Paramount CEO Bob Bakish steps down as company considers merger

Looming over Bakish’s exit are larger questions about Paramount’s future. Like many media companies, Paramount has struggled to get its streaming business off the ground in recent years as audiences for its cable channels have declined. As a result, it has long been considered a takeover target by rivals looking to build their own content libraries and increase their influence in cable deals.

In recent months, the company has discussed merging with Skydance, a media company run by tech scion and Hollywood executive David Ellison. Ms. Redstone, who is Paramount’s controlling shareholder, has already signed a potential deal for her stake, but company directors have yet to reach a deal for the entire company.

Several shareholders have spoken out publicly against a combination with Skydance, saying it would enrich Ms. Redstone at the expense of other investors. Private equity firm Apollo Global Management and Sony have discussed an all-cash offer for Paramount, one that could give the company a serious alternative. But for any negotiations with other suitors we will have to wait until the exclusive negotiation period with Skydance expires at the beginning of May.

In an effort to alleviate these concerns, Skydance has softened its proposal in recent days. The company told Paramount it would provide a $3 billion cash injection to pay down debt and buy back stock, money that would come from private equity firm RedBird Capital and the Ellison family. Skydance also offered to give Paramount shareholders a larger stake in the combined company than previously contemplated.

It’s unclear whether Skydance’s benefits will be enough to convince the special committee of board members considering the Skydance merger that the deal treats all shareholders fairly. The rare nature of Bakish’s departure could put additional pressure on the committee to demonstrate that it is negotiating the best deal for shareholders, said Jim Woolery, founder of Woolery & Company, a consulting firm.