In an unexpected turn of events that could be straight out of HBO’s popular series Succession, media giant Paramount Global is planning to replace its current CEO Bob Bakish with a group of existing division heads. This move comes as part of efforts aimed at accelerating the company’s future trajectory and may help push through an impending merger agreement between Paramount Global and Skydance Media. The decision follows intense criticism from some large shareholders who feel that this potential deal destroys value for common shareholders by involving billions in new equity, which would dilute their holdings significantly.
Skydance’s offer also includes a significant premium of around $2 billion to be paid to controlling shareholder Shari Redstone for her 77% voting shares under the umbrella holding company National Amusements by purchasing it altogether. However, some vocal opponents like Gamco Investors’ Chairman and CEO Mario Gabelli have called for an alternative or non-deal path. In light of this pushback, a majority vote from minority shareholders has been suggested to settle Skydance’s merger agreement fate since they believe the current offer is skewed in favor of Redstone at their expense.
The imbalance between these two parties led many Paramount executives, including Bakish himself, to openly speak against this potential deal. Some are calling it an unfair advantage for Shari Redstone alone as her economic interest has fallen below $1 billion despite the merger proposal being put forth. If minority shareholders now have a say in whether or not Skydance’s offer is accepted, Paramount Global shares could potentially rise by 5% during premarket trading on Monday.
The removal of Bakish as CEO comes at an interesting time for Paramount since the company has important negotiations with U.S cable provider Charter Communications coming up in the near future that will play a significant role in determining its valuation moving forward, and it is unclear how his departure could affect these talks. It remains to be seen whether Skydance’s offer can change significantly enough for common shareholders to alter their minds or if another potential suitor, like Apollo Global with support from Sony Corp., might make a bid in light of the recent events that threaten to destabilize Paramount without an apparent go-forward strategy.
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