Paramount Global, the parent company of Paramount+, is taking steps to ensure profitability and maintain its status as a standalone entity. During a conference call with Wall Street analysts, CEO Bob Bakish and CFO Naveen Chopra outlined their plans for the streaming service and the company as a whole.
Charting a Course for Profitability
Despite media speculation about potential suitors for Paramount, Bakish made it clear that the company is focused on creating shareholder value. He acknowledged the chatter surrounding Paramount’s long-term fate but expressed confidence in the value of their assets and their strategy moving forward.
To achieve profitability, Paramount Global will be implementing several measures. One of these is a $1 billion write-down in the current quarter. The company plans to reduce spending on content production and marketing for movies and TV shows, while maximizing the impact of their streaming content across linear platforms. This includes removing existing TV shows and movies from digital and linear platforms and scrapping certain development projects.
Paramount+ Profitability and Global Expansion
Bakish stated that Paramount+ is projected to reach profitability in the United States by 2025, following a $1.6 billion loss on streaming operations in 2023. The company aims to deliver free cash flow and growth in the second half of this year.
In terms of international expansion, Paramount Global will be shifting its focus away from producing local-language content in overseas markets. Instead, they will prioritize generating content with global resonance. Bakish emphasized that Hollywood hits are the biggest draw for international audiences, and they plan to leverage their CBS slate, Paramount+ originals, and Paramount films to engage global viewers.
Efficiencies and Offshore Production
While reducing spending on local content in overseas markets, Paramount will increase its production of TV programs and films overseas. The lower costs associated with offshore production make it an attractive option for the company. Bakish mentioned upcoming series like the London installment of “Billions,” the new “Ray Donovan” origin story, and “The Department” from George Clooney as examples of their offshore production plans.
Film Strategy and Content Spending
Paramount Pictures has seen success with modestly budgeted theatrical films such as “Mean Girls” and “Bob Marley: One Love.” Bakish highlighted the studio’s focus on balancing high-budget tentpoles with more cost-effective titles to improve return on investment. In 2023, Paramount Global spent around $16.5 billion on content, but this figure was lower due to strikes by the Writers Guild of America and SAG-AFTRA. While content spending is expected to increase in 2024, the company plans to spend only about 50% of the strike savings to drive healthy growth in free cash flow.
Other Topics Addressed
During the conference call, Bakish also commented on the recently announced Disney/Warner Bros. Discovery/Fox streaming sports venture. He expressed skepticism about the offering, stating that it lacks a comprehensive range of sports and may not be ideal at the speculated price points.
Bakish also highlighted the importance of sports as a subscriber funnel for Paramount+. While sports may initially attract subscribers, he noted that 90% of their engagement is with non-sports content.
Additionally, CBS has been a bright spot for Paramount Global. The network’s strike-delayed season started strong with the success of freshman drama “Tracker.” CBS is becoming more budget-conscious when it comes to content spending, prioritizing lower-cost formats like unscripted shows and those shot abroad.
Looking Ahead
Paramount Global is determined to unlock the value of its assets and achieve profitability for Paramount+. By implementing cost-cutting measures, focusing on global Hollywood hits, and leveraging offshore production, the company aims to secure its position as a standalone entity and deliver value to shareholders.
