0:00

Paramount is a media behemoth,

0:02

a movie studio, a TV

0:04

studio. It also owns

0:07

CBS, the broadcast network, as

0:09

well as a bunch of

0:11

cable channels that once were

0:13

very meaningful, but these days, while

0:16

still profitable, are making a

0:18

lot less money and have a lot less impact.

0:20

Nickelodeon, MTV, Comedy

0:23

Central, the only

0:25

all comedy network.

0:28

BET, VH1 and a

0:30

few others that don't really matter.

0:38

Paramount is in disarray. The CEO is

0:40

out as of this week. Chairwoman Sheri

0:42

Redstone wants to sell it. Why? This

0:46

is really a story about old

0:48

media colliding with the future. And

0:51

ultimately, it has taken down one

0:53

of the great media companies that is

0:55

now fighting for survival. Coming

0:57

up on Today Explained. I

1:30

think we can all agree the current political moment

1:32

is fraud. But how does it compare

1:34

to the other fraud political moments in history? It

1:36

felt for a time in part of that

1:39

decade like everything was falling apart. Young

1:41

people against old people, anti-war

1:43

violence, peace movement. I'm

1:46

former U.S. Attorney Preet Bharara, and

1:48

this week, presidential historian Doris Kearns

1:50

Goodwin joins me on my podcast,

1:52

Stay Tuned with Preet. You

1:55

talk about difficult times in America's history and

1:57

how its people overcame them. is

2:00

out now. Search and follow Stay

2:02

Tuned with Preet wherever you get your podcasts.

2:11

This is Today Explained.

2:14

I'm Noelle King. Tell me who

2:16

you are and what you do. My name

2:18

is Matthew Bellany. I'm a founding partner

2:21

at Puck, the digital media startup, and

2:23

I'm the host of the Town podcast

2:26

for the Ringer Podcast Network. Matt, you've

2:28

been covering Paramount for a long time.

2:30

What's been going on at the company

2:32

this week? The big news this

2:34

week is that the company fired its

2:37

CEO of the past seven years, a

2:39

guy named Bob Backish. We're really excited

2:41

about what we're doing in the streaming

2:43

space. And in fact, as you know,

2:45

we're the only company that's embracing an

2:47

ecosystem and streaming that spans free

2:50

pay and premium. And the

2:52

reason it fired the CEO,

2:54

two separate reasons. One, he

2:57

just didn't do a very good job.

2:59

I mean, Paramount is markedly smaller than

3:01

a lot of its rivals. Its

3:04

foray into streaming into the Netflix

3:06

competition business. Paramount Plus has not

3:08

been going great. Not built for

3:10

the moment, I see. They've lost

3:12

billions of dollars trying to compete

3:15

with Netflix in the general interest

3:17

streaming market. We're just not seeing

3:20

that improvement that we had

3:22

hoped. They have had opportunities

3:25

to sell assets that they

3:27

own, like the Showtime network.

3:29

And instead of taking

3:31

billions of dollars for those assets, he

3:34

has said has sort of managed it

3:36

into the ground. And

3:38

Bob Backish lost the confidence

3:41

of the owner of

3:44

Paramount, which is a woman named Sherry

3:46

Redstone. We all want different content. And we're

3:48

all going to ultimately put together not one

3:50

bundle, but probably two or three or four

3:52

to get what we want. We are going

3:54

to be one of those bundles as you

3:56

go forward. So that's one reason. The

3:58

other is if very

4:00

Machiavellian reason, he

4:03

was standing in the way or trying to

4:05

stand in the way of a potential sale

4:07

of the company. For the

4:09

past three or four months, Sheri

4:11

Redstone, who controls Paramount, has been

4:14

trying to sell her company and

4:16

merge Paramount into a company

4:18

called Skydance. Now there's a whole

4:20

bunch of complications with that deal

4:22

and who benefits and who doesn't,

4:25

but Bob Backish, the CEO of

4:28

Paramount, was decidedly in the anti-Ellison

4:30

camp. He did not want this

4:32

company to be sold to the

4:34

Ellisons and lo and behold,

4:36

he's now out. Because

4:38

there's such drama here, I want to ask

4:41

you about something. I'm noticing that in some

4:43

of the coverage, some reporting says that Backish

4:45

stepped down. Is that the same thing

4:47

as saying he was fired but we're agreeing on a

4:49

nice way of putting it? In

4:51

Hollywood, no one is ever fired. No

4:54

one always steps down or segues

4:56

into a producer position or is

4:59

spending more time with their family

5:01

or whatever. Technically, he

5:03

stepped down. When

5:06

you see the coverage, you have to say that he resigned.

