As Paramount Global is in the midst of a transaction that will result in a merger with Skydance Media upon the latter’s acquisition of National Amusements to create “New Paramount,” the company reported its second-quarter earnings on Thursday. The company has advanced its strategic plan, part of which includes at least $500 million in annualized cost savings, and is also working to improve its balance sheet “by growing free cash flow and optimizing our asset mix.”
Part of this cost savings plan includes reducing its U.S.-based workforce by approximately 15%, focusing on functions within marketing, communications, finance, legal and technology. These job cuts will begin taking place in the coming weeks and will mostly be completed by the end of the year, according to Paramount Global management.
The network also took a $5.98 billion goodwill impairment charge on its cable television networks, reflecting the changing nature of the subscriber marketplace amid a declining pay TV penetration rate. Recent data from MoffettNathanson conveys that consumers are leaving pay television at an annual decline of over 7% and that there are about 55 million U.S. households that still subscribe to traditional pay television. The goodwill impairment charge, which acknowledges the reduced monetary value of these networks, is factored into the company’s $5.32 billion operating loss.
The company’s streaming division attained a profit in the quarter, marking the first time that the direct-to-consumer business has attained such a feat. Paramount+ increased its revenue 46% year-over-year despite a loss of 2.8 million subscribers during that time period to mark a total of 68 million. Global average revenue per user augmented 26% year-over-year, helping contribute to an overall 13% year-over-year rise in total revenue to $1.8 billion. Moreover, adjusted OIBDA in the category equated to $26 million, an increase of $450 million year-over-year.
Advertising revenue in the sector grew by 16%, which reflects the growth attained by both Paramount+ and Pluto TV. The company is in the process of exploring “potential strategic partnerships” for Paramount+, an effort that contains active discussions with several parties in order to ensure it sustains profitability.
CBS finished the 2023-24 season as the No. 1 network in prime time television for the 16th consecutive year, holding eight out of the top 10 broadcast series. Yet the division reported a decrease in revenue to $4.27 billion, down $886 million year-over-year, and an additional $710 million in expenses. Adjusted OIBDA in the category finished at $1.02 billion, representative of a 15% year-over-year decrease.
During the quarter, CBS broadcast several golf tournaments on the PGA TOUR, including the Masters Tournament from Augusta, Ga. The entity has served as a home for WNBA broadcasts as well, several of which broke the 1 million viewer mark amid a year of record viewership and broadened interest. CBS Sports also broadcast the UEFA Champions League Final and averaged a total of 2.32 million viewers for the contest.
CBS Sports is preparing to enter another broadcast season with the National Football League, coming off a year in which it attained a record-setting audience for Super Bowl LVIII and various playoff games. As a whole, the NFL on CBS averaged 19.35 million viewers in the 2023-24 regular season, marking the most-watched regular season since the network regained broadcasting rights to the league in 1998.
Longtime chairperson Sean McManus officially retired from CBS Sports in April and is succeeded by David Berson, who is in the role of president and chief executive officer of the sports division. CBS Sports will also continue to broadcast Big Ten Conference football for the second season of its seven-year media rights deal, which includes its first broadcast of the conference’s championship game on Saturday, Dec. 7.
Paramount Global is currently headed by an Office of the CEO that contains division leaders George Cheeks, Chris McCarthy and Brian Robbins. Upon the close of the Skydance transaction, David Ellison will take over as chairman and chief executive officer, and Jeff Shell will be the company president. The transaction is subject to a 45-day “go-shop period,” which allows the special committee of the Paramount Global Board of Directors “to actively solicit and consider alternative acquisition proposals.”
