What is perceived as one of the most difficult times for the media has produced yet another casualty. Like some of its peers in the media world, Paramount Global, the renowned media conglomerate, has announced plans to trim its US staff by 15%, which translates to about 2,000 staff.
The parent company of cable TV businesses such as Nickelodeon, Comedy Central, CBS, UK’s Channel 5, and MTV is making the move as it prepares for a life-saving merger with Skydance film studio.
Paramount Global has been on the negotiation table with Skydance Media over a possible merger of the two conglomerates. The planned merger has brought to the fore marked differences between Paramount Global’s expected and actual valuation. The company’s value has tanked alongside the 80% drop in the price of its shares over the past 5 years.
The new reality has also forced Paramount Global to write down $6 billion in value for its cable television networks. Therefore, the company has to cut down costs to match the drop in valuation, hence the layoffs.
According to co-CEO Chris McCarthy, the layoffs will be “primarily focused on two areas: first, redundant functions within the marketing and communications; second, streamlining our corporate structure, reducing our headcount in finance, legal, technology and other support functions.”
McCarthy also disclosed that the employee drops will begin in the coming weeks, and a large percentage of staff would have been excused “by the end of the year.” He added, “We have incredibly talented people at Paramount, and these actions are not a reflection of their contributions.”
Instead, “they are necessary to transform our organization for the future.”
What’s the Reason for Paramount Global’s Drop in Value?
Things have been far from smooth for media companies in the past few years. Particularly, the traditional television business has taken a hit as consumers have migrated to streaming services. This exodus of consumers has resulted in a drastic drop in advertising revenue on its traditional media arms.
In contrast, Paramount Global’s streaming arms have recorded profit advancement. Its streaming businesses, which include the Paramount+ subscription service and its free counterpart, Pluto TV, posted an income of $26 million in the second quarter of this year.
But Paramount Global isn’t alone in the market distress. Just recently, Warner Bros Discovery, which is the umbrella company of cable networks such as CNN, TNT, and HGTV, wrote down $9.1 billion on its business.
The effects of the media earthquake have extended even beyond the traditional media arena. Axios, a digital media brand, also recently announced that it will lay off 10% of its staff. This amounts to about 50 employees and is the first time the company will succumb to such a measure.
What Does Paramount Global Do?
Paramount Global is one of the largest media and entertainment conglomerates in America. The company produces and distributes programs through several means. These include its broadcast networks, television stations, television studios, and several paid and free streaming services.
Besides creating content, Paramount Global is also in the business of acquiring the right to distribute and broadcast content through satellite, cable networks, or the Internet. This content includes television, radio, and data programs.
What Is Paramount Global’s Net Worth?
As of August 13, 2024, Paramount Global’s net worth or market capitalization was $6.87 billion. However, this is a whopping 29.92% drop from last year’s $22.80 billion. Since it was founded in 1998, the company has also dropped in its market capitalization by 69.89%.
The brightest side of the company’s books is those from Paramount+, which has recovered from the loss. Paramount+ rebounded from an operating loss of $424 million in the second quarter of 2023 to a $26 million income for this year’s second quarter.
According to a joint statement by the Paramount Global co-CEOs, Chris McCarthy, George Cheeks, and Brian Robbins, the company is “On track to reach domestic profitability for Paramount+ in 2025.”
ALSO READ: Is Netflix’s New Series “Supacell” a Hit or Miss?
Who Is the New CEO of Paramount Global?
If the merger with Skydance succeeds, the three CEOs will vacate their position, and Skydance’s founder and current CEO, David Ellison, will become the new CEO of the major Hollywood studio.
In April 2024, Paramount Global replaced its former CEO, Bob Bakish, with Chris McCarthy, George Cheeks, and Brian Robbins. Bakish has led the company since 2019 when it merged with CBS to form ViacomCBS, which later became Paramount Global.
Previously, Chris McCarthy was the head of Showtime, George Cheeks manned CBS as its president and CEO, while Brian Robbins was in charge of Paramount Pictures Studio. The appointment attracted some criticism, with one analyst calling it a “car crash with clear divisions among key stakeholders.”
However, McCarthy thinks differently, even as he reminded the public that the three new bosses had “worked together collaboratively for years and have known each other for decades.”
Is Paramount Global Free?
Paramount Global isn’t free. In fact, the company increased the subscription fee of its streaming service Paramount+ on June 24, 2024. Paramount launched the service in 2021, and so far, it has gained more than 71 million subscribers. It has also provided fierce competition to other streaming platforms like Disney+, Netflix, Hulu, and Max.
The company announced that from August 20, 2024, new members will pay $7.99 per month for Paramount+ Essential instead of the previous fee of $5.99. However, old subscribers will continue to pay the old amount.
Also, Paramount+ with Showtime will now cost $12.99 per month for new members from September 20, 2024. This is a $1 increase from the previous fee. This, alongside the US workforce layoff, is one measure the company is taking to maintain fitness for the Skydance merger.
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