5:11

But this is an exit

5:14

by force. He was asked

5:16

to resign. Okay, I got you. Let's

5:18

go back in time to Paramount's

5:22

decline. At one point, Paramount is doing really

5:24

well. And then at some point in recent

5:26

history, things start to go wrong. When

5:28

did Paramount start to

5:31

move downhill, start to decline? You

5:34

can absolutely trace the decline of

5:36

Paramount to the rise of the

5:38

internet. Viacom was

5:40

home to media brands that

5:43

young people cared about. TV,

5:47

VH1, Nickelodeon,

5:49

Comedy Central, to

5:51

Gen X people like me, these

5:54

are brands that are super

5:56

meaningful and played a large part

5:58

in my upbringing. and the kind of pre-internet

6:02

entertainment that my

6:04

generation loved. And

6:06

then after that, they slowly

6:08

started to slip. And why

6:10

did they slip? Because they,

6:12

unlike any other television company

6:14

out there, they appealed to

6:16

younger audiences. Those cable

6:18

channels that were king in the 80s

6:21

and 90s, they started to slip in

6:23

the 2000s because kids

6:25

weren't watching MTV anymore to find

6:27

out what was cool in music.

6:29

They were watching YouTube. They

6:31

were listening to Apple Music and then

6:34

Spotify. One

6:36

after another, these cable networks started

6:38

to struggle. And now the entire

6:40

cable television landscape is in

6:42

trouble. But Paramount

6:44

was first because it had these

6:46

brands that appealed to young people.

6:48

And it's really just a sad

6:52

and very interesting business

6:55

debacle that this

6:57

great Hollywood studio company has

6:59

been reduced to essentially fighting

7:02

for survival. So

7:04

there's a business story here, which is Paramount

7:06

did some things that were incredibly foolish and

7:09

incredibly short-sighted. There also seems

7:11

to be a personal story here. There

7:13

is the company as a

7:15

leader, Sumner Redstone, and at a certain point,

7:17

his health begins to decline. And from there,

7:19

it seems like Paramount is always in the

7:21

news for just like mess. Can you

7:24

tell us about Sumner Redstone? And

7:27

what happened around, I guess, about eight years

7:29

ago to kind of make him such a

7:31

main character? Sumner Redstone, in

7:33

addition to being one of the most

7:35

influential media moguls of the 20th century,

7:37

he was,

7:40

I'll be honest, not a very

7:42

good person. He

7:50

pitted people against each other. He

7:53

would use racist jokes. He

7:55

was absolutely obsessed with his stock

7:58

prices and nothing else. Because there's

8:00

some point at which you are big enough and don't need to grow.

8:03

He used to say that it was

8:05

over. But I've lived with

8:07

myself too long to say that

8:10

it's ever over. And

8:12

he had these two girlfriends. Manuela

8:14

Hertzer and Sidney Holland. That even in his

8:16

80s, in the late 2000s and early 2010s,

8:18

he had two girlfriends that lived with

8:24

him in his mansion above Beverly Hills.

8:26

These two women who at times

8:28

were romantic partners or companions, maybe

8:30

caregivers. And he would sort

8:33

of lord over his properties and

8:35

his studio with these two girls

8:37

living there and his

8:39

mental capacity started to decline.

