out, 0:02:37.560 --> 0:02:41.880 do Christ muccarthy, president's CEO of Showtime and MTV Entertainment 0:02:41.919 --> 0:02:45.320 Studios do the Showtime Studio part. Then Brian Robbins is 0:02:45.360 --> 0:02:47.560 the president's CEO of Paramount Pictures. Then you have the 0:02:47.639 --> 0:02:51.840 movie Behemoth, and then you wind up having cheeks George Cheeks, 0:02:51.840 --> 0:02:55.520 who's the CEO over He'll be the CEO over at CBS. 0:02:55.520 --> 0:02:58.280 So then that's where the tri effecta of what Paramount 0:02:58.280 --> 0:03:01.200 Global actually is and how that sets up each of 0:03:01.200 --> 0:03:04.120 its areas to either be sold separately or then tried 0:03:04.120 --> 0:03:04.680 two together. 0:03:05.160 --> 0:03:07.000 Yeah, and I mean, and that's well, that's the big 0:03:07.080 --> 0:03:09.120 question though, and a lot of questions about what the 0:03:09.360 --> 0:03:11.480 what the new structure would look like, whether this would 0:03:11.480 --> 0:03:13.760 be sort of a white knight coming in and buying 0:03:13.760 --> 0:03:16.160 the whole thing, or whether they're actually just looking for 0:03:16.320 --> 0:03:18.200 certain pieces of it. And I think, guys, if you're 0:03:18.240 --> 0:03:19.960 keeping an eye on the wire right now, I think 0:03:19.960 --> 0:03:22.480 we're actually finally getting the numbers for the most recent quarter, 0:03:22.520 --> 0:03:24.600 and they're pretty much what you would expected to miss 0:03:24.600 --> 0:03:26.640 on several of the key metrics. I'll just give you 0:03:26.639 --> 0:03:28.839 the top and bottom line here, one Q revenue coming 0:03:28.840 --> 0:03:31.079 in at seven point seven billion, the street was looking 0:03:31.120 --> 0:03:33.600 for about seven point seventy four and as far as 0:03:33.600 --> 0:03:36.520 the loss per share at least on a continuing basis, 0:03:36.720 --> 0:03:40.120 looking at about eighty eight cents here, not sure the comparison, 0:03:40.400 --> 0:03:43.280 but when you look at the one Q adjusted EPs 0:03:43.320 --> 0:03:45.880 for continuing ops, they did beat their sixty two cents 0:03:45.920 --> 0:03:48.000 at thirty six cents, So I'm not sure these numbers 0:03:48.040 --> 0:03:48.800 actually matter, and. 0:03:48.760 --> 0:03:50.560 She yeah, shares bouncing around a little bit, but still 0:03:50.600 --> 0:03:52.760 higher in the after hours by a little over two percent. 0:03:52.800 --> 0:03:55.800 First quarter direct consumer revenue coming in right at estimates 0:03:55.800 --> 0:03:58.280 of one point eight eight billion dollars, first quarter TV 0:03:58.400 --> 0:04:01.040 revenue at five point two three billion, missing estimates of 0:04:01.080 --> 0:04:04.240 five point three three But Scarlett, like Romaine, said, the 0:04:04.280 --> 0:04:06.080 big question is do these numbers even matter? 0:04:06.200 --> 0:04:08.800 Do the numbers really matter? Well, if you're a potential bidder, 0:04:08.800 --> 0:04:12.000 they do, because the filmed entertainment revenue was actually one 0:04:12.040 --> 0:04:14.640 part of the business that beat analyst estimates six hundred 0:04:14.680 --> 0:04:17.839 and five million dollars. The consensussessment was for five hundred 0:04:17.839 --> 0:04:19.960 and seventy seven. And again, if you're sky Dance, this 0:04:20.040 --> 0:04:23.400 really matters because this is what their their whole thing is, right, 0:04:23.400 --> 0:04:26.920 sky Dance is making movies, and Paramount has this storied 0:04:26.960 --> 0:04:28.880 franchise and that's what they would be buying. 