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Want to get to a key long term investor in Paramount, who's been in the name since two thousand and six, who believes in the streaming opportunity and the value of its content. It's John Rogers, a real investments founder co CEO.
You've been throughout this business in its many iterations, and I just want to focus first John, on yesterday growth being born out being shown by the business, particularly in its streaming, thanks in many ways to the Super Bowl, but it was overshadowed by the departure of Bob Backish. What did you make of the move?
It was pretty shocking to us.
I've been Ariel's been in business for forty one years.
We've not seen anything remotely like this.
It's just extraordinary, and it can't be good for shareholders to be able to have all this uncertainty and earning season. You're in the middle of a merger and acquisition transaction, negotiating with Charter Communications. All these important things are happening all at once, and you need.
The CEO in place.
So this has just been very very disappointing, disheartening, and also in the context of what you said business has.
Been getting better.
A lot of the initiatives that Bob and Bob and his executive team have worked on are really starting to show fruition. So the timing just seems extremely, extremely problematic.
Let's just talk about probably why Bob Backish has exited, and is because he felt that the negotiations reportedly underway with Skuydance were not within his agreement. Now, Sherry Redstone is a controlling shareholder at the moment with Plus National Amusements. It seems to be the deal that she's looking for with Skuydance. How are you currently dealing with the reports of a so called sweetened deal? What would you make of a combination of paramount with s guidance?
Well, we don't know enough.
We've read all the same you know pieces that have been written about this, and institutions like PUCK have had really good information that we've had confirmed. And so if this transaction is really is focused on Skydance, we think that that may possibly.
Have a chance to work.
But we really would much rather see the Apollo deal with Sony that's been so rumored to be out there to get certainty of a you know, Apollo's a world class firm with extraordinary resources. Sony has proven to be so successful, you know, in this industry that seems like a marriage made in heaven, and so we wouldn't rush to the altar with a smaller company that's not as proven as the Apollo and Sony.
John, Good morning, it's ed in San Francisco. Do you get any sense because you've held this idea that we should look at other offers on the table for a while. Do you still hold that belief but actually the hope that other offers will be looked at, Well.
That's we hear. We have.
You know, we had a lot of confidence in management that's been nothing but straightforward and can do with us. That they cared about all shareholders and as you know, the employee bases all own the secondary shares. So we really have been very, very hopeful that they were going to do the right thing for shareholders and that's been something that's been committed to us consistently, and we believe them, and we just continue to think that you don't need
to rush when things are getting going well. This is not a melting ice cube. This is a company in recovery, in a turnaround mode. We want to make sure that all shareholders get to be able to take advantage of that. And the price that Skydance is suggesting seems to us what we've read, much lower than what we would get from the Apollo Sony deal and many others that could possibly be out there if this company was truly shopped around. And the final thing I would say is the directors.
We know several as independent directors, and we know that they're committed to doing what's fair for all shareholders, So I'm hoping they'll be able to get to the finish line.
What does a change of ownership structure or this m and a path fix to Paramount?
Well, I think that with Apollo and Sony you would end up with enormous resources that would help them with their balance sheet that has you know, gotten higher.
Than we would have hoped. You'll be able if you're working with Sony.
Sony has been an expert of being an arms dealer, being able to use content and ways to generate cash flow and profits, and have the extraordinary library that Paramount brings.
The history of Paramount's.
You know lot where they have been able to make movies for generations, and there will be enormous synergies. You know, I think the synergies between Sony and Paramount Paramount are much much greater than you can imagine with a smaller company like sky Dance.
So we're really hopeful that you'd.
Be able to get great synergies, higher cash flow, and experienced management team that will be able to make those tough calls of what happens with Pike Paramount plus, do you use content there? How do you use it in selling into other competing services like Netflix.
We want that kind of.
Experience leadership that has been proven, and I know there are some other large streamers out there they could possibly also get into the mix.
We are, of course with John Rogers of Aerial Investments found of Coco to our radio and TV audience. John. Regulatory issues though with both potential tie ups. Is that a concern for you?