8:42

And then all hell broke loose. They isolated him

8:44

from his family. They tell him his family doesn't

8:47

love him. And they

8:49

siphoned away millions of dollars from him

8:51

in one afternoon. Each one

8:53

of them was wired $45 million. And

8:57

these two women got very close

8:59

to having Sumner add

9:01

them to the trust controlling his empire. His

9:04

CEO, who was running Viacom, it

9:06

was called at the time, he

9:08

started to scheme against him. He

9:10

wanted to sell assets. He was managing

9:12

the company so that he would get

9:15

incredible bonuses and mortgage in the future.

9:17

Sumner himself was taking huge dividends out

9:19

of the company. Every time it would

9:21

make a profit, Sumner would take the

9:23

money out, billions of dollars, and they

9:26

were not looking at the future. This

9:30

is a company that distributed

9:32

the Indiana Jones movies. I

9:34

came here to save you.

9:36

Oh yeah? And who's going

9:38

to come to save you, Joe? It

9:40

distributed the Marvel movies when Marvel started

9:42

to make movies. I am Iron Man.

9:46

And they lost both of those

9:48

franchises to Disney because Disney was

9:50

better managed, looked at the

9:52

franchises, came in and said, oh, we'll

9:54

buy Marvel and we'll start making these

9:56

Marvel movies on our own. Thanks for

9:58

launching the franchise, Para. Paramount, the

10:01

Indiana Jones movies as well. Lucasfilm sold

10:03

not to Paramount, it sold to Disney,

10:05

which then had the right to make

10:07

Star Wars movies and Indiana

10:10

Jones movies. It's like poetry, so that they

10:12

rhyme. Every stanza kind

10:14

of rhymes with the last one. One

10:16

after another, the owner of

10:19

Viacom then, now Paramount, he

10:21

was distracted. He was aging.

10:23

His mental capacity was declining,

10:25

and all of these sharks

10:28

in his orbit started to make their play.

10:31

And so he steps away in 2016,

10:33

and my understanding is that has to

10:35

do with his declining health. Is that

10:38

right? Yes. There was a

10:40

whole legal and boardroom

10:42

saga that ensued when

10:44

Sumner's mental health got

10:47

to the point where his girlfriends were

10:49

trying to take control of his life.

10:52

And that's when Sherry Redstone emerges. I

10:54

don't really want to talk about succession,

10:56

but I love my role at Viacom and

10:58

CBS. I think they're great companies. She

11:01

is Sumner's daughter, and he has had

11:03

a very fraught relationship with her over

11:05

the years. At one point, he said

11:07

publicly that he didn't want her to

11:10

take over the company. Are you the

11:12

boss? Yes, I'm the boss. She works.

11:15

She's the CEO. You're the CEO? I'm the CEO. She's

11:17

a friend. You won't even give her the CEO job?

11:19

No. I'm still very active.

11:22

I work very hard. I travel the

11:24

world for Viacom. I'm not about to

11:26

give up control. They didn't speak for

11:29

long periods of time. She didn't approve

11:31

of his lifestyle, did not approve of

11:33

the girlfriends. All that stuff

11:35

was in the background. But when her

11:38

father clearly was having trouble, she

11:40

stepped in and ended up doing battle

11:42

in the courtroom with both Philippe Domon,

11:45

who was the CEO of Viacom at

11:47

the time, one of the companies, and

11:49

Leslie Moonves, who was the CEO of

11:51

CBS At the time, she was openly at

11:54

war with them because they didn't want to listen

11:56

to her. They had it pretty good. They Were

11:58

running these companies. They were making. Tens of

12:00

millions of dollars every year. They

12:02

didn't really care about the future

12:04

of those companies. They wanted to

12:06

manage them right now and ultimately

12:09

see had to step in and

12:11

ultimately take the company. That and

12:13

she. Did and then what does she

12:15

do And to take silver? Ah

12:17

well See looks at the landscapes

12:19

and see decides to combine. Viacom.

12:22

And Cbs they were combined. In the

12:24

past, her father had split them up

12:26

and See combines them and See decides

12:29

that this company can be a player

12:31

to compete against Netflix and Dizzy and

12:33

all these big. Media. Companies

12:35

that are positioning themselves for the

12:38

Three Amigos. So she and her

12:40

Ceo decide to launch a general

12:42

interest streaming service called Paramount Plus

12:44

and that Ceo is Bob Bacchus.

