Paramount Global on Tuesday launched a deep round of job cuts, a move aimed at eliminating nearly 2,000 jobs by the end of the year as the company prepares for a new ownership regime.
Last week, company leaders announced they would reduce Paramount's U.S. workforce by 15% in an effort to save $500 million in annual costs. On Tuesday, leaders said affected employees would be notified in three phases “beginning today through the end of the year.”
“We expect 90% of these actions to be completed by the end of September,” co-CEOs Brian Robbins, Chris McCarthy and George Cheeks wrote in a memo sent early Tuesday morning.
The company, which includes broadcast networks such as CBS, MTV, Nickelodeon and Comedy Central as well as the storied Paramount Pictures movie studio, has been struggling for years as the cable TV bundle has crumbled, eroding its most stable profit base: cable programming fees. The company’s channels, once among the strongest in the industry, have become increasingly irrelevant to younger viewers.
Over the past year, as the company's value continued to plummet, majority shareholder Shari Redstone decided to divest from the firm her family has controlled for nearly 35 years. Last month, a group led by tech heir David Ellison reached an $8 billion deal with Redstone and other board members to buy the ailing company.
Ellison's Skydance Media, along with RedBird Capital Partners and Ellison's father, Larry, a co-founder of software giant Oracle Corp., will take over in the first half of next year.
Ellison's proposed acquisition of Paramount is a two-step process. First, his group would buy the Redstone family's holding company, National Amusements Inc., allowing the family to exit the movie business after more than 80 years. The late mogul Sumner Redstone acquired the company, then known as Viacom, in 1987. Seven years later, he added the prestigious Paramount film studio.
The Skydance deal currently earmarks $2.4 billion for the purchase of National Amusements. The Redstone family would receive about $1.7 billion after debt is settled, according to the sources.
Last week, Paramount alerted investors that it had taken a $6 billion writedown on its cable business, in another sign that Hollywood is coping with the continued deterioration of the traditional television business.
“The industry continues to evolve and Paramount is at an inflection point where changes are necessary to strengthen our business. And while these actions are often difficult, we are confident in the direction we will take going forward,” Robbins, McCarthy and Cheeks said in the memo.
Paramount employees have been reeling from corporate uncertainty all year. As the sale process progressed, the company's leader of seven years, Bob Bakish, was fired and a new group was installed. But any respite was short-lived.
In June, Cheeks, McCarthy and Robbins signaled that deep cost cutting was imminent.
The layoffs come as CBS prepares to launch its new fall television lineup and as the movie studio struggles to maintain its footing.
“We know that having to part ways with teammates whose contributions have been instrumental to our success is incredibly difficult,” the executives said.