0:04:28.960 --> 0:04:29.200 Yep. 0:04:29.640 --> 0:04:33.080 Interesting in their earnings release, this statement is from Navilla Chopra, 0:04:33.200 --> 0:04:36.560 the executive vice president CFO. So not I even bought 0:04:36.560 --> 0:04:39.440 backish there, just saying that the team delivered a strong 0:04:39.480 --> 0:04:43.719 operational and financial performance despite a quote dynamic environment. We 0:04:43.760 --> 0:04:45.320 continue to operate in code. 0:04:45.360 --> 0:04:47.000 That's code wow, what are you for? 0:04:47.040 --> 0:04:47.599 Hot mess? 0:04:49.880 --> 0:04:52.640 As I mentioned, we're talking about Paramount up two percent 0:04:53.040 --> 0:04:57.440 in after hours this after Paramount Global replaced Chief executive 0:04:57.480 --> 0:05:00.600 Officer Bob Bekish, appointing a management committee. As the board 0:05:00.640 --> 0:05:04.240 negotiates a possible change in control of the company, Three 0:05:04.240 --> 0:05:07.200 of Paramount's most senior executives will run the company, according 0:05:07.200 --> 0:05:10.440 to a statement released on Monday. Bloomberg News Entertainment editor 0:05:10.480 --> 0:05:13.919 Chris Paul Mary is in our Los Angeles bureau and 0:05:13.960 --> 0:05:16.400 he joins us right now with the latest. Chris, as 0:05:16.400 --> 0:05:19.240 I mentioned when this news broke on TV, not at 0:05:19.240 --> 0:05:21.240 all a surprise that Backish is out. He's been at 0:05:21.240 --> 0:05:23.360 the company since ninety seven. The reporting around this over 0:05:23.400 --> 0:05:25.440 the last few days has said that he'll be out. 0:05:25.440 --> 0:05:29.280 With surprises to me is who's taking over for backsh 0:05:29.360 --> 0:05:31.160 It's not one person, it's three. 0:05:31.400 --> 0:05:34.160 Yes, And I can't really think of a company that's 0:05:34.160 --> 0:05:35.200 had three CEOs. 0:05:36.320 --> 0:05:38.480 Your CEO, no, your CEO, no, you're CEO. 0:05:39.320 --> 0:05:43.120 Sometimes they've had two and that works and doesn't work, 0:05:43.640 --> 0:05:47.280 but three, I haven't heard of before. It's an unusual 0:05:47.360 --> 0:05:51.600 situation because they are negotiating this deal with David Ellison 0:05:51.839 --> 0:05:54.880 that would represent a change of control. If that happens, 0:05:55.240 --> 0:05:57.680 he would become the CEO. So that's clearly part of 0:05:57.720 --> 0:06:02.800 what's going on here and what happens if that doesn't 0:06:02.839 --> 0:06:06.360 go through. If they continue with this something, probably paramout's 0:06:06.360 --> 0:06:07.640 going to get asked a lot. 0:06:08.160 --> 0:06:12.680 So the stock was higher after, but the company also 0:06:12.720 --> 0:06:16.159 reported earnings. Do you get a sense of how much 0:06:16.440 --> 0:06:20.200 the shareholders of the company are kind of embracing this 0:06:20.400 --> 0:06:22.040 news of now three CEOs. 0:06:24.080 --> 0:06:26.600 Well, I think this sort of stock bumps started with 0:06:26.720 --> 0:06:30.560 we Knowther's reported over the weekend that there was sweetened 0:06:30.800 --> 0:06:33.839 terms for the sky Dance offer. They're going to invest 0:06:33.880 --> 0:06:36.600 the three billion dollars in paramount, which could be used 0:06:36.680 --> 0:06:38.919 for debt reduction, and do so at a premium to 0:06:38.960 --> 0:06:41.680 what the current stock is trading at. So I think 0:06:41.720 --> 0:06:44.359 the market sort of some degree is responding to that. 0:06:44.680 --> 0:06:46.920 But the numbers earnings wise were good. I don't think 0:06:46.920 --> 0:06:50.320 that was Bob Mackers's problem. Revenue was up. They had 0:06:50.320 --> 0:06:52.920 the Super Bowl in the quarter, so that was boost 0:06:53.040 --> 0:06:54.440 but other numbers were good as well. 0:06:54.560 --> 0:06:57.400 So what was Backash's problem. Why not have Backash go 0:06:57.440 --> 0:06:58.640 all the way until an acquisition? 