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Instant Reaction: Paramount CEO Bob Bakish Is Out · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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  Speaker 2: We're getting some news that the Paramount Global is announcing
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  Speaker 2: new leadership changes. CEO Bob Gatbackish stepping down from his
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  Speaker 2: role at CEO. Not a surprise to those who've been
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  Speaker 2: following over the last few days. Again, Paramount Global just
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  Speaker 2: out with the press release saying that Global CEO Bob
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  Speaker 2: Backish stepping down.
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  Speaker 3: Yeah.
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  Speaker 1: Apparently he and Shari Redstone were not seeing eye to eye.
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  Speaker 1: There are a lot of offers made for different parts
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  Speaker 1: of Paramount that he at different points rejected, and as
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  Speaker 1: a result, they are not going with any one CEO
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  Speaker 1: as his replacement. They're establishing an office of CEO. Which
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  Speaker 1: does that inspire confidence when the company's trying to I
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  Speaker 1: don't even know.
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  Speaker 3: What that means.
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  Speaker 4: Well, I mean, but look at who it is. I mean, no,
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  Speaker 4: it doesn't inspire confidence. Answer your question though, I will
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  Speaker 4: say this, And when you look at who it is,
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  Speaker 4: you're basically talking about Great Cheeks, who is running CBS.
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  Speaker 4: You're talking about Chris McCarthy who was running the Showtime
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  Speaker 4: and MTV Networks, and then they're bringing in Brian Robbins,
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  Speaker 4: who was I guess heading up Nickelodeon and some of
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  Speaker 4: the kids programming here, So it's kind of a cross
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  Speaker 4: section of all the major broadcast properties there. So maybe
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  Speaker 4: that provides some confidence that the people running this company
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  Speaker 4: now are probably more on the content side rather than
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  Speaker 4: just on sort of the financial side.
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  Speaker 2: But what does it mean for the future of Paramount
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  Speaker 2: Global as a standalone public company?
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  Speaker 4: It makes its fund to be sold and I'm sold soon.
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  Speaker 2: That's that's where I'm going with this. So Jay Redstone
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  Speaker 2: chaired the board, saying that it Paramount Global includes exceptional
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  Speaker 2: assets that we believe strongly in the future of value
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  Speaker 2: creation potential of the company. The question is where does
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  Speaker 2: that value come from. Does it come from a new
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  Speaker 2: ownership or does it come from staying independent.
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  Speaker 4: Well that's the other thing too, I mean we talk
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  Speaker 4: about I mean, to Scarla's point, I mean, whether this
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  Speaker 4: is a good idea to have basically three CEOs thing.
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  Speaker 4: But like, let's face it, this isn't going to last
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  Speaker 4: long one way or the other. This is sold, They're
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  Speaker 4: going to have to find some different management structure, and
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  Speaker 4: so this seems to be much more of a stopgap.
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  Speaker 2: I mean, end of an era. Though for Bob Backings, right.
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  Speaker 2: He's been at Viacomp since nineteen ninety seven, CEO of
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  Speaker 2: I come back in twenty sixteen, CEO of the combined
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  Speaker 2: company back in twenty nineteen.
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  Speaker 1: Yeah, and one reason why he was able to rise
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  Speaker 1: and stay in his position was because he did get
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  Speaker 1: along with Sharry Redstone once upon a time, a long
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  Speaker 1: time ago. That is no longer the case. And this
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  Speaker 1: is definitely a company Romaine as you were putting it
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  Speaker 1: set up to be sold. The question is whether it
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  Speaker 1: will be sky Dance that is the actual acquirer, and
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  Speaker 1: of course that's the Redstone family's preference, or Apollo and Sony,
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  Speaker 1: or maybe there might even be another dark horse candidate
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  Speaker 1: coming in here.
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  Speaker 5: I do find it interesting if you just look at
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  Speaker 5: the three that are taking over, and you guys pointed
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  Speaker 5: this out, But as we're spending some time on it,
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  Speaker 5: as we're also waiting for the numbers to come out,
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  Speaker 5: do Christ muccarthy, president's CEO of Showtime and MTV Entertainment
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  Speaker 5: Studios do the Showtime Studio part. Then Brian Robbins is
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  Speaker 5: the president's CEO of Paramount Pictures. Then you have the
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  Speaker 5: movie Behemoth, and then you wind up having cheeks George Cheeks,
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  Speaker 5: who's the CEO over He'll be the CEO over at CBS.
