Q4 2024 Earnings Summary
- Strong growth in streaming engagement and D2C advertising revenue, with D2C advertising up about 18% for the year, indicating successful transition from linear to streaming platforms like Paramount+ and Pluto. This positions the company well for future revenue expansion.
- Paramount+ ranked as the #2 domestic SVOD for hours watched across all original series, despite producing less content than competitors. D2C revenue grew 33%, and DTC profitability improved by $1.2 billion, giving confidence to reach profitability for Paramount+ domestic in 2025, setting a record time for U.S. SVODs.
- The company expects higher free cash flow in 2025 despite the absence of Super Bowl and political advertising, driven by stability in cash content spend and reduced working capital needs, leading to significant improvement in free cash flow conversion. Restructuring expenses are expected to decrease or cease in the future, further enhancing free cash flow.
- Increasing Rate of Decline in Affiliate Revenue: The company expects the rate of decline in affiliate revenue to increase in Q1 due to the impact of recent renewals and an evolving Pay-TV ecosystem, which could negatively affect traditional revenue streams. Naveen Chopra stated, "We also have to take into account some of the headwinds that I mentioned related to affiliate revenue... Q1 is really the quarter in which you're going to see the cumulative impact of those renewals".
- Anticipated Decrease in Full-Year Adjusted EBITDA: Including the impacts of the Super Bowl and political advertising, Paramount expects full-year adjusted EBITDA in 2025 to be "probably down slightly" on a reported basis, indicating potential profitability challenges ahead. Naveen Chopra mentioned, "If you were to think about it on a reported basis, meaning including the Super Bowl and political, I think full year adjusted EBITDA is probably down slightly".
- Lag Between DTC Engagement and Monetization: While the Direct-to-Consumer segment showed strong viewing growth, with watch time per user growing more than 20%, this engagement has not yet translated into proportional revenue growth, suggesting challenges in monetizing increased viewership. Michael Morris observed that "the viewing growth metrics... are clearly well ahead of revenue growth" , and Naveen Chopra acknowledged that monetization may not occur "at the exact same time because we want to build the engagement as we then start to drive price".
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +4.5% (from $7,638M to $7,984M) | Total revenue grew modestly by 4.5% YoY, driven by robust growth in the Direct-to-Consumer (+7.7%) and dramatic improvement in the Filmed Entertainment segment (+67%), which more than offset the decline (-3.7%) in the TV Media segment observed in Q4 2024 compared to Q4 2023. |
TV Media Segment | -3.7% (from $5,168M to $4,979M) | TV Media revenue declined by 3.7% YoY as the segment continued to face challenges with lower affiliate and subscription revenue and a drop in advertising and licensing revenue—trends similar to earlier periods where external market softness and production disruptions weighed on performance. |
Direct-to-Consumer | +7.7% (from $1,869M to $2,013M) | Direct-to-Consumer revenue increased by 7.7% YoY due to continued subscriber growth and strategic pricing increases, building on previous gains seen in earlier periods where the segment benefited from stronger subscription and advertising performance. |
Filmed Entertainment | +67% (from $647M to $1,081M) | Filmed Entertainment revenue surged by 67% YoY as a result of a significant turnaround in theatrical performance, likely due to an improved release schedule compared to prior periods, where earlier quarters were impacted by fewer or mistimed releases. |
Operating Income (EBIT) | -68% (from $404M to $129M) | Operating income fell by about 68% YoY, impacted by a combination of lower revenues, higher restructuring and impairment charges, and increased transaction-related costs in Q4 2024 relative to the stronger operating performance of Q4 2023. |
Net Income | Shift from $514M to -$224M | Net income deteriorated dramatically, reversing from a profit of $514 million in Q4 2023 to a loss of $224 million in Q4 2024, driven by lower overall revenues, higher operating expenses, impairment charges, and restructuring costs that adversely affected bottom-line profitability. |
Earnings Per Share (EPS) | Shift from $0.77 to -$0.32 | EPS dropped sharply from $0.77 to -$0.32 YoY, reflecting the significant negative impact of lower net income, increased charges including impairments and restructuring, and overall weaker operational performance in Q4 2024 compared to the prior year. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Free Cash Flow | FY 2025 | no prior guidance | Expected to increase year-over-year, even when including the impact of the Super Bowl and political advertising in 2024 | no prior guidance |
Adjusted OIBDA | FY 2025 | no prior guidance | Expected to show strong growth when adjusted for the contribution of the Super Bowl and political advertising ; on a reported basis, down slightly due to their absence | no prior guidance |
Paramount+ Domestic Profitability | FY 2025 | no prior guidance | Expected to achieve full‑year domestic profitability in 2025 | no prior guidance |
Affiliate and Subscription Revenue | FY 2025 | no prior guidance | The combination of traditional and streaming businesses is expected to yield net growth in total company affiliate and subscription revenue | no prior guidance |
Advertising Revenue | FY 2025 | no prior guidance | No explicit guidance for total company advertising growth; however, strong D2C advertising engagement is highlighted with 18% growth in 2024 and optimism for the 2025 slate | no prior guidance |
Paramount+ Subscriber Growth | Q1 2025 | no prior guidance | Expected to continue but at a slower pace than Q4 2024 | no prior guidance |
Paramount+ ARPU Growth | Q1 2025 | no prior guidance | Expected to accelerate as the company fully laps the 2023 price increase and benefits from Q4 2024 subscriber additions | no prior guidance |
