Paramount shutters television studio, begins major layoffs ahead of Skydance merger (2024)

Paramount Global announced Tuesday that it was shuttering one of its television studios, part of a round of deep staff cuts aimed at eliminating nearly 2,000 jobs by year’s end as the company prepares for a new ownership regime.

“A short time ago, we informed the team at Paramount Television Studios (PTVS) that the studio will cease operations at the end of the week,” Paramount co-Chief Executive George Cheeks wrote in a note to staff members.

Paramount Television Studios produces such streaming shows as “Reacher” for Amazon‘s Prime Video, “The Spiderwick Chronicles” for the Roku Channel, “13 Reasons Why” for Netflix and “Station Eleven” for Warner Bros. Discovery.

The company’s larger television production arm, CBS Studios, will continue its operations and will take responsibility for Paramount TV’s collection of shows as part of the restructuring. CBS Studios produces “Star Trek,” “NCIS,” “Survivor” and “Elsbeth,” among other hits.

“This is not a decision based on how PTVS performed,” Cheeks explained in the note. “This move is the result of significant changes in the TV and streaming marketplace and the need to streamline our company.”

Paramount Global boasts such major networks as CBS, MTV, Nickelodeon and Comedy Central as well as the historic Paramount Pictures movie studio on Melrose Avenue. The company has been struggling for years as the pay-TV bundle unraveled, eroding its most stable base of profits: cable programming fees.

The steep cutbacks come less than a week after Paramount and rival Warner Bros. Discovery acknowledged that their cable television channels were worth just a fraction of their value from two years ago. The two companies took write-downs that wiped out a combined $15 billion in value for their cable channels — an admission of a TV industry pillar’s collapse.

Those channels, once among the strongest in the industry, have become increasingly irrelevant to younger viewers.

Paramount leaders also announced last week that they would reduce their U.S.-based workforce by 15% in an effort to save $500 million in annual costs. On Tuesday, the managers 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-CEOs Brian Robbins, Chris McCarthy and Cheeks wrote in a memo that went out early Tuesday morning.

As many as 30 people are expected to exit as part of the studio closure. Since late 2022, the two main television studios have worked to centralize administrative operations and key departments including casting, production, law and finance. The creative teams remained separate. David Stapf has long run CBS Studios while Nicole Clemens has managed Paramount Television Studios as president for the last six years.

“Although Paramount Television Studios is ending, our ethos will live on in shows that will continue to be enjoyed by global audiences for years to come,” Clemens wrote in a note to staff members. “We’ve cemented our legacy by shepherding some of the most influential, award-winning, and critically acclaimed shows in the streaming era.”

Over the last 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 other 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., are poised to assume control in the first half of next year. But first, regulators must approve the transaction.

Ellison’s proposed Paramount takeover is a two-step process. First, his group will buy the Redstone family’s holding company, National Amusem*nts 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 Amusem*nts. The Redstone family would collect about $1.75 billion after paying off debt, according to knowledgeable sources.

RedBird and Skydance have also agreed to provide a $1.5-billion cash infusion to help Paramount pay down debt. The deal is expected to set aside more than $4 billion to buy shares from Paramount investors who have been itching for an exit.

Paramount completed an earlier round of layoffs several months ago, resulting in the elimination of about 800 positions.

Last week, during its second-quarter earnings report, Paramount alerted investors that it took a $6-billion write-down on its cable television networks business. Warner Bros. Discovery wrote down $9 billion for its networks, including CNN, HGTV, Food Network and TNT, the latest 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.