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  Speaker 5: So then that's where the tri effecta of what Paramount
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  Speaker 5: Global actually is and how that sets up each of
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  Speaker 5: its areas to either be sold separately or then tried
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  Speaker 5: two together.
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  Speaker 4: Yeah, and I mean, and that's well, that's the big
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  Speaker 4: question though, and a lot of questions about what the
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  Speaker 4: what the new structure would look like, whether this would
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  Speaker 4: be sort of a white knight coming in and buying
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  Speaker 4: the whole thing, or whether they're actually just looking for
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  Speaker 4: certain pieces of it. And I think, guys, if you're
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  Speaker 4: keeping an eye on the wire right now, I think
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  Speaker 4: we're actually finally getting the numbers for the most recent quarter,
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  Speaker 4: and they're pretty much what you would expected to miss
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  Speaker 4: on several of the key metrics. I'll just give you
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  Speaker 4: the top and bottom line here, one Q revenue coming
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  Speaker 4: in at seven point seven billion, the street was looking
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  Speaker 4: for about seven point seventy four and as far as
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  Speaker 4: the loss per share at least on a continuing basis,
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  Speaker 4: looking at about eighty eight cents here, not sure the comparison,
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  Speaker 4: but when you look at the one Q adjusted EPs
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  Speaker 4: for continuing ops, they did beat their sixty two cents
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  Speaker 4: at thirty six cents, So I'm not sure these numbers
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  Speaker 4: actually matter, and.
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  Speaker 2: She yeah, shares bouncing around a little bit, but still
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  Speaker 2: higher in the after hours by a little over two percent.
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  Speaker 2: First quarter direct consumer revenue coming in right at estimates
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  Speaker 2: of one point eight eight billion dollars, first quarter TV
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  Speaker 2: revenue at five point two three billion, missing estimates of
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  Speaker 2: five point three three But Scarlett, like Romaine, said, the
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  Speaker 2: big question is do these numbers even matter?
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  Speaker 1: Do the numbers really matter? Well, if you're a potential bidder,
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  Speaker 1: they do, because the filmed entertainment revenue was actually one
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  Speaker 1: part of the business that beat analyst estimates six hundred
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  Speaker 1: and five million dollars. The consensussessment was for five hundred
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  Speaker 1: and seventy seven. And again, if you're sky Dance, this
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  Speaker 1: really matters because this is what their their whole thing is, right,
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  Speaker 1: sky Dance is making movies, and Paramount has this storied
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  Speaker 1: franchise and that's what they would be buying.
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  Speaker 4: Yep.
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  Speaker 5: Interesting in their earnings release, this statement is from Navilla Chopra,
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  Speaker 5: the executive vice president CFO. So not I even bought
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  Speaker 5: backish there, just saying that the team delivered a strong
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  Speaker 5: operational and financial performance despite a quote dynamic environment. We
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  Speaker 5: continue to operate in code.
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  Speaker 1: That's code wow, what are you for?
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  Speaker 3: Hot mess?
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  Speaker 2: As I mentioned, we're talking about Paramount up two percent
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  Speaker 2: in after hours this after Paramount Global replaced Chief executive
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  Speaker 2: Officer Bob Bekish, appointing a management committee. As the board
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  Speaker 2: negotiates a possible change in control of the company, Three
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  Speaker 2: of Paramount's most senior executives will run the company, according
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  Speaker 2: to a statement released on Monday. Bloomberg News Entertainment editor
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  Speaker 2: Chris Paul Mary is in our Los Angeles bureau and
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  Speaker 2: he joins us right now with the latest. Chris, as
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  Speaker 2: I mentioned when this news broke on TV, not at
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  Speaker 2: all a surprise that Backish is out. He's been at
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  Speaker 2: the company since ninety seven. The reporting around this over
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  Speaker 2: the last few days has said that he'll be out.
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  Speaker 2: With surprises to me is who's taking over for backsh
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  Speaker 2: It's not one person, it's three.
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  Speaker 6: Yes, And I can't really think of a company that's
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  Speaker 6: had three CEOs.