Adjusted OIBDA | Q1 2025 | no prior guidance | Expected to decline year-over-year in Q1 due to the absence of the Super Bowl and cumulative impact of recent affiliate renewals | no prior guidance |
Free Cash Flow | Q1 2025 | no prior guidance | Expected to be lower year-over-year in Q1 due to approximately $150 million in cash restructuring payments and the absence of the Super Bowl | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
D2C Streaming Profitability and Subscriber Growth | Q1 detailed strong subscriber additions and a 44% YoY improvement in D2C adjusted OIBDA with cost discipline ; Q2 noted the first profitable quarter with an expectation of domestic profitability in 2025 ; Q3 highlighted ongoing subscriber growth and continued improvements in profitability. | Q4 emphasized significant progress with a nearly $1.2B improvement in profitability (despite a $497M full-year loss), 5.6 million subscribers added, increased engagement (+20% watch time), and confidence for domestic profitability by 2025. | Consistent growth and improved performance. The segment has maintained upward momentum across all periods with a strong focus on content and engagement, indicating a bullish outlook for D2C’s future. |
Operational Efficiency and Cost Reduction Initiatives | Q1 focused on disciplined cost management that improved operating leverage and reduced overhead costs. Q2 outlined aggressive initiatives including $500M in run rate cost savings, workforce reductions, and expected restructuring charges. Q3 reported progress with 90% of a 15% workforce reduction executed and ongoing cost-saving measures. | Q4 continued the focus on controlling expenses with flat TV Media costs, proactive measures to optimize content spend (with a shift to streaming), and noted ongoing restructuring costs (e.g. $150M cash charges in Q1 2025). | Steady commitment with evolving cost mix. While cost reduction has been a consistent priority, Q4 shows a nuanced approach balancing higher content investments with efficiency improvements to boost future free cash flow. |
Affiliate Revenue Decline and Traditional TV Challenges | Q1 reported a 3% decline in affiliate revenue due to persistent Pay-TV ecosystem pressures. Q2 saw a 5% decline amid cable network challenges and a related $6B goodwill impairment. Q3 continued to face difficulties with a 6.6% decline driven by factors like the exit from Showtime Sports. | Q4 reported a 6.7% decline in affiliate revenue and a 4% drop in linear TV advertising, with expectations of further pressure in Q1 2025 as challenges in the traditional TV space persist. | Persistent negative sentiment. The traditional TV environment remains a headwind with steady declines, underscoring ongoing struggles in monetizing legacy TV assets. |
Content Portfolio Performance and Programming Dynamics | Q2 and Q3 highlighted a robust slate of originals and strong performance from series like Tulsa King, Mayor of Kingstown, and Lioness—with Q3 noting record-setting debuts and high global rankings. Q1 provided limited detail on this topic. | Q4 showcased record-breaking content performance with hits like Land Men, Tulsa King, and LIONESS ranking among top originals, along with strong sports programming results and an ambitious pipeline for upcoming series. | Increasingly positive sentiment. Content quality and programming remain a core strength, with Q4 demonstrating enhanced viewership, engagement, and future growth potential that can positively impact the company’s competitive position. |
Advertising Revenue Trends and Monetization Challenges | Q1 exhibited strong overall ad revenue growth driven by major events like the Super Bowl and robust performance across TV Media and D2C channels. Q2 reflected mixed results with a 6% decline in total ad revenue and non-sports challenges, while Q3 showed further shifts to digital—with strong D2C growth but continued linear challenges. | Q4 reported an 18% increase in D2C digital ad revenue alongside a 4% decline in TV Media advertising, emphasizing the gap between viewership growth and revenue realization, particularly in legacy channels. | Mixed sentiment with a digital tilt. There is a clear shift toward digital advertising growth, yet traditional TV monetization remains challenged. The company is working to bridge the gap between rising viewership and overall revenue growth. |
International Strategy and DTC Profitability Gap | In Q2, the company reexamined its international streaming plans, including exiting less profitable partnerships, and outlined strategic partnerships to boost scale. Q3 detailed a market-by-market approach with international DTC trailing its domestic counterpart by 12–18 months. Q1 had minimal focus on this topic. | Q4 provided limited new updates on international strategy but reaffirmed the plan for domestic DTC profitability by 2025, while acknowledging that international operations remain at an earlier stage of profitability. | Reduced emphasis on international aspects. While the domestic DTC segment shows promising progress, there’s less focus on international strategy in Q4, although the profitability gap remains a key point for future monitoring. |
Asset Impairments and Strategic Portfolio Restructuring | Q2 detailed a $6B noncash goodwill impairment linked to the cable network unit and strategic portfolio reviews aimed at optimizing asset performance, including evaluating partnerships and divestitures. Q3 mentioned restructuring indirectly through ongoing workforce reductions and planned asset sales. Q1 did not address this. | Q4 did not mention asset impairments or portfolio restructuring, suggesting that this topic is less prominent in current discussions [–]. | Diminishing prominence. Previously a critical focus, asset impairments and restructuring appear to have receded in Q4 discussions, indicating that the topic may have been largely addressed or deprioritized as the company shifts focus to growth and efficiency. |
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DTC Profitability Guidance
Q: Is 2025 profitability guidance for Paramount+ domestic or total DTC?
