Paramount Global Announces Layoffs Amidst Record-Breaking Super Bowl Viewership
Paramount Global (PARA) has announced significant layoffs affecting approximately 800 employees, constituting around 3% of its workforce, following a remarkable Super Bowl performance that attracted over 123 million viewers across all company platforms, spearheaded by CBS.
The decision, set to take effect on Tuesday, underscores the company’s commitment to streamlining operations and achieving sustainable earnings growth, according to sources familiar with the matter as reported by Yahoo Finance.
In an internal memo addressed to employees, Paramount CEO Bob Bakish reaffirmed the necessity of the layoffs, emphasizing their role in shaping the company’s future trajectory. “I am confident this is the right decision for our future,” Bakish stated, expressing optimism about Paramount’s strategic vision and potential for growth in the forthcoming year.
However, news of the layoffs has led to a downturn in Paramount’s stock performance, with shares dropping by 4% on Tuesday. The company’s shares have already experienced a 13% decline since the beginning of the year.
The impending job cuts were forewarned in an earlier internal communication from Bakish on January 25, where he highlighted the imperative for Paramount to operate with greater efficiency and reduce expenditure.
Paramount has faced financial challenges, particularly within its streaming segment, despite narrowing losses in recent quarters. In the third quarter alone, the company reported a direct-to-consumer (DTC) loss of $238 million. Over the nine-month period ending September 30, the DTC unit incurred a staggering $1.2 billion in losses on an adjusted operating profit basis, while the film division saw losses amounting to $143 million during the same timeframe.
Additionally, Paramount’s television segment witnessed a 12% decline in adjusted operating profits, totaling $3.6 billion, largely attributable to a 14% decrease in linear ad revenue.
The company’s financial struggles are further compounded by its substantial long-term debt exceeding $15.6 billion, juxtaposed with approximately $1.8 billion in cash reserves.
The announcement of layoffs comes amidst swirling rumors of potential mergers and acquisitions. Media tycoon Byron Allen purportedly made a bid of $14.3 billion to acquire all outstanding shares of Paramount Global. Other interested parties include production studio Skydance Media, investment firm RedBird Capital, and private equity firm Apollo Global Management, along with industry rival Warner Bros. Discovery (WBD).
Paramount Global is scheduled to report its fourth-quarter and full-year 2023 earnings results on February 28, offering stakeholders insights into the company’s financial performance and strategic direction moving forward.
As Paramount navigates through this period of transition, the company remains open to exploring avenues for creating shareholder value, including through potential transactions, as indicated by Bakish in recent statements to Yahoo Finance.
