Name: Paramount Global Q3 2024 Earnings Call
Start: 2024-11-08T13:31:00.000Z

Executive Summary

Q3 delivered the second consecutive quarter of DTC profitability, with adjusted OIBDA of $858M (+20% YoY) and Paramount+ revenue up 25% YoY on 3.5M net subscriber adds to 72M; consolidated revenue declined 6% YoY on lower TV Media and Filmed Entertainment, while adjusted diluted EPS rose to $0.49 from $0.30 on cost actions and DTC leverage .
TV Media improved sequentially in advertising (–2% YoY vs worse declines in prior quarters) aided by NFL and political spend; Filmed Entertainment revenue fell 34% YoY on release timing (theatrical –71%), but segment OIBDA improved vs strike-impacted prior year .
Management guided: DTC to a Q4 loss on content/marketing timing, TV Media ad growth in Q4 to be similar to Q3, continued 2024 OIBDA and FCF growth versus 2023, and reiterated Paramount+ domestic profitability in 2025; leverage improved to 3.8x and ~$500M Viacom18 proceeds expected in Q4 to offset negative Q4 FCF timing headwind .
Skydance transaction progressing (S-4 filed, HSR waiting period expired), targeted to close H1 2025; cost program (~$500M run-rate) is ~90% executed, with a 15% U.S. workforce reduction underway; dividend of $0.05 declared for payment Jan 2, 2025 .

What Went Well and What Went Wrong

What Went Well
- DTC segment profitability for the second straight quarter; adjusted OIBDA improved $287M YoY to $49M, with Paramount+ revenue +25% YoY and +3.5M subs to 72M, ARPU +11% YoY; DTC ad revenue +18% YoY and Pluto engagement strong .
- Company-level adjusted OIBDA rose 20% YoY to $858M on expense discipline; CFO: “Q3 demonstrated the progress… delivering adjusted OIBDA of $858 million” .
- Cost actions advancing: $500M run-rate savings, ~90% executed; management: “we have made progress… reduce our U.S.-based workforce by 15%” .
What Went Wrong
- Consolidated revenue declined 6% YoY to $6.731B on TV Media (–6%) and Filmed (–34%); GAAP diluted EPS from continuing ops was $(0.01) as impairment and restructuring continued to weigh .
- TV Media affiliate/subscription revenue –7% YoY due to ecosystem declines and absence of Showtime PPV; licensing/other –12% with softer secondary market volumes .
- Filmed Entertainment theatrical –71% YoY on release timing; management expects licensing revenue to decline for 2024, citing fewer made-for-third-party productions and slower second-run/library activity post strikes .

Financial Results

Consolidated P&L and Cash Flow (Q1–Q3 2024)

Metric	Q1 2024	Q2 2024	Q3 2024
Revenue ($B)	$7.685	$6.813	$6.731
Operating Income (Loss) ($B)	$(0.417)	$(5.318)	$0.337
Adjusted OIBDA ($B)	$0.987	$0.867	$0.858
Diluted EPS – continuing ops (GAAP)	$(0.88)	$(8.12)	$(0.01)
Adjusted Diluted EPS – continuing ops	$0.62	$0.54	$0.49
Free Cash Flow ($M)	$209	$10	$214

Segment Breakdown (Q3 2024 vs Q3 2023)

Segment	Revenue Q3’24 ($M)	Revenue Q3’23 ($M)	Adj. OIBDA Q3’24 ($M)	Adj. OIBDA Q3’23 ($M)
TV Media	4,298	4,567	936	1,149
Direct-to-Consumer	1,860	1,692	49	(238)
Filmed Entertainment	590	891	3	(49)
Eliminations	(17)	(17)	—	—

Key KPIs

KPI	Q3 2024	Prior Commentary
Paramount+ Subscribers (EoQ)	72M	+3.5M net adds in Q3
Paramount+ ARPU YoY	+11%	Mix shift toward essential/hard bundles tempered ARPU near term
Paramount+ Revenue YoY	+25%
DTC Advertising Revenue YoY	+18%	DTC ad growth expected double-digit again in Q4
DTC Adjusted OIBDA	$49M	+$287M YoY
Pluto TV Engagement	YTD 5.6B hours, +5%
Leverage	3.8x
Free Cash Flow (Q3)	$214M	Q4 FCF to be negative on timing and ~$150M cash restructuring

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Paramount+ Domestic Profitability	FY 2025	On track for 2025 (Q2)	On track for 2025 (Q3)	Maintained
DTC Segment Profitability	Q4 2024	Loss expected H2 timing (Q2)	Loss expected in Q4 on content/marketing timing	Maintained / Clarified timing
TV Media Advertising Growth	Q4 2024	H2 to improve with sports/political (Q2)	Q4 growth similar to Q3; benefit from record political, less sports inventory	Updated specificity
Total Company OIBDA	FY 2024	Significant YoY growth (Q2)	On track for significant growth in 2024 (Q3)	Maintained
Free Cash Flow	FY 2024	Growth vs 2023 (Q2)	Growth vs 2023; Q4 negative on timing/~$150M cash restructuring; Viacom18 ~$500M proceeds expected in Q4	Maintained with Q4 phasing
Cost Savings	Run-rate by YE 2024	$500M run-rate; workforce –15% (Q2)	~90% executed; complete by year-end	Progressed
Skydance Transaction	Close Timing	H1 2025 expected (Q2)	H1 2025 expected; S-4 filed; HSR waiting period expired	Progressed
Dividend	Next Payment	—	$0.05 per share payable Jan 2, 2025 (record Dec 16)	Announcement

