No company had the business world’s attention on Monday quite like Paramount.
The five-week period that sees most technology, media and telecommunications companies report their quarterly earnings is closely followed by business reporters and Wall Street analysts alike, as it offers insight into the health of the sector at a time when those three industries are increasingly converging.
But Paramount is a different beast altogether. The company is in the midst of a blockbuster — and, to some, controversial — merger with Skydance Media, one that appears almost certain at this point. For weeks, institutional and retail investors have been split between shareholders supporting the Skydance deal and those backing a different bid from Sony Pictures and Apollo Global Management. Over the weekend, two newspapers and a leading business television channel reported CEO Bob Bakish was on the way out amid conflicts with National Amusements owner Shari Redstone, who holds a controlling amount of Paramount’s stock.
On Monday, that latter premonition came true, around the same time Paramount reported its first quarter (Q1) earnings for the year. Bakish is set to depart from the CEO role on Tuesday; he will remain at the company in a “senior advisor” role through October 31, according to a memo circulated among Paramount employees.
When Bakish resigns this week, a trio of executives leading Paramount’s businesses will take his place: Paramount Pictures CEO Brian Robbins, Showtime and MTV Entertainment CEO Chris McCarthy, and CBS CEO George Cheeks.
The trio spoke on Paramount’s quarterly earnings conference call on Monday. No one took questions from investors or reporters on the call, a departure from the usual way things are done at publicly-traded companies and an indication that the short-term course has already been charted at Paramount.
“Paramount Global includes exceptional assets, and we believe strongly in the future value creation potential of the company,” Redstone, who serves as the Chairperson of the Board at Paramount, said in a statement. “I have tremendous confidence in George, Chris and Brian. They have both the ability to develop and execute on a new strategic plan and to work together as true partners. I am extremely excited for what their combined leadership means for Paramount Global and for the opportunities that lie ahead.”
Officially, the co-CEOs will operate through a newly-created position called the “Office of the CEO,” which likely involves a fluid situation where the leadership role rotates among a core group of executives while the Paramount-Skydance merger is pending.
“The creation of the Office of the CEO will enable the Company to accelerate growth and strengthen operations,” the Paramount Board said in a statement. “We look forward to working with George, Chris and Brian as they execute on key initiatives to enhance performance and value creation at Paramount Global.”
As for Paramount’s Q1 24 report, it offered something of a mixed bag. Overall revenue came in at $7.69 billion, up from the $7.26 billion reported last year but missing estimates from Wall Street analysts, which had revenue pegged at $7.73 billion. Earnings came in at 62 cents per share, nearly double the 36 cents Wall Street analysts expected.
On the streaming side, Paramount Plus added 3.1 million new accounts, bringing its global customer base to 71 million. Streaming-related financial losses shrank to $286 million, a year-over improvement of 44 percent.
Streaming losses narrowed thanks in large part to an uptick in advertiser spending against Paramount Plus and the free, ad-supported TV platform Pluto TV. Marketers were particularly interested in Paramount Plus during Q1, which saw CBS stream Super Bowl LVIII through the platform. Streaming ad spending climbed to $520 million during the quarter, up 31 percent from the prior year.
Revenue in Paramount’s overall TV business grew 1 percent to $5.2 billion, reflecting a 14 percent uptick in ad spend attributed to the Super Bowl. Paramount continues to negotiate renewed carriage deals with cable, satellite and streaming cable-like TV providers, and is expected to renew its distribution deal with Charter Communications within the next week.
On the conference call with investors, McCarthy affirmed Paramount was in the midst of “finalizing a long-term strategic plan” that would “best position this storied company to reach new and greater heights in our rapidly-changing world.”
There were few specifics offered on that particular plan, but Bakish’s imminent departure from the company makes it clear that Paramount’s board and still-in-place executive team are prioritizing the Skydance merger.
Both companies are holding pre-merger discussions on an exclusive basis through May 3.