12:46

We're really excited about what we're

12:48

doing in the streaming space. yes,

12:50

that's yo his backers and I

12:53

respect them apart that newsletter that

12:55

Sumner Redstone surrounded himself with lots

12:57

of yes men and cronies that

12:59

kind of cheered him on over

13:01

the years. Wealth by Back was

13:03

a crony and a yes man

13:05

for sorry Redstone on. Process towels and

13:08

on the basis for know how to build

13:10

polls and a pulp or the other. This

13:12

and that that is that it and by

13:14

ourselves to understand that it's all about the

13:17

brand that to let your seventy of any

13:19

brand center content companies they. Decided.

13:21

That a general into streaming service

13:23

where they would have to spend

13:25

billions of dollars on contents to

13:27

try to generate. Subscribers.

13:30

That that was the way to go

13:32

rather than swimming the company down and

13:35

selling content to other streaming services like

13:37

Netflix. It had some of that on

13:39

their own as well, but for the

13:41

most part they're making shows for their

13:43

own platforms and Para just at that

13:46

point was too small. When

13:48

and how did the relationship between bad since

13:50

her. redstone start to go

13:52

awry according to my sourcing

13:54

about a year ago sherry

13:57

red zone really started to

13:59

get the picture that this was

14:01

not working out. There

14:08

was an instance where the dividend

14:11

that pays her family company was

14:13

slashed by Bob Backish because of

14:15

the financial situation of the company.

14:18

And when you start hitting somebody

14:20

in the pocketbook, they start to notice what's

14:22

going on. There was a

14:24

downgrade of the company's debt to

14:26

junk status, which caused all kinds

14:28

of problems. There were a number

14:31

of deals that were put on

14:33

the table for potentially selling off

14:35

assets like Showtime and BET for

14:37

billions of dollars. Those deals were

14:39

rejected by Bob Backish and she

14:41

started to question why that was

14:43

happening. And she essentially looked

14:45

at the landscape and said, you know what,

14:47

I might want to get out of this

14:50

and this guy is not helping my cause. And

14:53

that relationship started to really

14:56

break. Matt

15:00

Bellamy. Matt's back. Coming up in

15:03

Cherry Redstone. Find a buyer. Support

15:18

for Take's line comes from FX's The

15:21

Veil starring Elizabeth Moss. If you

15:23

like spy thrillers or indeed Elizabeth

15:25

Moss, then you might want to check out

15:28

FX's The Veil. It's an international spy thriller

15:30

that follows two women as they play a

15:32

deadly game of truth and lies on the

15:34

road from Istanbul to Paris and London. I'll

15:37

go. One woman has a secret. Same

15:40

here. And the other has a mission

15:42

to reveal it before thousands of lives

15:44

are lost. FX's The Veil now streaming

15:46

only on Hulu. This

15:53

Week on The Grey Area, writer Derek

15:55

Thompson makes his case that everything has

15:57

become a cult. Most

16:00

everything. Is. Taylor Swift. the closest

16:02

thing we have to amass cold

16:04

today. Eat. I'd I'd know I think

16:07

is the closest thing we had to Christianity. Find

16:13

out if you're an occult this week on

16:15

the gray area wherever you get your pi

16:17

guess. It's

16:38

today explained We're back with Matt

16:40

Villainy. Earlier in the so you

16:42

told the set paramount global value has been

16:45

plummeting. Under sorry Redstone's

16:47

Watch. Ah, now the Ceo

16:49

is out. Sorry Redstone would like

16:51

to pass out. She would like

16:53

to make a deal, but let

16:55

me ask you first whether or

16:57

not Cherry Red Zone needed to

16:59

be making a deal Summer, a

17:01

place of such desperation over the

17:03

past eight or so years, has

17:05

anyone approach Paramount previously and said,

17:07

hey, we've got an idea. For your

17:09

we could make a deal here or we

17:11

could buy a pair of On has been

17:13

approached a number of times over the years,

17:16

not necessarily for a full. Take.

