WEBVTT - Instant Reaction: Paramount CEO Bob Bakish Is Out

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>We're getting some news that the Paramount Global is announcing

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<v Speaker 2>new leadership changes. CEO Bob Gatbackish stepping down from his

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<v Speaker 2>role at CEO. Not a surprise to those who've been

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<v Speaker 2>following over the last few days. Again, Paramount Global just

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<v Speaker 2>out with the press release saying that Global CEO Bob

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<v Speaker 2>Backish stepping down.

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<v Speaker 3>Yeah.

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<v Speaker 1>Apparently he and Shari Redstone were not seeing eye to eye.

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<v Speaker 1>There are a lot of offers made for different parts

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<v Speaker 1>of Paramount that he at different points rejected, and as

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<v Speaker 1>a result, they are not going with any one CEO

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<v Speaker 1>as his replacement. They're establishing an office of CEO. Which

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<v Speaker 1>does that inspire confidence when the company's trying to I

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<v Speaker 1>don't even know.

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<v Speaker 3>What that means.

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<v Speaker 4>Well, I mean, but look at who it is. I mean, no,

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<v Speaker 4>it doesn't inspire confidence. Answer your question though, I will

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<v Speaker 4>say this, And when you look at who it is,

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<v Speaker 4>you're basically talking about Great Cheeks, who is running CBS.

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<v Speaker 4>You're talking about Chris McCarthy who was running the Showtime

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<v Speaker 4>and MTV Networks, and then they're bringing in Brian Robbins,

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<v Speaker 4>who was I guess heading up Nickelodeon and some of

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<v Speaker 4>the kids programming here, So it's kind of a cross

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<v Speaker 4>section of all the major broadcast properties there. So maybe

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<v Speaker 4>that provides some confidence that the people running this company

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<v Speaker 4>now are probably more on the content side rather than

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<v Speaker 4>just on sort of the financial side.

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<v Speaker 2>But what does it mean for the future of Paramount

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<v Speaker 2>Global as a standalone public company?

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<v Speaker 4>It makes its fund to be sold and I'm sold soon.

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<v Speaker 2>That's that's where I'm going with this. So Jay Redstone

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<v Speaker 2>chaired the board, saying that it Paramount Global includes exceptional

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<v Speaker 2>assets that we believe strongly in the future of value

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<v Speaker 2>creation potential of the company. The question is where does

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<v Speaker 2>that value come from. Does it come from a new

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<v Speaker 2>ownership or does it come from staying independent.

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<v Speaker 4>Well that's the other thing too, I mean we talk

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<v Speaker 4>about I mean, to Scarla's point, I mean, whether this

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<v Speaker 4>is a good idea to have basically three CEOs thing.

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<v Speaker 4>But like, let's face it, this isn't going to last

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<v Speaker 4>long one way or the other. This is sold, They're

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<v Speaker 4>going to have to find some different management structure, and

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<v Speaker 4>so this seems to be much more of a stopgap.

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<v Speaker 2>I mean, end of an era. Though for Bob Backings, right.

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<v Speaker 2>He's been at Viacomp since nineteen ninety seven, CEO of

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<v Speaker 2>I come back in twenty sixteen, CEO of the combined

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<v Speaker 2>company back in twenty nineteen.

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<v Speaker 1>Yeah, and one reason why he was able to rise

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<v Speaker 1>and stay in his position was because he did get

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<v Speaker 1>along with Sharry Redstone once upon a time, a long

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<v Speaker 1>time ago. That is no longer the case. And this

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<v Speaker 1>is definitely a company Romaine as you were putting it

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<v Speaker 1>set up to be sold. The question is whether it

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<v Speaker 1>will be sky Dance that is the actual acquirer, and

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<v Speaker 1>of course that's the Redstone family's preference, or Apollo and Sony,

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<v Speaker 1>or maybe there might even be another dark horse candidate

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<v Speaker 1>coming in here.

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<v Speaker 5>I do find it interesting if you just look at

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<v Speaker 5>the three that are taking over, and you guys pointed

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<v Speaker 5>this out, But as we're spending some time on it,

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<v Speaker 5>as we're also waiting for the numbers to come out,

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<v Speaker 5>do Christ muccarthy, president's CEO of Showtime and MTV Entertainment

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<v Speaker 5>Studios do the Showtime Studio part. Then Brian Robbins is

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<v Speaker 5>the president's CEO of Paramount Pictures. Then you have the

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<v Speaker 5>movie Behemoth, and then you wind up having cheeks George Cheeks,

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<v Speaker 5>who's the CEO over He'll be the CEO over at CBS.