I think it's a modest concern for the real large guys that are out there. I understand that people would be worried if Netflix, for example, was to buy Paramount Global, But ultimately I think if people are really looking this for the long run, you know, there's been lots of litigation around some of the regulatory constraints that are out there in today's economic system. I think ultimately rational people will see do you want to see Paramount Plus collapse?
Do you want to see all those jobs lost? Do you want to see a world class American company in disarray? Where do you want to see it find a great parent where they can merge and have a successful, growing business over the over the next.
Decade or so.
So I think I'm hopeful that regulators will be able to make the right decision, have an open mind about all the various different possible combinations that are out there, And I certainly think to Apollo a Sony deal should not have any significant regulatory concerns.
John, You've written to your own investors in your Q one report really saying, look, you're not an activist investor, but you feel it's your fiduciary duty to raise concerns, particularly from a corporate governance perspective here. And I want to go back to the fact that you have held this stock throughout these iterations, and you've seen the fact that there was this controlling shareholder. Did you sort of worry this might ever evolve from this corporate governance structure?
That particularly you're worry was the fact that three independent board members have recently stepped down amid this m and A speculation.
You know, over the years that mentioned, you know, the forty one years, we've not seen anything like this. I've never in all the years of owning stocks that have dual class shares, I've never seen a scenario where the A shareholders were going to get a significantly larger premium than the B shareholders. And that's just something we've never seen before. And there's been a lot of smart investors, it'seno factual over the years. You know, Warren Buffett's been
a shareholder. We know Mario Gabelli, my friend Mario has.
Been a shareholder. We had other several.
Good, smart people looking at this, and we've always felt that people would do the rational thing and do the right thing for all shareholders. That's what management's told us. Frankly, that's what sharey has said over time. And so we think that this is something that came as a real true surprise, and it's something again like we've never seen before.
John, I watched The Masters on Paramount Plus. I get my Champions League Football two Paramount Plus.
I liked Halo.
What is it that you like about paramounts existing portfolio and offering.
Well, you started at the right place.
They have extraordinary content.
That you must see.
The super Bowl, you know, had great, great ratings, Grammys were great.
You mentioned the Masters.
They've got great scripted shows, the CSI franchise, the news franchise, CBS Sunday Morning sixty Minutes, CBS Evening News.
And this is robust history. But then you put on top of it this.
Extraordinary library with the paramount greats, Mission Impossible, and The Godfather.
You could go on and on and on.
They've got Pluto, which is an extremely successful streaming service. You've got worldwide assets the Bob Backish used to run that are extremely valuable and seem to get ignored by the analyst community and the value that's there. So they have a well diversified group of assets, many hidden assets, real estate that it hasn't completely been utilized, institutions like Showtime and BT that I wish they had found a way to have sold earlier. But these are real, true
assets to this company. And I think sometimes people get into the group think of the moment, they're worried about the cord cutting, and they're forgetting to value all of the assets that Paramount Global has.
You're a value investor, you look at the value. John, you also say you don't sell into chaos. What do you do though, if a deal with Skuydance goes ahead.
Well, we have been looking at all of our options.
We did write a letter to the board of directors explaining our position. We've been, of course talking to expert legal counsel, and our general counsel is terrific and she's been on top of those issues. So we're looking at all of our alternatives and we'll see how this all plays out.
But we would like to.
See this play out in a way that's very constructive because it would be not a good thing for a sky Dancer trying to buy a company where you're in litigation with all of your shareholders or many of your shareholders, I should say many of your shareholders, and at the same time, your senior management is not going to be happy if the deal isn't fair for the b shareholders the management team owns.
And we all know M and.
A is difficult in the best of circumstances, getting all the synergies done and all the tough calls that have to be made, and it would be a difficult environment I think for them to be able to be successful, while you could have such a cleaner deal with an extraordinary company like Apollo and Sony.
John Rogers Aerial Investments Founder and co C grateful for your time.
Thank you,