By Jessica Toonkel, Amol Sharma and Joe Flint
Bob Bakish used to browse guitars at a music store in Times Square. Nobody recognized him as the chief executive of Paramount Global, the entertainment company headquartered nearby. He was just fine with that.
In an industry known for celebrity CEOs and larger-than-life moguls, Bakish was the anti-mogul, a veteran executive who was more at home talking about streaming strategy and ad budgets than sitting in on Hollywood script pitches -- and who seemed unconcerned with being a famous titan of show business.
Now, after more than seven years at the helm, Bakish's run is over. Paramount, owner of CBS, networks such as MTV and Comedy Central, and its namesake film studio, said Monday it is parting ways with him and installing a committee of top managers to run the company.
Bakish's relationship with Shari Redstone, Paramount's chair and the head of controlling shareholder National Amusements, deteriorated as she grew concerned about his handling of strategic opportunities, such as his decision not to sell the Showtime channel. Some members of the board and Paramount's senior leadership team have also raised questions about some of Bakish's decisions.
On Bakish's watch, Paramount made some strides in streaming with Paramount+ and the acquisition of Pluto TV, secured a major National Football League rights renewal, streamlined the cable-TV operations and scored some Hollywood hits, such as 2022's "Top Gun: Maverick." But the company's market value was halved, as investors saw its TV business shrink and losses pile up in streaming.
The Wall Street Journal first reported Friday that Paramount's board was considering replacing Bakish.
His exit comes as Paramount is in merger discussions with Skydance Media, with a 30-day exclusivity period that is ending on May 3. Bakish has told people close to him that he had concerns about the Skydance transaction. The proposed deal has infuriated shareholders because it would give Redstone a substantial premium for her voting stake.
Skydance on Sunday proposed a revised offer that would give nonvoting shareholders a premium in a Paramount-Skydance stock merger and provide less cash to National Amusements, people familiar with the proposal said. It would also involve Skydance putting $3 billion on Paramount's balance sheet to help pay down debt.
Paramount's channel-carriage agreement with top U.S. cable-TV provider Charter Communications, which operates the Spectrum brand, is also about to expire.
Bakish, 60 years old, is a 27-year veteran of the company. He held a variety of roles, including several years as a top MTV executive, before rising to lead its international operations. He was credited with exposing the entertainment giant to growth in markets such as India, Argentina and the U.K.
Bakish was appointed CEO of Viacom in 2016, and later retained the top post in 2019 when the company merged with CBS, the other part of the Redstone family's media empire.
In announcing Bakish's departure Monday, Redstone thanked him "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."
His low-profile, no-drama approach was part of what appealed to Redstone when she put him in the job. She had just been through a spectacularly turbulent period at CBS, where former chief Leslie Moonves was fired following accusations of sexual misconduct by several women, which he denied.
Over the years, Bakish was a calming force -- keeping the company steady and employees intact even at the most tumultuous times, said Chris Marangi, co-chief investment officer at Gabelli Funds, which is Paramount's second-biggest voting shareholder. "Bob provided a steady hand on the tiller through seas roiled by secular change, Covid, strike disruptions and boardroom drama," he said.
Some media executives said it would be a challenge for any executive to run a public company with a controlling shareholder, especially one who recently has been focused also on selling her stake. "It's a no-win situation being at the helm," said Scott Koondel, a former CBS executive vice president. He said it might be a blessing for Bakish to escape the messy drama playing out at the company, as shareholders object to the proposed merger with Skydance. "Under the circumstances, this is the optimal situation for him," Koondel said.
Bakish plays the Wall Street role, generally favoring suits and dress shoes, not fleeces and sneakers favored by many media executives. The industry sees little of his other side: the guy who has a collection of signature guitars.
Like other media executives, he has been compensated handsomely, even as the industry has contracted. From 2017 to 2023, Bakish received $149 million in compensation, including equity that was exercised or vested and bonus payouts, according to Equilar. His severance package is estimated to be $50.6 million, with $31 million of that in cash.
When he was given the top job at Viacom in 2016, Bakish took over a company on the brink and more exposed than others in media to the hollowing out of the cable-TV business, with a huge list of channels on the dial. One of Bakish's early moves was to pare back that cable portfolio to a handful of core networks such as Nickelodeon, Comedy Central, BET and MTV.
Bakish recognized the value of ad-supported streaming years before any of Paramount's competitors did. In 2019, Paramount bought ad-supported streaming service Pluto TV in 2019 for $340 million, giving Paramount a new source of streaming revenue.
In an effort to reduce its debt levels, Paramount last year sold book publisher Simon & Schuster to private-equity firm KKR for $1.62 billion in cash. Other efforts to slim down didn't pan out, such as a failed attempt to sell a majority stake in BET Media Group.
Under Bakish, Paramount launched its flagship streaming service, Paramount+ in early 2021. Wall Street was skeptical that the company could compete given that it came to market later than rival services such as Disney+, Peacock and HBO Max.
Paramount+ now has more than 70 million subscribers globally, but it isn't profitable. The company on Monday said its direct-to-consumer unit lost $286 million in the first quarter, less than the $511 million adjusted loss it posted a year earlier.
To grow Paramount+'s subscriber base, Bakish signed a deal with Walmart to offer an ad-supported version at no cost to members of the Walmart+ membership program. The company also has deals with Delta Air Lines to give its SkyMiles frequent-fliers members free access to the streaming service with free Wi-Fi on flights.
Wall Street began to shift its focus away from subscriber growth and onto streaming profitability in 2022, so even with its revenue growth, Paramount+ began to look less appealing to investors.
While Netflix is profitable and Disney has said its streaming operations will be profitable this year, Paramount has said its streaming business won't hit profitability until 2025.
"He has been dealt a tough hand in an industry that is changing extraordinarily rapidly," said John Rogers, co-CEO of Ariel Investments, a Paramount shareholder.
Write to Jessica Toonkel at jessica.toonkel@wsj.com, Amol Sharma at Amol.Sharma@wsj.com and Joe Flint at Joe.Flint@wsj.com
(END) Dow Jones Newswires
April 29, 2024 19:49 ET (23:49 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments