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The statement comes a day after Grey presented a turnaround plan to Viacom’s board, according to insiders.
Viacom, in fact, disclosed in a regulatory filing this week that interim CEO Tom Dooley had asked Grey and his team to defend the studio’s poor performance of late and offer a blueprint for its improvement.
In the filing, the board said it may require Paramount to seek its approval for “co-production, co-financing or other financing activities.” It even said Paramount executives might need board approval for distribution agreements and first-look deals with particular talent.
Dooley, Shari Redstone and the rest of the board, though, were apparently impressed with what Grey offered on Thursday, so issued the following statement Friday:
“Shari, Tom and the Board remain fully supportive of Brad and his leadership of the studio. Under Brad’s leadership Paramount has taken significant successful steps to broaden and strengthen its business, and we are confident that Brad and his team have the skills, relationships and resources necessary to return Paramount to success in its movie business and continue its rapid growth in television.”
Also on the table is a sale of a minority interest in Paramount, and the board could discuss possible offers as early as next month. Dalian Wanda Group is likely a lead suitor, given the giant Chinese company is looking to beef up its investments in the U.S. movie industry after purchasing AMC Theatres, thus becoming the world’s largest movie exhibition company, and spending $3.5 billion to acquire Legendary Entertainment.
Dooley became Viacom’s CEO less than a week ago, after Philippe Dauman stepped down following a bitter power struggle with chairman emeritus Sumner Redstone. Dauman remains nonexecutive chairman of Viacom, though, until Sep. 13 or until three days after the board votes on possibly selling off a piece of Paramount, whichever comes first.
Some on Wall Street, meantime, are looking for some sort of restructuring for Paramount so that it won’t be such a drag on Viacom’s earnings. In the latest quarter, the conglomerate’s filmed entertainment unit recorded a $26 million loss as Teenage Mutant Ninja Turtles: Out of the Shadows underperformed. More recent disappointment Ben-Hur, which Paramount made with MGM and distributed, likely represents a $13 million loss for Paramount, and earlier in the year its Zoolander 2 bombed.
“Short of firing the entire Paramount leadership team, there is little a new CEO could do quickly to improve its film pipeline,” analyst Michael Nathanson of MoffettNathanson said. He predicted Paramount will lose about $350 million this year.
Paramount’s pipeline, though, includes potential hits like Jack Reacher: Never Go Back with Tom Cruise, Transformers: The Last Knight and Arrival, a sci-fi movie starring Amy Adams and Jeremy Renner.
Guggenheim Securities analyst Michael Morris has been arguing for changes at the top of Paramount, but not for selling off a stake.
“Paramount needs a significant leadership overhaul, which is not addressed in a proposed sale,” he said. “We see Paramount playing a significant role in the future of Viacom.”
Nathanson, though, counters: “The best Tom Dooley can do is sell 100 percent of Paramount to the highest bidder.”
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