Paramount Deal Talks: Peacock Streaming Pact Next?

And now?

The Skydance Media deal for National Amusements appears dead, with the company refusing to extend its exclusive negotiating window, sources say. The Hollywood Reporter that majority shareholder Shari Redstone is on board with the $26 billion offer from Sony Pictures and Apollo Global Management – ​​a deal that would lead to the breakup of the empire built by her father. While it is possible that the independent committee of Paramount’s board of directors believes that the regulatory concerns raised by the Apollo-Sony bid can be overlooked and recommends this deal, it appears to be an increasingly contested proposition.

For the foreseeable future, it seems, the company is in the hands of a three-man committee consisting of CBS chief George Cheeks, Paramount Pictures’ Brian Robbins and Showtime/MTV Entertainment head Chris McCarthy. Studios and Paramount Media Networks. Paramount shares fell 7 percent to $12.89 at the close following the news.

For now, Paramount’s board has named McCarthy “acting chief executive officer,” while adding that it is doing so “for purposes of the rules and regulations of the Securities Exchange Commission,” according to a securities filing . A Paramount source points out that the trio are co-CEOs.

A senior executive at a rival media company has expressed disbelief at the latest turn of events. “(Shari) can’t not do one of these deals,” this person said. “If things continue to get worse for them, you’re going to sell this thing for pennies on the dollar, more than they are right now. How can you not take an exit ramp now? »

As for what’s next, speculation is that Paramount could attempt some sort of combination of its streaming service with Peacock. “It’s logical,” said a source close to the matter. “These are the two services that will not be included in the package because, on their own, they do not have enough EBITA.” But when we get into the details, this manager adds: “I don’t understand how this is going to work. Is it Paramount+ with Showtime, Peacock plus Paramount+?. . I don’t know what this structure would look like.

Paramount+ and Peacock are both small streaming services with around 100 million subscribers combined (71 million for Paramount+, 34 million for Peacock). Compare that to Netflix, which has about 270 million subscribers, and Disney+ which has more than 111 million (not to mention the nearly 50 million Hulu subscribers or the nearly 40 million Disney+ Hotstar subscribers that Disney also has ).

Another source says the deal could work because the two services are complementary, with Paramount+ catering more to men and Peacock appealing more to female audiences. But this person says Comcast would only consider the possibility if it oversaw the service. Control emerged as an issue in previous negotiations between Comcast and Paramount.

Paramount+ is leaning on its “Mountain of Entertainment,” to borrow the advertising slogan, while Peacock has leaned more on live sports, with the company broadcasting live WWE events like Wrestlemania. The platform is expected to be the only place to watch every Olympic event live from Paris this summer.

On the library side, the combination of Paramount and Universal films would make for a formidable combined service in terms of feature films, while a deal would also unite the Yellow stone and the cinematic universes of Dick Wolf. While the Yellow stone spinoffs and other Taylor Sheridan shows are streaming on Paramount+, the original hit is on Peacock, thanks to a deal Bob Bakish struck before the company went all-in on streaming. Meanwhile, NBC and Peacock are home to Dick Wolf’s shows. Law and order And Chicago franchises, while its FBI the franchise lives on CBS and Paramount+.

For Comcast chief Brian Roberts, a source explains: “It’s a question of timing. If all of these options disappear and Comcast doesn’t get an NBA package (which the company is trying to wrest from Warner Bros. Discovery), Brian doesn’t want to be left with nothing. Does he see that the NBA deal is going south and then he makes a Hail Mary offer for Paramount? He doesn’t want to find himself in a situation where all these irons are in the fire and then the fire has spread elsewhere.

Another speculation is that Byron Allen or another bidder might attempt to acquire BET, although one observer was skeptical that such a sale would have a significant impact on Paramount.

Meanwhile, Paramount executives, as well as high-level observers of the studio’s wild ride over the past few weeks, are expressing skepticism about leaving the company in the hands of three top executives. “It’s a terrible idea,” says a senior executive at another studio. “When has this ever worked?” I can imagine a partnership between Brian and George, but – ai yi yi yi yi.

During the initial CBS briefing on May 2, Cheeks told reporters that he, Robbins and McCarthy would each remain in their respective lanes as co-CEOs. “Divisional clarity will continue,” Cheeks told reporters. “In other words, I have no involvement in the green lights of Paramount Pictures and Brian has no involvement in the green lights of the CBS shows.” Cheeks also reiterated that the trio “is finalizing our strategic plan which we will roll out as soon as possible” but declined to provide details.

But a longtime Paramount insider offers a harsh assessment of the hydra-headed approach, which certainly took its toll when Jeff Bewkes, then CEO of Time Warner, mounted a campaign for the company’s top job. studio. “They don’t complement each other,” this person said. “Robbins never scheduled an entire roster. McCarthy was lucky Yellow stone. And Cheeks is kind of like (former CEO Bob) Bakish – a good but uninspired bureaucrat. (Inspirational or not, CBS just claimed its 16th consecutive season as the most-watched broadcast network in prime time.) Sources within Paramount insist that the three men have always gotten along very well.

Co-CEOs are rare among large companies, and many who tried the idea have since abandoned it. Software provider Salesforce briefly had founder Marc Benioff join Bret Taylor at the helm of the company, a co-CEO relationship that lasted only 18 months.

But there are success stories, and one of Paramount’s biggest competitors is one of them.

In July 2020, amid the COVID-19 pandemic, Netflix elevated Ted Sarandos to co-CEO alongside founder Reed Hastings. “This change makes formal what was already informal: that Ted and I share leadership of Netflix,” Hastings said at the time. “As co-CEOs, there are two of us full-time. It’s not like a part-time contract.

This arrangement, however, was part of Hastings’ succession planning. Two and a half years later, he officially stepped down, moving to executive chairman and elevating Greg Peters to co-CEO alongside Sarandos. Paramount’s current management setup did not have this extensive runway. And there’s another critical difference between Netflix’s C-suite and Paramount’s: Netflix gave Sarandos and Peters clear lines of oversight, with Sarandos overseeing content and marketing, and Peters managing product, games and advertising.

A Paramount source says it’s not yet clear how the three executives will divide oversight of some of the company’s non-content business areas, such as operations, streaming, advertising and licensing, a concern that appears to be a priority on Wall Street.

The trio’s elevation “raises several questions that remain unanswered in our view,” Bank of America’s Jessica Reif Ehrlich wrote on April 30. “These include: 1) who makes strategic decisions within the company, 2) what is the timing/terms of a potential sale (as has been the subject of several media reports), and 3 ) what would be the strategic direction of the company if no transaction is executed and current ownership remains in control? »

The analyst warned that Paramount’s shares would remain “volatile” until there were more definitive answers.

In fact, several analysts said following Bakish’s ouster that they viewed the “CEO’s office” as a temporary structure, meant to be maintained only to allow a deal to be reached.

These views will probably need to be re-evaluated now. To quote Naveen Sarma of S&P Global: “We believe that such a shared management structure is not viable for Paramount Global, or any publicly traded company, outside of a short transition period. »

Lesley Goldberg contributed reporting.