A momentous couple of weeks for Paramount Global are underway. Its second-quarter earnings are due out today; the “go-shop” period in the $8B Skydance deal closes August 21; and a new round of layoffs is expected next week.
Paramount will release its earnings after the market closes, with Wall Street analysts forecasting a 5% year-to-year revenue dip due to challenges in linear TV and at the film studio.
In addition to the Skydance deal, the eyes of the financial community will be focused on Paramount’s cost-cutting plans. The company’s Co-CEOs, who have promised to deliver $500 million in annual cost savings, said in June that more details about the streamlining would be revealed on the Q2 earnings call.
Chatter has been intensifying over the last few days that the next round of layoffs is coming next week, with hundreds of jobs expected to be eliminated. According to multiple sources, Tuesday, Aug. 13, is the target date. It fits into the pattern of previous mass layoffs at the company, most recently on Feb. 13, which also was a Tuesday, with the impacted employees asked to leave by that Friday.
Marketing and Paramount+ are two areas that are expected be hit hard, we hear. In a precursor to a major marketing consolidation, Michael Engleman, Chief Marketing Officer for Paramount+ Domestic and Paramount+ with Showtime, announced Tuesday that he will be stepping down.
According to sources, tens of marketing positions could be gone, with as much as half of the Paramount Global’s overall marketing team in danger of losing their jobs.
Paramount+ also is likely to take some of the brunt of the latest staff reductions as media companies, including Paramount, are trying to cut streaming losses by reducing spending and original output as they push to make their platforms profitable. On Disney’s quarterly earnings call Wednesday, CFO Hugh Johnston hinted that new cost cuts may be in the offing, assuring Wall Street analysts that there would be more ways to do “more with less” in the near future.
While marketing and Paramount+ may be disproportionately affected, no one would be spared as every division across the company is expected to be part of the cutbacks, including frequent layoff targets such as corporate and shared services.
Per standard practice, every department head had been given a number to hit in terms of eliminated positions and/or overall savings.
“It’s going to be a bloodbath,” one staffer said, echoing the sentiment of thousands across the company who are bracing for the cuts. The mood at Paramount has been pretty subdued over the last couple of weeks as the layoffs are drawing near, with the morale and level of anxiety moving in opposite directions. Some speculate that the staff reductions may stretch beyond next week into September and even possibly into next year.
During the February round of layoffs, 800 jobs were eliminated, which represented about 3% of the company’s global head count, with Paramount TV Studios heavily impacted as it underwent a major consolidation.
In November 2022, Paramount TV Studios as well as CBS Studios underwent staff reductions. In February 2023, there were layoffs at Showtime. In May 2023, the company proceeded to eliminate 25% of staff in its domestic cable networks and shutter its longstanding MTV News division after 36 years on air.
The unease among the employees follows months of uncertainty about the company’s future, with a drumbeat of press coverage about a range of scenarios. An M&A deal has been on the table since the end of 2023, when National Amusements chief Shari Redstone came to terms with the daunting reality of Paramount’s deteriorating cable TV business and the cash burn of streaming. As Skydance made multiple attempts to secure the company and other suitors circled, she ousted longtime CEO Bob Bakish and installed company veterans Brian Robbins, Chris McCarthy and George Cheeks in the newly christened Office of the CEO.
During a presentation to shareholders in June, Cheeks said the trio would lay out the “broad strokes” of their strategic plan for the company before “sharing greater detail on our Q2 earnings call in August.”
A few notable bidders, among them Barry Diller and Sony Pictures, have abandoned their pursuit as the the “go-shop” period is coming to a close. Even assuming Skydance and its backers — including RedBird Capital and Oracle billionaire Larry Ellison — prevail, with former NBCUniversal CEO Jeff Shell poised to become president of the newly merged entity, there will be plenty of changes in the months to come under the three Co-CEOs. Cheeks in June emphasized plans for “streamlining our organization, allowing us to build a leaner, more nimble company that’s better positioned to win.” He also said $500 million in annual cost savings has already been identified, with layoffs a key aspect to achieving them.
After the trio of CEOs were thrust into a more prominent role in June after Redstone abruptly pulled out of a prior version of the Skydance pact, sources told Deadline they would be given time to settle in. That still appears to be true to an extent. The original cost-cutting plan was developed when the previous Skydance deal fell through, and when the current proposal took effect the cutbacks stayed in the forecast.
Paramount’s stock, like those of several media players, has been struggling even after news of the Skydance proposal last month. Shares closed Wednesday at $10.46, leaving them down 28% in 2024 to date. The company’s debt and exposure to linear TV declines have both spooked investors, akin to the recent investor retreats from Disney, Warner Bros. Discovery, AMC Networks and others.
Gerry Cardinale, founder and managing partner of RedBird, has said the Skydance team plans to give the Paramount CEOs ample latitude to make strategic decisions in the leadup to the deal’s close in mid-2025. When the merger was announced last month, he said RedBird backed it “because we believe that the pro forma company under this leadership team will be the pace car for how these incumbent legacy media businesses will need to be run in the future.”