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
DTC Profitability	Q1: narrowing streaming losses; Q2: first DTC-profitable quarter, continue to expect P+ domestic profitability in 2025	Second consecutive DTC-profitable quarter; reiterate 2025 P+ domestic profitability	Improving
Cost Actions	Q1: focus on transforming cost base ; Q2: $500M run-rate, ~15% U.S. workforce reduction	~90% of reductions executed; completion expected by year-end	Accelerating execution
Advertising	Q1: total ad +17% on Super Bowl ; Q2: total ad –6%, H2 to improve	Total ad +2%; Q4 ad growth for TV Media similar to Q3; record political spend tailwind	Improving sequentially
International Strategy/Hard Bundles	Q2: exited Tving Korea; Charter P+ essential to basic video subs; bundles to be shared between segments	New international hard bundle aided subs; Charter bundle contributing; still early	Pivoting to bundles/licensing mix
Licensing	Q1: licensing –25% YoY ; Q2: licensing to decline in 2024	Licensing –9% YoY; 2024 decline reiterated	Under pressure
Measurement (Nielsen)	—	Dispute ongoing; no adverse revenue impact so far; pushing alternatives	New issue; managed
Skydance Transaction	Q2: announced, go-shop, H1’25 close expected	S-4 filed; HSR wait expired; H1’25 close expected	Advancing

Management Commentary

“We are pleased with our very strong performance this quarter… Paramount+ added 3.5 million subscribers… D2C achieved profitability for the second quarter in a row… $500 million in annual run rate savings.” — Co-CEOs Chris McCarthy, George Cheeks, Brian Robbins .
“Q3 demonstrated the progress… We delivered adjusted OIBDA of $858 million… D2C advertising grew 18%… we expect another quarter of double-digit D2C advertising growth [in Q4].” — CFO Naveen Chopra .
“We have made progress on… reduce our U.S.-based workforce by 15%. To date, we have executed 90% of these reductions.” — Brian Robbins .
“We continue to expect the [Skydance] deal to close in the first half of 2025… S-4 filed… HSR waiting period expired.” — Chris McCarthy .

Q&A Highlights

Streaming partnerships and international approach: Company evaluating market-by-market mix of owned-and-operated, hard bundles, and licensing to maximize value; opportunistic on deeper partnerships; bundle activation counted as subs post-activation, economics shared between TV Media and DTC .
Paramount+ profitability trajectory: Domestic profitable in 2025; Pluto already profitable; international P&L running 12–18 months behind domestic .
Advertising measurement: Nielsen dispute about value-for-fees, not affordability; “haven’t seen any adverse impact on ad revenue” and do not expect a material Q4 impact .
International ad revenue true-ups: Prior-period underreporting true-up was ~±$50M in Q3; no further true-ups assumed in Q4 .
Content cost allocation: Allocation reflects relative value of windows; as viewership shifts to streaming, more cost is allocated to DTC .

Estimates Context

S&P Global (Capital IQ) consensus for Q3 2024 EPS and Revenue was unavailable via our SPGI tool at this time; therefore, we cannot present a beats/misses comparison versus Wall Street estimates. Values retrieved from S&P Global were unavailable due to a mapping issue.

Key Takeaways for Investors

DTC inflection appears durable: two straight profitable quarters in DTC on accelerating revenue mix (Paramount+ +25% YoY, DTC ads +18%) and cost leverage; however, Q4 will be loss-making on content/marketing timing before resuming the path to 2025 domestic profitability .
TV Media stabilization signals: advertising down just 2% YoY in Q3 with Q4 expected similar to Q3; political tailwinds help, but affiliate trends remain negative and licensing volumes softer, muting revenue recovery .
Filmed volatility persists: lower theatrical slate timing weighed on revenue (–71% theatrical YoY), though OIBDA improved vs strike-impacted prior year; near-term box office cadence remains a swing factor .
Balance sheet: leverage improved to 3.8x; expect nearly $500M Viacom18 proceeds in Q4 to offset negative FCF timing; restructuring cash costs (~$150M in Q4) will be a near-term drag before cost savings fully accrue .
Strategic catalysts: execution of $500M run-rate savings, continued DTC ad growth, Charter and international bundles, and Skydance closing trajectory (H1’25) shape the medium-term narrative .
Risk watch: licensing softness, TV Media affiliate pressure, ARPU mix headwinds (greater essential/hard-bundle mix), and any resolution and implications of the Nielsen dispute .

Additional Detail (source excerpts)

Q3 consolidated results and non-GAAP reconciliations: revenue $6.731B, operating income $337M, adjusted OIBDA $858M, adjusted EPS $0.49; DTC revenue +10% YoY, TV Media –6%, Filmed –34% .
Paramount+ metrics: +3.5M subs to 72M, ARPU +11% YoY, revenue +25% YoY; DTC adjusted OIBDA +$287M YoY to $49M .
Free cash flow: Q3 FCF $214M; FY24 FCF growth vs 2023 reiterated, but Q4 FCF expected negative on timing and $150M restructuring cash payments; leverage 3.8x .
Dividend: $0.05 per share payable Jan 2, 2025 (record Dec 16, 2024) .

Paramount Global (PARA)·Q3 2024 Earnings Summary