Paramount Global CEO Bob Bakish announced major layoffs on January 25th, 2023 as part of a new business strategy focused on cutting costs and prioritizing the company’s biggest franchises. The job cuts come amid a difficult economic environment and speculation that Paramount’s parent company, National Amusements, could take the entertainment giant private.
Background
Paramount has struggled in recent years to keep up with larger streaming competitors like Netflix and Disney. The company has invested heavily in its Paramount+ streaming service, but rising costs have made profitability a challenge.
In 2022, Paramount lost over $3 billion, despite hits like Top Gun: Maverick. With economic conditions worsening, Bakish is now planning significant cuts to rein in costs. There is also talk of a potential acquisition by National Amusements, which is controlled by billionaire Sumner Redstone’s family and already owns the majority of Paramount’s voting shares.
Mass Layoffs Announced
In a memo to staff, Bakish warned employees that layoffs are imminent:
“We will be making additional cuts, knowing this will affect people, budgets and projects.”
Though no specifics were given, Variety reported the cuts could impact up to 800 positions globally, including high-level creative execs. The New York Post put the number at “hundreds” of jobs. The layoffs will reduce Paramount’s headcount by nearly 10%, building on smaller rounds of cuts made last fall.
Refocusing Content Strategy
Along with job cuts, Bakish outlined plans to be more selective in Paramount’s content investments. Rather than trying to match Netflix’s enormous volume of original shows and movies, the company will focus more narrowly:
“We must concentrate our resources on our biggest franchises.”
Major existing franchises like Star Trek, South Park, and the company’s library of films were called out as top priorities. Paramount will also continue to develop potential new franchises, but will likely greenlight fewer new projects overall.
Some international output is being reduced as well. Paramount is planning to cut the number of local-language Paramount+ originals in some markets and rely more heavily on imported U.S. shows.
| Department | Layoffs | Strategy Changes |
|---|---|---|
| International Production | Yes | Reduce number of local originals in some markets |
| Domestic Creative Teams | Yes, significant cuts | Greenlight fewer new projects overall |
| Marketing, Distribution | Unknown | TBD |
Financial Turnaround Mandated
The moves come as Bakish sets lofty new financial goals for Paramount Global across 2023 and 2024. Management aims to:
- Reach $9 billion in revenue by the end of 2024 (from $6.5 billion in 2022)
- Grow streaming subscribers to over 100 million globally
- Increase Paramount+ operating income to over $1 billion in 2024
- Deliver 30% growth in free cash flow per share
Achieving these targets will require both revenue growth in streaming/digital areas and much stricter limits on costs company-wide.
Merger Speculation Swirls
As Bakish laid out plans to boost earnings, deal talks also seem to be intensifying. National Amusements has reportedly been speaking with banks about financing a potential deal to take Paramount private.
National Amusements already owns the majority of voting shares in Paramount, but buying the remainder of stock would give them full ownership and control. This would allow for more aggressive restructuring moves without public shareholder pressure.
Taking Paramount private could also facilitate a subsequent merger with another production company. Variety reported National Amusements has held talks with Skydance Media, though any deal remains uncertain.
More Pain Before Gain
In the memo to employees, Bakish attempted to acknowledge the difficult road ahead while asking staff to stay focused:
“There will likely be more tough news ahead before things start to brighten.”
The layoffs and content cuts represent painful but likely necessary steps to help Paramount compete in the streaming era. With economic conditions worsening industry-wide, the company has little choice but to reduce costs in hopes of reaching profitability.
If Bakish’s strategy succeeds, a leaner Paramount positioned around major franchises could potentially rebound as the economy eventually improves. But employees and investors will have to endure a period of austerity first. From more job losses, to cuts in film and TV budgets, additional organizational changes are expected this year as Paramount fights to execute on its financial goals.
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