Paramount ‘focused on execution’ as merger speculation dampens

With no announcement in sight regarding the much-speculated-on sale of the company, Paramount is “focused on execution” of its current plans and believes that “continued execution of our plan will unlock value”, according to Naveen Chopra chief financial officer Paramount Global.

“We are very conscious that our job as management is to create value for all of our shareholders and there are multiple ways potentially to accomplish that. We think execution of our plans is compelling but to the extent that there are other alternatives, we will be diligent about exploring those,” said Chopra, interviewed by Morgan Stanley’s Ben Swinburne for this week’s Morgan Stanley Technology, Media & Telecom Conference.

Chopra’s comments come after Warner Bros. Discovery reportedly pulled back from considering an acquisition or merger.

Chopra said that Paramount will nevertheless continue to look to “divest non-core assets” as it seeks to reduce its level of indebtedness.

He said that the company recognises the “need to deleverage the balance sheet” and is aiming to do this by multiple means including delivering growth.

Sharing content across platforms

Naveen Chopra

On the linear side of the business, Chopra said that Paramount had to meet viewing objectives by generating enough content to fill the schedules, but would look to do it “more efficiently” by changing the mix of programming and “leaning into international production” where costs could be much lower than in the US, along with sharing content across platforms – between cable and networks and between streaming and linear.

Examples included putting drama series Yellowstone, normally on cable, on the CBS network during the strike to boost the latter’s line-up. Another example is its plan to run series one of Tulsa on linear ahead of running season 2 on Parmaount+. “There are a lot of synergies that can be realised from windowing,” he said.

On the streaming side, he said, Paramount was “getting to a place where it is about the right volume and the right cadence of original programming, which you then use to drive consumers into library and affinity programming which tends to be less expensive and therefore more efficient”.

Spend on streaming

Chopra said that spend on content for streaming would start to level off, creating free cash-flow growth.

Having “one or two originals” that are relevant to subs at any one time is optimal, he suggested. Having more did not necessarily deliver a significant benefit, he added.

Chopra said that bundling streaming services in with MVPD packages also made sense, and that Paramount had done this in hard bundles in overseas markets. He said this kind of bundle delivered bigger audiences more quickly, incurred low subscriber acquisition costs and delivered, typically, lower churn.

“The trade-off is wholesale ARPU versus retail ARPU, but from our experience outside the US we’ve seen that if you structure those things correctly, they can be accretive to the business overall,” he said.

Paramount stated last week on its earnings call that it was aiming for domestic US profitability of streamer Paramount+ in 2025.

Paramount has not put a target date on profitability for the international business. Chopra said the domestic Paramount+ delivers more revenue and higher losses than the international business today, but 2023 was the first full year of availability of Paramount+ in many international markets.

Paramount is focusing on three key initiatives – maximising the value of its content, driving towards D2C profitability, and unlocking synergies from inside the business.