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  Speaker 2: Your CEO, no, your CEO, no, you're CEO.
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  Speaker 6: Sometimes they've had two and that works and doesn't work,
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  Speaker 6: but three, I haven't heard of before. It's an unusual
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  Speaker 6: situation because they are negotiating this deal with David Ellison
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  Speaker 6: that would represent a change of control. If that happens,
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  Speaker 6: he would become the CEO. So that's clearly part of
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  Speaker 6: what's going on here and what happens if that doesn't
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  Speaker 6: go through. If they continue with this something, probably paramout's
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  Speaker 6: going to get asked a lot.
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  Speaker 3: So the stock was higher after, but the company also
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  Speaker 3: reported earnings. Do you get a sense of how much
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  Speaker 3: the shareholders of the company are kind of embracing this
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  Speaker 3: news of now three CEOs.
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  Speaker 6: Well, I think this sort of stock bumps started with
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  Speaker 6: we Knowther's reported over the weekend that there was sweetened
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  Speaker 6: terms for the sky Dance offer. They're going to invest
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  Speaker 6: the three billion dollars in paramount, which could be used
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  Speaker 6: for debt reduction, and do so at a premium to
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  Speaker 6: what the current stock is trading at. So I think
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  Speaker 6: the market sort of some degree is responding to that.
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  Speaker 6: But the numbers earnings wise were good. I don't think
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  Speaker 6: that was Bob Mackers's problem. Revenue was up. They had
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  Speaker 6: the Super Bowl in the quarter, so that was boost
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  Speaker 6: but other numbers were good as well.
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  Speaker 2: So what was Backash's problem. Why not have Backash go
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  Speaker 2: all the way until an acquisition?
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  Speaker 6: Very good question. It appears that he was opposed to
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  Speaker 6: this deal happening and was sort of vocal in the
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  Speaker 6: last earnings call saying that he thought whatever deal Paramount
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  Speaker 6: worked out should benefit all shareholders right now, the Skydiance
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  Speaker 6: offer would certainly buy out the Redstones families controlling share
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  Speaker 6: of the company, but would possibly dilute the other shareholders
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  Speaker 6: through this merger with Skydance, So his opposition probably is
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  Speaker 6: one of the factors involved here. He's also made some
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  Speaker 6: missteps that ultimately the board lost confidence in him.
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  Speaker 2: So if this deal with Skydance actually goes through, and
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  Speaker 2: again it's a little complicated here because of the different
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  Speaker 2: share classes and who has control, would the Redstone family
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  Speaker 2: have any ownership of the new company.
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  Speaker 6: They're going to keep some residual shareholder in the company,
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  Speaker 6: but won't be the controlling shareholders anymore. So they have
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  Speaker 6: this voting stock Class A shares they owned seventy seven
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  Speaker 6: percent of those. Those would be bought by David Ellison
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  Speaker 6: and his group.
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  Speaker 3: Can you give us a few details about the deal
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  Speaker 3: with Skydance Media led by David Ellison. What would that
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  Speaker 3: actually look like for the consumers of Paramount.
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  Speaker 6: Yeah, it's very complicated. So it's a three part deal really.
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  Speaker 6: So they would buy National Amusements, which is the holding
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  Speaker 6: company the Redstones own their controlling shares of Paramount, and
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  Speaker 6: also some movie theaters. Skuidance would also invest three billion
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  Speaker 6: dollars directly into Paramount, and they would merge Skydance and
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  Speaker 6: get Paramount shares for that as well. And that's probably
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  Speaker 6: the most controversial part of the deal because the valuation
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  Speaker 6: of Skydance is on a order of five billion dollars
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  Speaker 6: and its profits are not nearly what one would pay
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  Speaker 6: for the price, So that's probably the most contentious part,
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  Speaker 6: even though, mind you, none of these deal details have
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  Speaker 6: actually been announced publicly. This is all folks like us
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  Speaker 6: reporting on.
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  Speaker 2: It, all right, Well, we certainly appreciate the folks like you, Chris,
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  Speaker 2: who are reporting on this and explaining and breaking it
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  Speaker 2: down for our audience. Bloomberg News entertainmentitor Chris Paul Mary
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  Speaker 2: live out there in California or Los Angeles Bureau