Matrix Asset Advisors, a significant shareholder of Paramount Global, has expressed strong disapproval following the announcement of CEO Bob Bakish’s departure. Let’s delve into the details of this tumultuous situation:
Bakish’s Exit and Merger Talks: Bob Bakish, who has been a prominent figure at Paramount since 1997, is stepping down immediately. A trio of division heads—Brian Robbins, George Cheeks, and Chris McCarthy—will temporarily lead the company in a new office of the CEO. The timing of Bakish’s exit coincides with ongoing merger discussions between Paramount and David Ellison’s Skydance Media.
Matrix Asset Advisors’ Critique: Matrix Asset Advisors, which holds 355,445 Paramount shares on behalf of its clients and itself, has raised several concerns.
Lack of Guidance: The firm criticized Paramount for not providing guidance or answering analysts’ questions during its first-quarter earnings call.
Costly Error: Katz believes this move will cost the company upwards of $50 million and highlights the lack of leadership during a critical period.
Paramount’s Performance: Despite the turmoil, Paramount had a good quarter, focusing on improving cash flow, earnings, and subscriber growth. Katz acknowledges that Bakish’s plan is working, and Paramount is an undervalued, high-quality media asset. Matrix Asset Advisors opposes the sale to Skydance, considering it “significantly dilutive” to shareholder value.
Skydance Deal and Alternatives: Skydance’s initial proposal involved acquiring Redstone’s controlling stake in Paramount and other assets, followed by Paramount acquiring Skydance in an all-stock deal. Matrix Asset Advisors argues that a full and open sale process would likely yield a higher price for shareholders.
The firm suggests that Paramount going it alone and allowing the turnaround to continue is preferable to an exclusive deal with Skydance.
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