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Paramount Skydance Corp (PSKY)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 pro forma revenue was $6.70B, essentially flat year-over-year (vs. $6.73B in Q3’24), with strength in DTC (+17% y/y; Paramount+ revenue +24% y/y) offset by TV Media (-12% y/y) and softer filmed entertainment; consolidated adjusted OIBDA was $297M (pre-close) and $655M (post-close) as reported in split periods .
  • Against S&P Global consensus, PSKY missed on both revenue and EPS: revenue $6.70B vs $6.99B* and Primary EPS -$0.12* vs $0.41*; management cited seasonal content costs, TV ad headwinds/political comps, and filmed slate underperformance as drags, partly offset by cost actions and accounting-basis content expense benefits in DTC .
  • Outlook: Q4 2025 revenue $8.1–$8.3B and adj. OIBDA $500–$600M, with several hundred million of transformation costs and a ~$500M restructuring charge; 2026 targets include $30B revenue, $3.5B adj. OIBDA, and raised run‑rate efficiencies to ≥$3B .
  • Strategic catalysts: UFC (exclusive U.S. rights in 2026; now expanded to Latin America and Australia), Zuffa Boxing (exclusive from 2026), and PBR deal to deepen year‑round live sports engagement on Paramount+—plus planned U.S. price increases in early Q1 2026 to drive ARPU and profitability .

What Went Well and What Went Wrong

  • What Went Well

    • DTC growth and profitability trajectory: DTC revenue +17% y/y; Paramount+ revenue +24% y/y with roughly balanced sub and ARPU contributions; DTC adj. OIBDA improved (pre: $105M, 12% margin; post: $235M, 18% margin) helped by efficiency and content accounting base reset .
    • Raised transformation/synergy target: “We are increasing our run-rate efficiency target from $2 billion to at least $3 billion,” supporting 2026 adj. OIBDA of $3.5B and free cash flow improvement .
    • Strategic sports rights: UFC exclusive in U.S. from 2026 (now expanded to Latin America and Australia), plus Zuffa Boxing and PBR—management described UFC as a “once‑in‑a‑decade opportunity” that can drive engagement and retention while removing the secondary PPV paywall for Paramount+ subscribers .

  • What Went Wrong

    • TV Media pressure: segment revenue -12% y/y on lower advertising (-12% including ~8pt headwind from political and a prior-year underreported revenue recognition catch-up), affiliate (-7% from pay TV declines), and licensing (-22% timing), partially mitigated by cost management (adj. OIBDA pre: $282M; post: $540M) .
    • Filmed Entertainment underperformed expectations in-quarter; adj. OIBDA was negative (pre: -$36M; post: -$13M). Management flagged underperformance of the 2025 slate and a multi‑year plan to recalibrate, targeting ≥15 films annually starting in 2026 .
    • Elevated restructuring/transition costs: Q3 restructuring and transaction-related items totaled $185M (successor) and $188M (predecessor). Management guided to several hundred million of transformation costs in Q4 and a ~$500M restructuring charge, weighing on reported FCF near-term .

Financial Results

Consolidated results (reported split periods for Q3 2025; prior periods shown for context)

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Billions)$6.731 $6.849 $6.702 (=$2.581 pre + $4.121 post)
Operating Income ($USD Millions)$337 $399 $80 (pre) / $244 (post)
Adjusted OIBDA ($USD Millions)$858 $824 $297 (pre) / $655 (post)
Free Cash Flow ($USD Millions)$214 $114 -$207 (pre) / $222 (post)

Segment revenue (pro forma) and growth

SegmentQ3 2024 Pro Forma Revenue ($USD Billions)Q3 2025 Pro Forma Revenue ($USD Billions)YoY
TV Media$4.298 $3.796 -12%
Direct-to-Consumer$1.860 $2.167 +17%
Filmed Entertainment$0.799 $0.768 -4%

Note: Management also cites +30% y/y in Filmed Entertainment vs predecessor baseline due to Skydance consolidation; the table above uses pro forma basis for comparability .

