Business
Bob Bakish is ousted as CEO of Paramount Global as internal struggles explode into public view
Paramount Global’s months-long internal struggles spilled into full view Monday as Chief Executive Bob Bakish was ousted and pressure mounted for the company’s directors to accept — or reject — a takeover bid by David Ellison’s Skydance Media.
Moments before the company announced its first-quarter earnings, Paramount issued a statement announcing Bakish’s departure. The company said three of its top entertainment executives would run the firm: Paramount Pictures CEO Brian Robbins; CBS CEO George Cheeks; and Showtime/MTV Entertainment Studios chief Chris McCarthy.
Bakish’s firing comes during a tumultuous period for the company as its traditional TV and movie studio businesses decline amid head winds for the media industry. Bakish also was at odds with controlling shareholder Shari Redstone, who is seeking an exit.
Redstone, who has presided over the steep decline of her family’s media heirloom, is in a bind. She doesn’t want the company built by her father, the late, ferocious mogul Sumner Redstone, carved up and sold for parts at auctions. Paramount includes the CBS television network, MTV, Nickelodeon, BET and the Paramount Pictures movie studio on Melrose Avenue.
But Paramount’s common shareholders are wary of the two-phased deal with Skydance because Redstone will get a premium for her family’s shares.
Paramount is in the midst of a 30-day exclusive negotiating period with Ellison, a tech scion whose Skydance Media has teamed up with investment firms RedBird Capital and KKR to acquire Redstone’s National Amusements holding company. On Sunday, Skydance sweetened its offer by $1 billion, with money earmarked for Paramount’s B-class, or nonvoting, shareholders, according to three people familiar with the deal but not authorized to comment. National Amusements holds 77% of Paramount’s voting shares.
The exclusive negotiating period ends Friday. It is unclear whether Skydance and RedBird have given Paramount’s board a deadline to accept its revised offer. Skydance and its partners have been wrangling with Paramount’s independent board members over how much money will go to common shareholders, two knowledgeable people said. Skydance and its partners have pressed for more of the proceeds to pay down Paramount’s debt.
The company’s credit last month was downgraded to “junk” status by ratings agency S&P Global.
Bakish was opposed to the Skydance transaction, a stance that infuriated Redstone, who in 2016 handpicked Bakish to run the company, then known as Viacom. In recent weeks, senior company executives also raised questions about Bakish’s leadership and the strength of his long-range plan in their conversations with board members — a development that expedited Bakish’s departure from the company, the sources said.
Bakish was more open to another proposed deal, favored by smaller shareholders, with private equity firm Apollo Global Management, which has offered $26 billion, including the assumption of Paramount’s debt. Sony Pictures Entertainment has been negotiating with Apollo to join that effort. Most insiders expect that Apollo and Sony would break the company apart, a scenario that Redstone does not want to allow.
Redstone, according to one person familiar with the matter, has also been frustrated with some of Bakish’s decisions, including not selling Showtime, the premium cable network that the company folded into its television networks and streaming effort. Bakish had dismissed a recent offer of $3 billion for the channel from investors, including former Showtime head David Nevins.
Paramount, meanwhile, has lost more than $2 billion on its streaming service, Paramount+.
“Paramount Global includes exceptional assets and we believe strongly in the future value creation potential of the Company,” Redstone 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.”
In addition, the company faces a crucial Wednesday deadline to strike a new deal with cable distribution giant Charter Communications, which runs the Spectrum TV service.
Paramount entered the Charter negotiations with a weak hand — its cable television channels have suffered from falling ratings amid consumers’ shift to streaming. Paramount relies heavily on the revenue it receives from Charter, Comcast, DirecTV and other distributors.
“Paramount still has a popular network, an esteemed studio, and solid streaming services, but its business prospects look tenuous as it looks to sell,” EMarketer senior analyst Ross Benes wrote Monday in an emailed statement. “Arranging a new quixotic leadership structure may appease those looking for new blood. But the dramatic removal evokes a feeling of rearranging deck chairs on the Titanic.”
Less than two minutes after Paramount announced Bakish’s departure, the company reported its earnings results.
At the beginning of a call with analysts, company executives said they would not take questions after reporting their financial results. The call lasted slightly less than 10 minutes.
After Cheeks thanked Bakish for “his many years of leadership and steadfast support for all Paramount Global businesses, brands and people,” McCarthy tried to calm concerns about the new triumvirate leadership structure, saying that he, Cheeks and Robbins have worked together for years.
“It’s a true partnership,” McCarthy said. “We have a deep respect for one another, we’re going to lead and manage this company together.”
