Paramount CEO Bob Buckish speaks with CNBC’s David Faber on September 6, 2023.
CNBC
Which could easily have a plot line from HBO’s hit show “Succession.” Paramount Global Chief Executive Officer Bob Buckish is scheduled to be replaced with existing division heads on Monday in a game-changing move designed to accelerate the company’s future.
Buckish’s departure is expected to be announced on Monday before Paramount reports earnings, which is after the market closes, according to people familiar with the matter.
The decision to remove Bakish as CEO came after Paramount Global terminated its merger agreement with Skydance Media. His departure calls into question Paramount’s near future as a standalone company, which could help force through a merger deal.
Many major joint shareholders, incl Gameco InvestorsAerial investments, metrics and Aspen Sky Trust has publicly criticized the deal, arguing that it destroys value for common shareholders. The Skydance offer would involve billions in new equity that would dilute common holders.
Sherry Redstone, president of National Amusements and controlling shareholder of Paramount Global, walks the morning session at the Allen & Company Sun Valley Conference on July 12, 2023 in Sun Valley, Idaho.
David A. Grogan | CNBC
Meanwhile, Skydance will pay shareholder Shari Redstone about $2 billion to acquire its holding company National Amusements for 77 percent of its voting stake in the company, CNBC previously reported that a deal for Redstone. Important is the premium, whose economic interest in the company has fallen. Less than $1 billion.
The imbalance has led many at Paramount, including Buckish, to speak out against the deal, which they see as only benefiting Redstone.
“There’s no question I won’t see any sales,” Gameco chairman and CEO Mario Gabelli said. told the New York Post earlier this month.
The majority of the minority
This is where Monday’s CEO drama begins.
Redstone is now open to a so-called “minority majority” vote on the Skydance deal, according to a person familiar with his thinking. Bloomberg And The Wall Street Journal First reported the development on Sunday.
This is a turning point in the Skydance conversation. That means minority shareholders will now have a say in whether the deal goes ahead, giving those who denounce the deal a potential influence in the outcome. Shares of Paramount Global rose nearly 5% in premarket trading on Monday.
Typically, Paramount Global’s shareholders, such as Gabelli, will compare an offer to the company’s standalone prospects – hence their comments that aren’t looking at a sale.
But by removing Buckish, the Redstone and Paramount Global boards are now throwing the status quo into disarray. The company will no longer have a leader or a clear strategy going forward. Redstone is potentially trying to force common holders to opt for a sale without effectively destabilizing the company.
The exclusive deal with Skydance is set to end on May 3. CNBC reported last week that Skydance was moving toward value terms but wanted a two-week extension on the exclusivity, which the special committee had not yet approved.
“National Entertainment has specifically requested that the Paramount board form a special committee to use its discretion to consider a potential transaction with Skydance,” a National Entertainment spokesperson said in a statement provided to CNBC. said “National Entertainment has no role in the committee, and we respect the committee’s process and final decision as to whether the Skydance deal presents an attractive transaction for Paramount and whether they wish to continue moving forward.”
With a majority of minority votes, Skydance plans to further sweeten its offering to make it more attractive to advertisers. Bloomberg reported.. It is unclear whether the company will be able to change the terms enough to convince ordinary investors to change their minds.
A joint bid by private equity firm Apollo Global and Sony could act as a white knight if investors don’t want Skydance and don’t have a viable non-sale option. The New York Times Reported Earlier this month, the two parties held preliminary talks on an agreement.
Shareholders will wait to see if the parties make a formal offer with details about who is funding an acquisition. Regulators may view acquisitions by Apollo and Sony as high risk if funding is provided by foreign entities. Sony, too, is a non-U.S.-based company, which could theoretically raise concerns with the Committee on Foreign Investment in the U.S., which would likely review the deal.
Meanwhile, Paramount has signed a major carriage renewal deal with US cable company Charter Communications in the coming days. Buckish has engaged in intensive negotiations with Charter. It’s unclear how his removal will affect those negotiations, which will play a big role in valuing the company going forward.
Credit : www.cnbc.com