A: Management clarified that the profitability target for 2025 is specifically for Paramount+ domestic , not the entire DTC segment. They are confident in reaching profitability in record time for a U.S. SVOD service. -
Free Cash Flow and Restructuring Costs
Q: Expectations for free cash flow growth in 2025, considering restructuring costs?
A: Management expects free cash flow to be higher year-over-year in 2025 , even after considering significant contributions from the Super Bowl and political advertising in 2024. Stability in content spend reduces working capital needs, improving free cash flow conversion. However, cash restructuring payments will impact conversion by about 10 percentage points in 2025. -
Advertising Growth Prospects
Q: Can you return to advertising growth in 2025, excluding Super Bowl and political?
A: Management is optimistic about advertising growth in 2025. DTC advertising grew 18% for the year , driven by strong engagement in streaming platforms. While linear advertising faces challenges, their strong content lineup, especially on CBS, helps mitigate pressures. Positive responses from advertisers give them confidence heading into 2025. -
Affiliate Revenue Trends
Q: How is Paramount positioned given the decline in affiliate revenues and emergence of skinny bundles?
A: Despite the acceleration in affiliate revenue declines, management expects company-wide affiliate revenue growth in 2025. They negotiate distribution agreements holistically across all tiers and believe their must-have sports content, particularly CBS, is essential for any sports bundle. They remain committed to working with partners to create compelling offerings. -
Content Spend Outlook
Q: What are the plans for content spending across segments in 2025?
A: Total company content spend in 2025 is expected to be relatively flat to 2024. After years of ramping up spend for streaming and dealing with strike impacts, this marks a return to a more normalized level. There will be ongoing remixing in favor of streaming content. -
DTC Viewership vs. Revenue Growth
Q: Is strong DTC viewership growth a leading indicator for revenue acceleration?
A: Yes, management views strong viewership growth as a leading indicator for future revenue growth in DTC. Increased engagement helps reduce churn and allows for price increases over time. They plan to drive growth through both subscriber additions and continued ARPU growth. -
Content Licensing Expectations
Q: What are your expectations for content licensing in 2025?
A: The licensing business remains very strong and essential. Significant internal licensing contributes to DTC growth but doesn't appear in reported results. They are producing fewer originals for third parties and see opportunities to innovate in windowing strategies and deal structures to unlock more value. -
Impact of Super Bowl and Political Advertising
Q: How much did the Super Bowl and political advertising benefit 2024 results?
A: The Super Bowl was a very meaningful contributor in 2024 , impacting both the TV Media and DTC segments. This contribution is one reason for expected headwinds in Q1 2025. Management expects earnings to grow materially in 2025 excluding the impact of the Super Bowl and political advertising. -
Protections in Distribution Deals
Q: Are there protections in distribution deals to mitigate risks from cord-shaving?
A: Management negotiates distribution agreements holistically, considering economic and distribution commitments across all service tiers. When it makes business sense, they agree to add tiers, as with Comcast. They remain open to experimenting with skinny bundles but are not yet convinced of a compelling value proposition compared to the full bundle due to minimal price benefits for consumers. -
Paramount+ Partnerships Progress
Q: Any progress on exploring Paramount+ partnerships in the U.S. and internationally?
A: While management is always looking for opportunities to drive more value and will evaluate them as they arise, there is no news to share currently. -
Slate Financing Deal with Domain Capital
Q: Can you provide more background on the slate financing deal with Domain Capital?
A: The deal establishes a long-term alliance with Domain Capital to finance upcoming films across Paramount's slate. This partnership helps spread production cash over more films and has positive free cash flow and operating income attributes. It aligns with their strategy and is not unique in the industry. -
Competitiveness of Programming Slate
Q: Is your programming slate enough to drive scale to compete with larger SVOD platforms?
A: Management is proud of the success to date, with content working and a great number of subscribers signing up. In Q4, they ranked as the #2 SVOD when looking at spend across all original series. Record engagement, up 20%, led to strong improvement in churn. These factors contribute to strong revenue growth, up 33%, and give confidence in their competitive positioning.