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<v Speaker 5>So then that's where the tri effecta of what Paramount

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<v Speaker 5>Global actually is and how that sets up each of

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<v Speaker 5>its areas to either be sold separately or then tried

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<v Speaker 5>two together.

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<v Speaker 4>Yeah, and I mean, and that's well, that's the big

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<v Speaker 4>question though, and a lot of questions about what the

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<v Speaker 4>what the new structure would look like, whether this would

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<v Speaker 4>be sort of a white knight coming in and buying

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<v Speaker 4>the whole thing, or whether they're actually just looking for

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<v Speaker 4>certain pieces of it. And I think, guys, if you're

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<v Speaker 4>keeping an eye on the wire right now, I think

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<v Speaker 4>we're actually finally getting the numbers for the most recent quarter,

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<v Speaker 4>and they're pretty much what you would expected to miss

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<v Speaker 4>on several of the key metrics. I'll just give you

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<v Speaker 4>the top and bottom line here, one Q revenue coming

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<v Speaker 4>in at seven point seven billion, the street was looking

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<v Speaker 4>for about seven point seventy four and as far as

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<v Speaker 4>the loss per share at least on a continuing basis,

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<v Speaker 4>looking at about eighty eight cents here, not sure the comparison,

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<v Speaker 4>but when you look at the one Q adjusted EPs

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<v Speaker 4>for continuing ops, they did beat their sixty two cents

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<v Speaker 4>at thirty six cents, So I'm not sure these numbers

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<v Speaker 4>actually matter, and.

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<v Speaker 2>She yeah, shares bouncing around a little bit, but still

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<v Speaker 2>higher in the after hours by a little over two percent.

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<v Speaker 2>First quarter direct consumer revenue coming in right at estimates

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<v Speaker 2>of one point eight eight billion dollars, first quarter TV

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<v Speaker 2>revenue at five point two three billion, missing estimates of

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<v Speaker 2>five point three three But Scarlett, like Romaine, said, the

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<v Speaker 2>big question is do these numbers even matter?

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<v Speaker 1>Do the numbers really matter? Well, if you're a potential bidder,

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<v Speaker 1>they do, because the filmed entertainment revenue was actually one

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<v Speaker 1>part of the business that beat analyst estimates six hundred

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<v Speaker 1>and five million dollars. The consensussessment was for five hundred

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<v Speaker 1>and seventy seven. And again, if you're sky Dance, this

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<v Speaker 1>really matters because this is what their their whole thing is, right,

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<v Speaker 1>sky Dance is making movies, and Paramount has this storied

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<v Speaker 1>franchise and that's what they would be buying.

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<v Speaker 4>Yep.

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<v Speaker 5>Interesting in their earnings release, this statement is from Navilla Chopra,

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<v Speaker 5>the executive vice president CFO. So not I even bought

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<v Speaker 5>backish there, just saying that the team delivered a strong

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<v Speaker 5>operational and financial performance despite a quote dynamic environment. We

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<v Speaker 5>continue to operate in code.

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<v Speaker 1>That's code wow, what are you for?

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<v Speaker 3>Hot mess?

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<v Speaker 2>As I mentioned, we're talking about Paramount up two percent

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<v Speaker 2>in after hours this after Paramount Global replaced Chief executive

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<v Speaker 2>Officer Bob Bekish, appointing a management committee. As the board

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<v Speaker 2>negotiates a possible change in control of the company, Three

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<v Speaker 2>of Paramount's most senior executives will run the company, according

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<v Speaker 2>to a statement released on Monday. Bloomberg News Entertainment editor

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<v Speaker 2>Chris Paul Mary is in our Los Angeles bureau and

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<v Speaker 2>he joins us right now with the latest. Chris, as

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<v Speaker 2>I mentioned when this news broke on TV, not at

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<v Speaker 2>all a surprise that Backish is out. He's been at

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<v Speaker 2>the company since ninety seven. The reporting around this over

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<v Speaker 2>the last few days has said that he'll be out.

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<v Speaker 2>With surprises to me is who's taking over for backsh

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<v Speaker 2>It's not one person, it's three.

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<v Speaker 6>Yes, And I can't really think of a company that's

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<v Speaker 6>had three CEOs.

