Commentary

Paramount Global Hurt By Absence Of Big Deals, Cuts... And More Cuts?

by Wayne Friedman , Staff Writer, June 27, 2024

Paramount Global may survive as a wounded independent company -- but it could be a slow demise by a thousand cuts.

On Tuesday, the company’s trio of chief executives had a town hall meeting with staff telling them it needed to sell assets to strengthen its balance sheet due to recent “unacceptable” profit declines.

As part of this remedy, the company is looking to cut a massive $500 million in costs.

Wondering if there has been some second guessing now at the company -- as Shari Redstone, president National Amusements, which controls Paramount Global, put the ki-bosh on a number potential acquisition proposals --- buyout plans by Skydance Media as well as Sony Pictures Entertainment.

This second guessing actually comes in reference to a much earlier proposal last August-- one that would sell off a majority equity piece Paramount’s BET Media Group, which included networks/platforms such as BET, BET+ and VHI. Bids for the business were reported to be in the $2.3 billion to $3.0 billion range.

Figure that decently priced deal could have now saved -- or helped -- ameliorate those expected wide-scales company wide cuts.

Overall the temperament of Paramount staffers are now beyond a nervous, antsy environment in which hundreds of jobs could be cut from every division.

One key financial metric -- operating income (before depreciation and amortization), OIBDA -- has declined 61% over a five year span, 2018 to 2023, according to Chris McCarthy, president/CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks, and one of three Paramount Global co-CEOs.

He called that decline “simply unacceptable.”

This comes even as there are two small silver clouds growing: First, its premium streamer Paramount+ witnesses continued rising subscribers -- now at 71 million in its second quarter period, up from 67.5 million the first. Second, it has trimmed streaming losses to $286 million in the period.

Possible acquirers now look at companies -- especially ones in obvious declining business like linear TV, and especially owners of linear cable TV networks-- as wounded animals.

Right now, expectations for Paramount to survive as an independent media company will be difficult at best, and that BET Media Group deal now might be priced somewhat differently. Perhaps even seemingly for other untouchable businesses -- say CBS Television Network?

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