He said the company’s long-term strategic plan would be focused around three pillars — making the most of the company’s popular content, strengthening its balance sheet and optimizing its streaming strategy.
Paramount reported $7.68 billion in revenue for the three-month period that ended March 31, up almost 6% compared with the same period a year earlier. Paramount reported a net loss of $554 million, but that was less than its loss of more than $1 billion from a year earlier.
The company’s streaming division saw increased revenue of nearly $1.88 billion, up 24% compared with a year earlier. The segment’s quarterly loss was $287 million.
The company’s TV media revenue was aided by CBS’ February broadcast of the Super Bowl, which drew a massive audience. Revenue for the television networks division totaled $5.23 billion, up 1% compared with a year earlier. Paramount’s film division revenue totaled $605 million, up almost 3% compared with a year earlier.
The media empire now known as Paramount Global was formed in 2019 from the merger of Viacom Inc. and CBS Corp. But the combination never convinced Wall Street of its promise. In the last year alone, Paramount Global’s stock has lost nearly half of its value.
“While the mighty Viacom empire declined tremendously under Bakish, who profited handsomely personally, it isn’t clear that another appointed leader would have changed Paramount’s fortune,” Benes of EMarketer wrote in a note to investors. “With a mountain of debt and its primary assets, namely TV, continually losing value, the deep problems facing the company extend beyond any single executive.”
Bakish, who joined Viacom in 1997, was named CEO of Viacom in 2016, after the company’s stock had fallen 45% in two years due to falling ratings at some of its key networks, including Comedy Central and MTV, as well as struggles at its Paramount Pictures film studio.
After Redstone orchestrated the merger of Viacom with CBS, Bakish became CEO of the combined enterprise.
“The Board and I thank Bob for his many contributions over his long career, including in the formation of the combined company as well as his successful efforts to rebuild the great culture Paramount has long been known for,” Redstone said in her statement.
Paramount’s B-class stock rose 3% to $12.25 a share Monday before Bakish’s departure was officially announced. The shares continued to gain slightly in after-hours trading.
Lululemon, the yoga pants and athletic clothing company, has hired a former executive from a rival, Nike, as its new chief executive.
Heidi O’Neill, who spent more than 25 years at Nike, will take the reins and join Lululemon’s board of directors on Sept. 8, the company announced on Wednesday.
The leadership change is happening during a tumultuous time for Lululemon, which had grown to $11 billion in revenue by persuading shoppers to ditch their jeans and slacks for stretchy leggings. But lately, sales have declined in North America amid intense competition and shifting fashion trends, with consumers favoring looser styles rather than the form-fitting silhouettes for which Lululemon is best known.
“As I step into the C.E.O. role in September, my job will be to build on that foundation — to accelerate product breakthroughs, deepen the brand’s cultural relevance, and unlock growth in markets around the world,” Ms. O’Neill, 61, said in a statement.
Lululemon, based in Vancouver, British Columbia, has also been entangled in a corporate power struggle over the company’s future. Its billionaire founder, Chip Wilson, has feuded with the board, nominated independent directors and criticized executives.
Lululemon’s previous chief executive, Calvin McDonald, stepped down at the end of January as pressure mounted from Mr. Wilson and some investors. One activist investor, Elliott Investment Management, had pushed its own chief executive candidate, who was not selected.
The interim co-chiefs, Meghan Frank and André Maestrini, will lead the company until Ms. O’Neill’s arrival, when they are expected to return to other senior roles. The pair had outlined a plan to revive sales at Lululemon, promising to invest in stores, save more money and speed up product development.
“We start the year with a real plan, with real strategies,” Mr. Maestrini said in an interview this year. “We make sure decisions are made fast.”
Lululemon said last month that it would add Chip Bergh, the former chief executive of Levi Strauss, to its board to replace David Mussafer, the chairman of the private equity firm Advent International, whom Mr. Wilson had sought to remove.
Ms. O’Neill climbed the organizational chart at Nike for decades, working across divisions including consumer sports, product innovation and brand marketing, and was most recently its president of consumer, product and brand. She left Nike last year amid a shake-up of senior management that led to the elimination of her role.
Analysts said Ms. O’Neill would be expected to find ways to energize Lululemon’s business and reset the company’s culture in order to improve performance.
“O’Neill is her own person who will come with an agenda of change,” said Neil Saunders, the managing director of GlobalData, a data analytics and consulting company. “The task ahead is a significant one, but it can be undertaken from a position of relative stability.”
Eaton wildfire survivors’ anger about Southern California Edison’s burying of electric wires in Altadena boiled over Tuesday with residents calling on government officials to temporarily halt the work.