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<v Speaker 2>Your CEO, no, your CEO, no, you're CEO.

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<v Speaker 6>Sometimes they've had two and that works and doesn't work,

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<v Speaker 6>but three, I haven't heard of before. It's an unusual

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<v Speaker 6>situation because they are negotiating this deal with David Ellison

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<v Speaker 6>that would represent a change of control. If that happens,

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<v Speaker 6>he would become the CEO. So that's clearly part of

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<v Speaker 6>what's going on here and what happens if that doesn't

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<v Speaker 6>go through. If they continue with this something, probably paramout's

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<v Speaker 6>going to get asked a lot.

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<v Speaker 3>So the stock was higher after, but the company also

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<v Speaker 3>reported earnings. Do you get a sense of how much

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<v Speaker 3>the shareholders of the company are kind of embracing this

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<v Speaker 3>news of now three CEOs.

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<v Speaker 6>Well, I think this sort of stock bumps started with

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<v Speaker 6>we Knowther's reported over the weekend that there was sweetened

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<v Speaker 6>terms for the sky Dance offer. They're going to invest

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<v Speaker 6>the three billion dollars in paramount, which could be used

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<v Speaker 6>for debt reduction, and do so at a premium to

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<v Speaker 6>what the current stock is trading at. So I think

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<v Speaker 6>the market sort of some degree is responding to that.

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<v Speaker 6>But the numbers earnings wise were good. I don't think

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<v Speaker 6>that was Bob Mackers's problem. Revenue was up. They had

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<v Speaker 6>the Super Bowl in the quarter, so that was boost

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<v Speaker 6>but other numbers were good as well.

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<v Speaker 2>So what was Backash's problem. Why not have Backash go

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<v Speaker 2>all the way until an acquisition?

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<v Speaker 6>Very good question. It appears that he was opposed to

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<v Speaker 6>this deal happening and was sort of vocal in the

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<v Speaker 6>last earnings call saying that he thought whatever deal Paramount

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<v Speaker 6>worked out should benefit all shareholders right now, the Skydiance

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<v Speaker 6>offer would certainly buy out the Redstones families controlling share

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<v Speaker 6>of the company, but would possibly dilute the other shareholders

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<v Speaker 6>through this merger with Skydance, So his opposition probably is

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<v Speaker 6>one of the factors involved here. He's also made some

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<v Speaker 6>missteps that ultimately the board lost confidence in him.

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<v Speaker 2>So if this deal with Skydance actually goes through, and

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<v Speaker 2>again it's a little complicated here because of the different

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<v Speaker 2>share classes and who has control, would the Redstone family

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<v Speaker 2>have any ownership of the new company.

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<v Speaker 6>They're going to keep some residual shareholder in the company,

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<v Speaker 6>but won't be the controlling shareholders anymore. So they have

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<v Speaker 6>this voting stock Class A shares they owned seventy seven

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<v Speaker 6>percent of those. Those would be bought by David Ellison

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<v Speaker 6>and his group.

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<v Speaker 3>Can you give us a few details about the deal

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<v Speaker 3>with Skydance Media led by David Ellison. What would that

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<v Speaker 3>actually look like for the consumers of Paramount.

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<v Speaker 6>Yeah, it's very complicated. So it's a three part deal really.

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<v Speaker 6>So they would buy National Amusements, which is the holding

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<v Speaker 6>company the Redstones own their controlling shares of Paramount, and

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<v Speaker 6>also some movie theaters. Skuidance would also invest three billion

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<v Speaker 6>dollars directly into Paramount, and they would merge Skydance and

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<v Speaker 6>get Paramount shares for that as well. And that's probably

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<v Speaker 6>the most controversial part of the deal because the valuation

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<v Speaker 6>of Skydance is on a order of five billion dollars

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<v Speaker 6>and its profits are not nearly what one would pay

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<v Speaker 6>for the price, So that's probably the most contentious part,

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<v Speaker 6>even though, mind you, none of these deal details have

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<v Speaker 6>actually been announced publicly. This is all folks like us

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<v Speaker 6>reporting on.

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<v Speaker 2>It, all right, Well, we certainly appreciate the folks like you, Chris,

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<v Speaker 2>who are reporting on this and explaining and breaking it

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<v Speaker 2>down for our audience. Bloomberg News entertainmentitor Chris Paul Mary

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<v Speaker 2>live out there in California or Los Angeles Bureau