Q2 2024 Summary
Published Feb 18, 2025, 5:23 PM UTC- Paramount+ has amassed 68 million global subscribers, driven by strong content, including originals and library offerings, which is fueling subscriber growth and business momentum.
- The company is on path to achieve domestic profitability for Paramount+ in 2025, with opportunities to accelerate profitability both domestically and globally through strategic partnerships or joint ventures that aim to increase scale, improve content offerings, reduce costs, and enhance profits.
- Streaming audience on Paramount+ for NFL increased by more than 50%, while NFL on CBS was up 5% year-over-year, indicating strong growth in sports content across both streaming and broadcast, benefiting affiliates and the streaming business alike.
- Paramount Global recorded a $6 billion non-cash goodwill impairment charge due to linear declines in the cable networks segment and the valuation implications of the Skydance transaction, indicating significant challenges in their traditional TV business.
- The company is reevaluating its international streaming strategy, considering options like strategic partnerships or joint ventures to reduce costs, which suggests difficulties in scaling their international streaming business independently.
- Despite announcing $500 million in cost savings, Paramount acknowledges this is only "step one", and that additional significant cost reductions are necessary, implying ongoing profitability challenges and the need for deeper cuts to achieve financial targets.
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Paramount+ Profitability
Q: When will Paramount+ be profitable?
A: The company aims for domestic profitability for Paramount+ in 2025, focusing on a full-year positive result. They are exploring strategic partnerships and joint ventures to accelerate profitability by improving scale, enhancing content offerings, reducing costs, and driving long-term value. -
Cost Savings Plans
Q: Can you detail the $500M cost savings and Skydance's $2B?
A: They are implementing $500 million in immediate cost savings, primarily through headcount reductions. This is just the first step; they are also pursuing additional significant cost reductions beyond headcount, which won't all occur simultaneously. These plans contribute to the initiatives comprising the $2 billion referenced in the Skydance transaction. -
Goodwill Impairment Charge
Q: What caused the $6B goodwill impairment?
A: The $6 billion noncash goodwill impairment charge is due to linear declines and the value implied by the Skydance transaction. Accounting rules require reconciling the value of individual reporting units with the enterprise value implied by the transaction, resulting in the charge specific to the cable network reporting unit. -
Content Licensing Strategy
Q: Will licensing remain a growth driver post-2024?
A: Licensing remains a compelling business. The company focuses on maximizing first-run content on its own platforms but continues to license to third parties to drive more revenue, reach, and relevance. Despite timing dynamics due to strikes, they believe long-term licensing will continue to be a growth driver. -
Charter Agreement Impact
Q: How does the Charter deal affect subscribers and revenue?
A: Subscribers who activate Paramount+ through Charter will be counted as Paramount+ subscribers. Revenue from such deals will be allocated between the TV Media segment and the D2C segment. The revenue received is not contingent on activation; it's part of the overall economics of the arrangement with the distributor. -
Cash Flow Outlook
Q: What's the outlook for free cash flow and leverage?
A: The company expects to deliver growth in free cash flow in 2024, alongside significant growth in adjusted OIBDA, with no changes to prior expectations for the year. -
International Streaming Strategy
Q: Any updates on international streaming plans?
A: While maintaining a global footprint, they are exploring options to optimize profitability. This may include strategic partnerships or joint ventures to reduce costs and drive greater profits, focusing on markets where they can achieve better scale. -
Sports Rights Strategy
Q: Will you pursue new sports rights?
A: Satisfied with their current sports portfolio, including recent deals with EFL and Serie A, they remain opportunistic and will consider acquiring additional rights that enhance offerings for both broadcast and streaming.