In a letter to the Los Angeles County Board of Supervisors, more than 120 Altadena residents and the town’s council wrote that they had witnessed “manifest failures” by Edison in recent months as it has been tearing up streets and digging trenches to bury the wires.
The residents cited the unexpected financial cost of the work to homeowners and possible harm to the town’s remaining trees. They also pointed out how the work will leave telecommunication wires above ground on poles.
“The current lack of coordination is compounding the stress of a community still reeling from the Eaton Fire, and risks causing further irreparable harm,” the residents wrote.
The council voted unanimously Tuesday night to send the letter.
Scott Johnson, an Edison spokesman, said Wednesday that the company has been working to address the concerns, including by looking for other sources of funds to help pay for the homeowners’ costs.
“We recognize this community has already faced a number of challenges,” he said.
Johnson said the company will allow homeowners to keep existing overhead lines connecting their homes to the grid if they are worried about the cost.
Edison’s crews, Johnson said, have also been trained to use equipment that avoids roots and preserves the health of trees.
The utility has said that burying the wires as the town rebuilds thousands of homes destroyed in the fire will make the electrical grid safer and more reliable.
But anger has grown as work crews have shown up unexpectedly and residents learned they’re on the hook to pay tens of thousands of dollars to connect their homes to the buried lines.
Residents have also found the crews digging under the town’s oak and pine trees that survived last year’s fire. Arborists say the trenches could destroy the roots of some of the last remaining trees and kill them.
Amy Bodek, the county’s regional planning director, recently warned Edison that a government ordinance protects oak trees and that “utility trenching is not exempt from these requirements.”
Residents have also pointed out that in much of Altadena, the telecom companies, including Spectrum and AT&T, have not agreed to bury their wires in Edison’s trenches. That means the telecom wires will remain on poles above ground, which residents say is visually unappealing.
“While our community supports the long-term benefits of moving utilities underground, the current execution by SCE is placing undue financial and planning burdens on homeowners, causing irreparable harm to our heritage tree canopy, and proceeding without adequate local oversight,” the residents wrote.
They want the project halted until the problems are addressed.
Edison announced last year that it would spend as much as $925 million to underground and rebuild its grid in Altadena and Malibu, where the Palisades fire caused devastation.
The work — which costs an estimated $4 million per mile — will earn the utility millions of dollars in profits as its electric customers pay for it over the next decades.
Pedro Pizarro, chief executive of Edison International, told Gov. Gavin Newsom last year that state utility rules would require Altadena and Malibu homeowners to pay to underground the electric wire from their property line to the panel on their house. Pizarro estimated it would cost $8,000 to $10,000 for each home.
But some residents, who need to dig long trenches, say it will cost them much more.
“We are rebuilding and with the insurance shortfall, our finances are stretched already,” Marilyn Chong, an Altadena resident, wrote in a comment attached to the letter. “Incurring the additional burden of financing SCE’s infrastructure is not something we can or should have to do.”
Other fire survivors complained of Edison’s lack of planning and coordination with residents.
“I’ve started rebuilding, and apparently there won’t be underground power lines for me to connect with in time when my house will be done,” wrote Gail Murphy. “So apparently I’m supposed to be using a generator, and for how long!?”
Johnson said the company has set up a phone line for people with concerns or questions. That line — 1-800-250-7339 — is answered Monday through Saturday, he said.
Residents can also go to Edison’s office in Altadena at 2680 Fair Oaks Avenue. The office is open Monday to Friday from 8 to 4:30.
It’s unclear if the Eaton fire would have been less disastrous if Altadena’s neighborhood power lines had been buried.
The blaze ignited under Edison’s towering transmission lines that run through Eaton Canyon. Those lines carry bulk power through the company’s territory. In Altadena, Edison is burying the smaller distribution lines, which carry power to homes.
The government investigation into the cause of the fire has not yet been released. Pizarro has said that a leading theory is that a century-old transmission line, which had not carried power for 50 years, somehow re-energized to spark the blaze.
The fire killed at least 19 people and destroyed more than 9,400 homes and other structures.
Oil prices rose and stocks moved slightly higher on Wednesday as investors tried to make sense of President Trump’s decision to extend the cease-fire with Iran despite doubts about the status of another round of peace talks.
An adviser to Mohammad Bagher Ghalibaf, the influential speaker of the Iranian Parliament, dismissed the cease-fire announcement, saying that it had “no meaning.” He equated the U.S. naval blockade with bombings, with commercial vessels coming under attack near the Strait of Hormuz, the crucial shipping lane that has been at the center of a growing energy crisis.
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