Industry Insider: Paramount Stockholders

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On June 24, 2024 Paramount held their annual meeting titled “Global Annual Meeting of Stockholders,” where they highlighted their future plans for the company and shareholders. The meeting started with Shari Redstone, Paramount Global’s non-executive chair and controlling shareholder, who stated the key initiatives: 

1. Reducing Paramount’s cost to be consistent with industry standards 

2. Decrease debt

3. Strengthen Paramount’s balance sheet 

4. Continue to invest in the best-in-class content

5. Drive value for all of Paramount’s shareholders 

Redstone then introduced what she called the “Office of the CEO,” which consisted of George Cheeks, Chris McCarthy, and Brian Robbins. They took over the news-like meeting, highlighting the above statements. A Hot Set will analyze Paramount’s comments, detailing the specific intricacies – and controversies – that the meeting examines. 

While Shari Redstone introduced the meeting with a positive outlook, the co-CEOs acknowledged that Paramount can use improvement, stating, “We all agree that Paramount is not where we want it to be,” specifically with reducing debt and cost. They stated their strategic plan: 

1. Transform streaming 

2. Streamline organization 

3. Optimize asset mix 

To start, the trio claims that they have identified $500 million in annual costs that they can cut as well as other initiatives that will “optimize” earnings. These claims come with the goal of “returning to investment-grade metrics,” according to co-CEO George Cheeks. How will they do this? Well, content. 

With content, the executive trio has created a “Billion Dollar Brand Strategy.” Brian Robbins maintains the idea that content has gotten cluttered and over-saturated with the long-lasting streaming war, thus they have decided to focus on simplicity with their content. Meaning, they have invested into a few franchises that they know have performed well. Robbins, for example, says Paramount has a billion-dollar friend, Bob, which alludes to SpongeBob SquarePants. Further examples of their billion-dollar franchises are NCIS, YellowStone, South Park, Top Gun: Maverick, Mission Impossible, A Quiet Place, and more. They want to explore revenue growth by expanding on this existing content. 

While their plan might certainly work, Paramount Plus has been struggling to catch up with other streaming platforms like Netflix and Disney Plus for the past several years – even the co-CEO Chris McCarthy says that they “had a late start” to the game. Will a shift in content help that? Building upon franchises that are well-known or maintaining a massive IP library will bring in revenue, but it is not new or unique. Both Disney, Netflix, and other streaming services have been doing the same. Disney, for example, has been known to build on their existing franchises with Marvel, Star Wars, and their large IP library. However, their statistics seem to be improving from 2021 with more sign-ups among streaming services. 

Share of Sing-Ups Among Top 10 Streaming Services

Addressing these problems, the trio created a plan called “Transform Streaming Strategy.” The first step being accelerating the path towards profitability by reducing expenses, exploring alternative strategies for international, and increasing licensing across the company. Second, they plan on exploring options with SVOD players and leading technology platforms by improving consumer offerings, reducing churn, and reducing expenses. 

The rest of the meeting talks vaguely about their future plans for Paramount; however, there is an important issue that the co-CEOs failed, or could not, address: Paramount and Skydance agreed to the terms of a merger deal right before the annual meeting on Tuesday. A deal was created between David Ellion’s Skydance and private equity firm Redbird Capital and KKR and is waiting to be signed off by controlling shareholder Shari Redstone, who owns 77% of class A Paramount shares. What does this mean for the company? Well, Skydance will buy out nearly 50% of class B Paramount shares and would contribute $1.5 billion in cash to the balance sheet in order to reduce debt. Because of the expected costs and debts, finding a partner like Skydance could help the company gain streaming profitability. 

However, the meeting of shareholders seemed to derail all expectations of the merger going through as shares fell 5% after the three CEOs and Redstone went on stage. Some have reported that Redstone is unhappy with the deal and is looking for other partnerships to streamline profitability for Paramount. However, both Skydance representatives and Redstone have declined to comment. 

Ultimately, Paramount's recent Global Annual Meeting of Stockholders underscored the company's need for transformation amid industry challenges. The introduction of the "Office of the CEO" and their emphasis on content-driven growth reflects a targeted yet familiar approach, mirroring strategies of rivals like Disney and Netflix. While their “Billion Dollar Brand Strategy” aims to leverage existing franchises, this alone may not suffice for sustained competitive advantage. The potential Skydance merger, pivotal for reducing debt and enhancing liquidity, faces uncertainty, casting doubt on Paramount's path forward. Paramount's success hinges on innovative execution and strategic alliances to reach their goals.