Select KPIs

KPIQ3 2024Q2 2025Q3 2025
Paramount+ Revenue ($USD Billions)$1.428 $1.771 ~$1.769 (=$0.709 pre + $1.060 post)
Paramount+ Subscribers (Millions)71.9 77.7 79.1; free trials 1.2M (to be excluded from Q4 reporting)
Paramount+ ARPU YoYn/a+? (context)+11% (y/y)
DTC Adj. OIBDA ($USD Millions)$49 n/a$105 (pre, 12% margin) / $235 (post, 18% margin)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2025n/a$8.1B–$8.3B New
Adjusted OIBDAQ4 2025n/a$500M–$600M (midpoint margin ~6.7%) New
Transformation CostsQ4 2025n/a“Several hundred million” (impacting reported FCF) New
Restructuring ChargeQ4 2025n/a~ $500M New
DTC ProfitabilityFY 2025n/aDTC expected profitable for full-year 2025 New
Total RevenueFY 2026n/a$30B New
Adjusted OIBDAFY 2026n/a$3.5B (11.7% margin) New
Efficiency TargetRun-rate$2B (prior target)≥$3B Raised
FCF ConversionFY 2026n/a~5% before ~$800M non-recurring transformation costs New
Paramount+ PricingEarly Q1 2026 (U.S.)n/aU.S. price increase; also Canada/Australia adjustments announced New
DividendOngoingn/a$0.05 per share declared Sept 5, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/Tech & PlatformLimited public detail pre-close; retooling underwayUnified tech stack for Paramount+/Pluto TV by mid-2026; ERP unification by early 2027; explore AI for personalization/recommendations Accelerating execution
DTC Strategy & ProfitabilityShellco period (New Pluto) in Q1/Q2; legacy PARA transitioningDTC top priority; 2025 profitability; price hikes (Q1’26 US); shift away from low-margin bundles; optimize distribution Improving unit economics
Live Sports RightsUFC U.S. exclusive from 2026 announced in Aug; Zuffa Boxing in SeptExpanded UFC to Latin America & Australia; PBR five‑year deal; UFC positioned as monthly marquee driver on Paramount+ Scaling global sports
TV Ad & AffiliateOngoing secular pressureAd -12% y/y (political and prior-year comp headwinds); affiliate -7% y/y; cost actions supporting margins Structural headwinds; cost offsets
Film Slate RebuildN/A2025 slate underperformed; plan to recalibrate and grow to ≥15 films/year beginning 2026 Reset then rebuild

Management Commentary

  • “Our direct-to-consumer business is our top priority… we are increasing our investment in quality, exclusive programming across our streaming platforms… [and] plan to implement price increases in the US early in the first quarter of 2026.”
  • “We are increasing our run-rate efficiency target from $2 billion to at least $3 billion… [and] expect 2026 adj. OIBDA of $3.5 billion.”
  • On UFC: “A once‑in‑a‑decade opportunity to become the exclusive home of a major global sport… with marquee events every month.”
  • Capital structure: “Ended the quarter with $3.3B in cash and cash equivalents and $13.6B in gross debt… expect investment grade debt metrics by the end of 2027.”

Q&A Highlights

  • Capital structure and targets: Management reiterated focus on regaining investment-grade metrics by 2027; balance sheet trajectory framed in the context of synergy capture and DTC profitability inflection .
  • DTC monetization and UFC economics: Discussion centered on how UFC will be used across Paramount+, CBS, and potentially cable brands, alongside price increases to drive ARPU and returns .
  • Investment priorities vs. efficiencies: Management emphasized incremental content/tech investments (> $1.5B in 2026) while raising efficiency targets to fund growth and improve margins/FCF .
  • Industry consolidation/M&A philosophy: Addressed strategically on the call in context of ongoing portfolio optimization and selective divestitures (e.g., Telefe sale, planned Chilevisión sale) .

Estimates Context

Q3 2025 vs S&P Global consensus (Primary EPS and Revenue):

MetricQ3 2025 ActualQ3 2025 ConsensusSurprise
Revenue ($USD Billions)$6.70 $6.99*-$0.29B (≈ -4%)
Primary EPS ($)-$0.12*$0.41*-$0.53

Forward consensus snapshot:

MetricQ4 2025 Consensus
Revenue ($USD Billions)$8.17*
Primary EPS ($)-$0.03*

*Values retrieved from S&P Global.

Where estimates may need to adjust: TV Media ad trends/political comps, filmed entertainment pacing, transformation timing/costs into Q4, and DTC trajectory (ARPU uplift, bundle pruning, and quarterly seasonality) per management commentary .

Key Takeaways for Investors

  • DTC scaling with improving profitability: Paramount+ revenue +24% y/y and DTC adj. OIBDA margins improved; 2025 DTC profitability and 2026 ARPU tailwinds (pricing, mix) are key earnings drivers .
  • Structural TV headwinds persist: Advertising/affiliate declines continue; cost discipline is offsetting some pressure but segment growth likely depends on broader ad cycle and distribution dynamics .
  • Sports as a differentiated growth flywheel: UFC (U.S. and expanded international), Zuffa Boxing, and PBR position Paramount+ with year‑round live events to drive engagement, retention, and ARPU .
  • Transformation program raised and front-loaded: Run-rate efficiencies ≥$3B with sizable Q4 transformation and restructuring charges; near-term FCF under pressure, with conversion guided to ~5% in 2026 before one‑offs .
  • 2026 guide anchors the medium-term: $30B revenue and $3.5B adj. OIBDA targets suggest material earnings power if execution on content slate, pricing, tech integration, and ad partnerships is delivered .
  • Stock catalysts: Execution progress on UFC onboarding/Paramount+ pricing, visibility into TV ad/station trends, film slate recalibration milestones, and cadence of synergy capture/FCF improvement .

Additional Source Documents Read:

  • Q3 2025 press release directing to shareholder letter (call time/replay details) .
  • Q3 2025 Form 10-Q financial statements and notes (pushdown accounting, debt, liabilities, segment details) .
  • Related Q3 2025 press releases on UFC expansion, Zuffa Boxing, and PBR media rights .