17:18

Over but to buy specific assets.

17:20

The problem Paramount has. oh once

17:22

it's great strength is now it's

17:25

great weakness. It has all of

17:27

these cable networks that nobody wants

17:30

to buy because they're not the

17:32

future. Netflix was interested in buying

17:34

just the studio and they wanted

17:37

a lot in Hollywood. Sues a

17:39

beautiful studio lot in Hollywood. The

17:41

last major studio actually located in

17:44

Hollywood is Paramount and Netflix wanted

17:46

to buy that. Lot and move

17:49

into the property they wouldn't sell

17:51

Netflix. Was interested in buying the

17:53

film studio because their franchises like

17:56

Mission Impossible. Transformers,

18:02

you know, the godfather. Don't ever take

18:04

sides with anyone against the family again.

18:07

A lot of iconic movies that Paramount

18:09

has made, Netflix would love to

18:11

own those. They had offers for Showtime.

18:13

There was an offer on the table, apparently in 2021, $5.5

18:15

to $6 billion from a private

18:21

equity firm for just Showtime. And

18:24

they have always said no. And you

18:26

know, when Sherry had taken over, she

18:28

said, we're not for sale. And

18:31

nobody wanted to buy the full company

18:33

because of the television

18:36

networks. And now we have Bob

18:38

Backish out after those

18:40

opportunities past Paramount, Sherry Redstone by

18:42

Bob Backish is out and who's taking

18:44

over for him? Now that Backish is

18:46

out, there is a, what they're calling

18:48

an office of the CEO. I don't

18:50

even know what that means. Which is

18:52

comprised of three executives. Basically talking about

18:54

great cheeks who was running CBS. You're

18:56

talking about Chris McCarthy, who was running

18:58

Showtime and MTV networks. And then they're

19:00

bringing in Brian Robbins, who was, I

19:02

guess, heading up Nickelodeon and some of

19:04

the kids programming. And the three of

19:06

them were reporting to Backish and now

19:08

they've just been elevated up to the

19:10

CEO role. You know, any

19:13

student of corporate governance will tell you, it's

19:15

like having two starting quarterbacks. You have no

19:17

starting quarterbacks. When you have three CEOs,

19:19

you don't have any CEO. And now

19:22

they're describing this as a temporary situation.

19:24

Maybe they'll bring in another CEO. Maybe

19:26

one of these three guys will get

19:29

elevated above the others. If

19:31

a sale doesn't happen to one of the

19:33

suitors that are out there. But for

19:35

now it's very unclear who is setting

19:37

the strategic direction of the company. They

19:39

have this three headed monster. They have

19:41

not articulated what their plan is. They

19:43

say they have one and they presented

19:45

it to the board, but they've not

19:47

said it publicly and we're all just

19:49

kind of sitting around waiting to see

19:51

what the direction of this company is

19:53

if it's not sold. OK, so

19:55

if it's not sold, that's

19:58

that's one issue, but it might.

20:00

Sherry Redstone seems to really want

20:02

out. Do we know what is likely

20:04

to happen next? Well, there

20:06

are a couple scenarios on the table. One

20:09

is the Skydance deal, which is currently

20:11

being negotiated, and then that would buy

20:14

out Sherry Redstone for $2 billion. They've

20:16

already agreed, is my understanding. I think

20:19

others may have reported this to a

20:21

price there. It would then merge Paramount

20:23

with Skydance, valuing Skydance at $5 billion.

20:26

That was done. That was done actually months ago. That

20:28

has faced resistance from some of the

20:31

Paramount shareholders because that deal would be

20:33

good for Sherry Redstone, but not necessarily

20:35

good for the common shareholders of the

20:37

company. Investors that are common shareholders,

20:39

not a huge fan of this deal because

20:42

of the dilution. There is a second offer

20:44

that is potentially on the table. We don't

20:46

know as many details about that. That is

20:49

coming from a private equity firm called Apollo.

