Paramount Global Layoffs Ahead of Skydance Deal Closes

UPDATE with management comments: These are big weeks for Paramount Global. Second-quarter results are due today, the go-shop period on the $8 billion Skydance deal ends Aug. 21, and another round of layoffs is expected next week.

Paramount will release its financial results after the close of trading. Wall Street analysts are forecasting a 5 percent year-over-year revenue decline due to problems in linear television and the film studio.

In addition to the Skydance deal, the financial community will be watching Paramount’s cost-cutting plans. The company’s co-CEOs, who have promised to deliver $500 million in annual cost savings, said in June that more details on the improvements would be revealed during a Q2 earnings conference call. UPDATE:Co-CEO Chris McCarthy confirmed on the call that the media company plans to cut its U.S. workforce by about 15%.

Rumors have been mounting over the past few days that another round of layoffs will occur next week, with hundreds of jobs to be eliminated. According to multiple sources, Tuesday, Aug. 13 is the target date. It fits the pattern of previous mass layoffs at the company, most recently Feb. 13, which was also a Tuesday, and affected employees were asked to leave by Friday.

Marketing and Paramount+ are two areas that will likely be hit hard, we’ve heard. In a precursor to a major marketing consolidation, Michael Engleman, chief marketing officer of Paramount+ Domestic and Paramount+ at Showtime, announced Tuesday that he will be stepping down.

Dozens of marketing positions could be eliminated, with up to half of Paramount Global’s marketing team at risk of losing their jobs, according to sources.

Paramount+ is also likely to bear some of the brunt of the recent staff cuts as media companies including Paramount try to limit streaming losses by cutting expenses and original production to keep their platforms profitable. During Disney’s quarterly earnings call on Wednesday, Chief Financial Officer Hugh Johnston hinted that new cost cuts could be in the works, assuring Wall Street analysts that there will be more ways to do “more with less” in the near future.

While Marketing and Paramount+ may take a disproportionate hit, no one will be spared as the cuts will cut across every department in the company, including common layoff targets like Corporate and Shared Services, along with Legal and BA.

UPDATE:During the second-quarter earnings call, McCarthy revealed that marketing and communications would be one of two areas to see cuts. The other would be support functions, including legal, finance and other administrative areas of the company.

Following standard practice, each department head was given the number of positions to be eliminated (double-digit percentage estimates) and/or the overall number of savings.

“It’s going to be a bloodbath,” said one employee, echoing the sentiment of thousands across the company bracing for cuts. The mood at Paramount has been fairly subdued over the past few weeks as the layoffs approach, with morale and anxiety levels moving in opposite directions. Some speculate that the staff cuts could extend beyond next week, into September, and possibly even into next year.

“As you can imagine, these are difficult decisions to make,” McCarthy said on a conference call announcing financial results. “We have incredibly talented people at Paramount, and these actions are not a reflection of their contributions. Rather, they are necessary to transform our organization for the future.”

The February round of layoffs eliminated 800 positions, or about 3% of the company’s global headcount. The biggest contributor was a major consolidation at Paramount TV Studios.

In November 2022, Paramount TV Studios and CBS Studios underwent staff reductions. Showtime reported layoffs in February 2023. In May 2023, the company began eliminating 25% of the staff across its national cable networks and shuttered its longtime MTV News division after 36 years on the air.

The employee unease follows months of uncertainty about the company’s future, with a cadence of news reports about a range of scenarios. An M&A deal has been on the table since late 2023, as National Amusements chief Shari Redstone came to terms with the grim reality of Paramount’s declining cable business and the cash drain associated with streaming. While Skydance made repeated attempts to secure the company and other suitors circled, it ousted longtime CEO Bob Bakish and installed company veterans Brian Robbins, Chris McCarthy and George Cheeks in a newly christened Office of the CEO.

During a presentation to shareholders in June, Cheeks said the trio would provide a “broad outline” of their strategic plan for the company before “sharing more details during our Q2 earnings conference call in August.”

Several major bidders, including Barry Diller and Sony Pictures, have abandoned their bids as the go-shop period winds down. Even assuming Skydance and its backers — including RedBird Capital and Oracle billionaire Larry Ellison — win out, and former NBCUniversal CEO Jeff Shell is poised to become chairman of the newly combined entity, there will be plenty of changes under the three co-CEOs in the coming months. Cheeks in June highlighted plans to “streamline our organization, which will allow us to build a leaner, more agile company that is better positioned to win.” He also said $500 million in annual cost savings have already been identified, and the layoffs are a key part of achieving them.

After the trio of CEOs were thrust into a more prominent role in June after Redstone abruptly withdrew from a previous version of the Skydance pact, sources told Deadline they would be given time to settle in. That seems to be true to some extent. The original cost-cutting plan was developed when the previous Skydance deal fell through, and when the current proposal went into effect, the cuts remained in the forecast.

Paramount stock, like several other media stocks, has struggled even after news of Skydance’s proposal last month. Shares closed Wednesday at $10.46, down 28% through 2024. Downside to the company’s debt and linear TV exposure has spooked investors, as have recent investor withdrawals from Disney, Warner Bros. Discovery, AMC Networks and others.

Gerry Cardinale, RedBird’s founder and managing partner, said the Skydance team plans to give Paramount’s CEOs ample latitude to make strategic decisions in the run-up to the deal closing in mid-2025. When the merger was announced last month, he said RedBird backed it “because we believe that, pro forma, the company under this leadership will be a safety car for how these current, traditional media companies will need to be run in the future.”