0:07:00.200 --> 0:07:04.040 Very good question. It appears that he was opposed to 0:07:04.080 --> 0:07:07.760 this deal happening and was sort of vocal in the 0:07:07.839 --> 0:07:11.240 last earnings call saying that he thought whatever deal Paramount 0:07:11.240 --> 0:07:15.720 worked out should benefit all shareholders right now, the Skydiance 0:07:15.760 --> 0:07:19.360 offer would certainly buy out the Redstones families controlling share 0:07:19.520 --> 0:07:24.560 of the company, but would possibly dilute the other shareholders 0:07:25.120 --> 0:07:29.800 through this merger with Skydance, So his opposition probably is 0:07:29.800 --> 0:07:32.160 one of the factors involved here. He's also made some 0:07:32.160 --> 0:07:36.240 missteps that ultimately the board lost confidence in him. 0:07:36.680 --> 0:07:40.640 So if this deal with Skydance actually goes through, and 0:07:40.680 --> 0:07:43.920 again it's a little complicated here because of the different 0:07:43.920 --> 0:07:47.280 share classes and who has control, would the Redstone family 0:07:48.240 --> 0:07:51.280 have any ownership of the new company. 0:07:52.400 --> 0:07:57.560 They're going to keep some residual shareholder in the company, 0:07:57.560 --> 0:08:01.000 but won't be the controlling shareholders anymore. So they have 0:08:01.120 --> 0:08:04.800 this voting stock Class A shares they owned seventy seven 0:08:04.840 --> 0:08:07.880 percent of those. Those would be bought by David Ellison 0:08:07.920 --> 0:08:08.480 and his group. 0:08:09.400 --> 0:08:12.760 Can you give us a few details about the deal 0:08:12.840 --> 0:08:17.160 with Skydance Media led by David Ellison. What would that 0:08:17.200 --> 0:08:20.560 actually look like for the consumers of Paramount. 0:08:20.760 --> 0:08:24.080 Yeah, it's very complicated. So it's a three part deal really. 0:08:24.200 --> 0:08:27.160 So they would buy National Amusements, which is the holding 0:08:27.200 --> 0:08:30.720 company the Redstones own their controlling shares of Paramount, and 0:08:30.760 --> 0:08:36.320 also some movie theaters. Skuidance would also invest three billion 0:08:36.360 --> 0:08:40.840 dollars directly into Paramount, and they would merge Skydance and 0:08:40.920 --> 0:08:43.360 get Paramount shares for that as well. And that's probably 0:08:43.360 --> 0:08:46.400 the most controversial part of the deal because the valuation 0:08:46.480 --> 0:08:49.320 of Skydance is on a order of five billion dollars 0:08:49.840 --> 0:08:54.080 and its profits are not nearly what one would pay 0:08:54.160 --> 0:08:58.680 for the price, So that's probably the most contentious part, 0:08:58.840 --> 0:09:01.520 even though, mind you, none of these deal details have 0:09:01.559 --> 0:09:04.040 actually been announced publicly. This is all folks like us 0:09:04.040 --> 0:09:04.640 reporting on. 0:09:04.600 --> 0:09:07.480 It, all right, Well, we certainly appreciate the folks like you, Chris, 0:09:07.720 --> 0:09:09.680 who are reporting on this and explaining and breaking it 0:09:09.720 --> 0:09:12.319 down for our audience. Bloomberg News entertainmentitor Chris Paul Mary 0:09:12.800 --> 0:09:16.199 live out there in California or Los Angeles Bureau