20:51

Shares of movie and TV company, Paramount, rallying

20:54

right now. They're up 8%. The Top Gun

20:57

franchise owner flying on the back of a New

20:59

York Times report that Sony and Apollo are talking

21:01

about making a joint bid to buy the company.

21:04

It's a $26 billion offer

21:06

just for Paramount to take

21:08

over the Paramount company. Now,

21:10

obviously, Sherry Redstone as the

21:13

controller would have to approve that

21:15

and allow it to happen, but that

21:17

is a very separate deal that would

21:19

take care of all those shareholders. But

21:21

Sherry doesn't want that deal and she

21:23

controls Paramount. When you're dealing with a

21:26

company that is controlled by one shareholder,

21:28

that shareholder has a lot of power.

21:31

There's a third scenario where someone

21:34

comes in potentially and buys out

21:36

Sherry Redstone's interest in her own

21:38

company and becomes the controlling shareholder

21:41

of Paramount, but doesn't actually buy

21:43

Paramount. We haven't gotten there yet.

21:46

Okay, so the attractive thing about the Skydance deal

21:48

is that Sherry Redstone would walk away with $2

21:51

billion, which she also just

21:53

completely lose control. She would

21:56

have no more influence or

21:59

no more job at pay. Paramount? She

22:01

would not have control over the company anymore.

22:03

And that's the key that Ellison is buying

22:05

here. There is a scenario where she would

22:07

keep a small stake. They call it schmuck

22:10

insurance. So if Paramount somehow becomes

22:12

the biggest company in the world, she

22:14

would then benefit at least a little

22:16

bit from that. But she

22:18

would not be the controlling shareholder.

22:20

And that is what matters. The

22:23

controlling shareholder makes the decision, gets

22:25

to decide what's going on. And

22:27

that's what David Ellison wants. We've

22:30

talked about the nostalgic appeal

22:32

of Paramount. This company was responsible

22:34

for a lot. And

22:36

the more you list it, the more I could

22:38

feel what it was responsible for. What

22:40

is all of this disarray? However

22:43

it ends, what does this mean for audiences?

22:46

Is it going to affect what we see from Paramount at all?

22:49

The outcome here absolutely could affect

22:51

what we see from Paramount. This

22:53

is an iconic Hollywood studio, home

22:55

of everything from Titanic. From

22:59

The Godfather to Forrest Gump. I

23:01

was running Mission Impossible,

23:04

all of those great Paramount movies.

23:07

There's a real chance here that Paramount could

23:09

go away. If

23:17

Apollo gets this studio and

23:19

combines it with Sony Pictures,

23:22

Paramount could go the way of what

23:24

Fox as a movie studio

23:26

went. Where Fox was

23:29

essentially absorbed by Disney. The

23:31

Fox News Network stayed as it is with

23:34

the Murdochs. But the

23:36

Fox movie studio basically doesn't exist

23:38

anymore. It's just a label within

23:40

Disney. And that means

23:42

fewer movies for consumers. So

23:45

if Sony is combined

23:47

with Paramount and Paramount goes away,

23:49

that's bad for consumers. And also

23:51

bad for Hollywood talent. Because

23:54

As a creative person, you want

23:56

multiple outlets to sell your creative

23:58

output to. Going from

24:00

fire down to four in the traditional

24:03

studio space really would hurt the amount

24:05

of projects I get me now. Obviously,

24:07

a Paramount is not a going concern

24:09

on it's own and it's not able

24:12

to stay in business as a studio

24:14

on it's own that it would go

24:16

out of business anyway, and that sort

24:19

of how the world works and plenty

24:21

of people. And I would you think

24:23

that the industry absolutely needs consolidation right

24:25

now because it's really tough to make

24:28

any money in streaming, so perhaps. Pair

24:31

About does need to go away, but I

24:33

would hope that there's a path to keep

24:35

it alive and stable. Allison with the pocketbook

24:38

that he has seemed to want and be

24:40

able to keep that studio alive. He

24:46

is pets me to. He has. To.

24:50

Be visiting is needed to be.

24:53

In a said he editor and he

24:56

did and. It

24:59

said it.