Paramount Global launched a deep round of staff cuts Tuesday, a move aimed at eliminating nearly 2,000 jobs by year’s end as the company prepares for a new ownership regime.
Company leaders announced last week they would reduce Paramount’s U.S.-based workforce by 15% in an effort to save $500 million in annual costs. On Tuesday, the leaders said affected employees would be notified in three phases “starting today and continuing through the end of the year. “
“We expect 90% of these actions to be complete by the end of September,” Co-Chief Executives Brian Robbins, Chris McCarthy and George Cheeks wrote in a memo that went out early Tuesday morning.
The company, comprised of television networks including CBS, MTV, Nickelodeon and Comedy Central as well as the historic Paramount Pictures movie studio, has been struggling for years as the cable TV bundle unraveled, eroding its most stable base of profits: 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, controlling shareholder Shari Redstone decided to jettison the firm her family has controlled for nearly 35 years. Last month, a group led by tech scion David Ellison reached an $8-billion deal with Redstone and others board members to buy the battered company.
Ellison’s Skydance Media, along with RedBird Capital Partners and Ellison’s father, Larry, the co-founder of software giant Oracle Corp., will assume control in the first half of next year.
Ellison’s proposed Paramount takeover is a two-step process. First, his group will buy the Redstone family’s holding company, National Amusements Inc., which would give the family an exit from the movie business after more than 80 years. The late mogul Sumner Redstone acquired the company, then known as Viacom, in 1987. He added the prestigious Paramount movie studio seven years later.
The Skydance deal currently earmarks $2.4 billion to buy National Amusements. The Redstone family would collect about $1.7 billion after paying off debt, according to the knowledgeable sources.
Late last week, Paramount alerted investors that it took a $6-billion write-down on its cable television networks business, in yet another sign that Hollywood is reckoning with the ongoing deterioration of the traditional television business.
“The industry continues to evolve, and Paramount is at an inflection point where changes must be made to strengthen our business. And while these actions are often difficult, we are confident in our direction forward,” Robbins, McCarthy and Cheeks said in the memo.
Paramount employees have been reeling due to corporate uncertainty throughout the year. As the sale process inched forward, the company’s leader for seven years, Bob Bakish, was bounced and the new group 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 TV schedule 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 hard,” the executives said.