Paramount Global, following a highly successful Super Bowl broadcast by CBS that drew over 123 million viewers across all platforms, has announced plans to lay off approximately 800 employees, amounting to about 3% of its workforce. The decision, communicated via an internal memo from Paramount CEO Bob Bakish, emphasizes the necessity of these layoffs to drive the company back towards earnings growth.
According to Variety, Bakish, in his memo, reiterated the importance of this step for Paramount’s future trajectory. “I am confident this is the right decision for our future,” he stated, emphasizing that these adjustments are crucial for building upon the company’s momentum and executing its strategic vision for the upcoming year.
Despite the optimism regarding future prospects, Paramount’s shares have faced a decline of around 13% since the beginning of the year, dropping a further 4% following the announcement of the layoffs.
This move comes as no surprise, as Bakish had previously alerted employees to the impending job cuts in a memo sent on January 25. In that communication, he stressed the need for Paramount to operate more efficiently and reduce spending, indicating the company’s intention to function as a leaner organization.
The need for cost-cutting measures is particularly pronounced in Paramount’s streaming business, which has been incurring significant losses. While there has been some narrowing of losses, the direct-to-consumer (DTC) unit still reported a loss of $238 million in the third quarter alone. Over the nine months ending September 30, the DTC unit’s losses amounted to approximately $1.2 billion on an adjusted operating profit basis, with the film division also shedding $143 million during the same period.
On the television front, Paramount experienced a 12% decline in adjusted operating profits annually, reaching $3.6 billion, primarily due to a 14% decrease in linear ad revenue.
Financially, Paramount finds itself burdened with more than $15.6 billion in long-term debt, juxtaposed with approximately $1.8 billion in cash reserves.
The announcement of these layoffs coincides with swirling rumors of potential mergers and acquisitions involving Paramount. Media mogul Byron Allen has reportedly made a bid of $14.3 billion to acquire all outstanding shares of the company. Additionally, Skydance Media and RedBird Capital have shown interest in potential deals, along with Apollo Global Management and Warner Bros. Discovery.
Addressing these speculations, Bakish confirmed Paramount’s openness to exploring dealmaking opportunities. “In parallel, we are always looking at alternate ways of creating shareholder value, including potentially through transactions,” he stated, suggesting the company’s willingness to consider various avenues for growth and enhancement.
Paramount is scheduled to announce its fourth-quarter and full-year 2023 earnings results on February 28, providing further insight into its financial performance and future outlook.