Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Paramount+ added 3.5 million subscribers, reinforcing its position as the number four global streaming service.
- Paramount+ revenue grew by 25% year over year, marking the second consecutive quarter of profitability.
- The company achieved $500 million in annual run rate savings through cost reductions.
- Pluto TV reached record engagement with 5.6 billion viewing hours year-to-date.
- Paramount Global's advertising revenue grew by 2%, driven by strong digital ad growth and political spending.
Negative Points
- TV media advertising revenue declined by 2%, reflecting ecosystem trends and the absence of Showtime pay-per-view events.
- Licensing and other revenue declined by 9% due to lower volume of licensing and home entertainment revenues.
- The ongoing dispute with Nielsen remains unresolved, potentially impacting advertising measurement.
- International D2C profitability is tracking 12 to 18 months behind domestic profitability.
- Free cash flow in Q4 is expected to be negative due to content spend timing and restructuring payments.
Q & A Highlights
Q: Brian, can you elaborate on the strategic considerations for direct-to-consumer partnerships and the progress towards domestic streaming profitability?
A: Chris McCarthy, Interim Principal Executive Officer, explained that Paramount+ has seen significant revenue growth and is on track for domestic profitability in 2025. The company is open to partnerships that drive value but feels confident in its standalone position. Naveen Chopra, CFO, added that domestic profitability is expected next year, with international operations trailing by 12 to 18 months.
Q: What is the strategy for Paramount+ in international markets, and can you quantify the impact of underreported international ad sales?
A: Chris McCarthy stated that the company is taking a market-by-market approach to maximize content value, using a mix of owned operations, hard bundles, and licensing. Naveen Chopra noted that the underreported revenue in Q3 was significant, around $50 million, and no further adjustments are expected.
Q: How has the dispute with Nielsen affected advertising revenue, and what are the current employee numbers in TV media?
A: George Cheeks, CEO of CBS, mentioned that there has been no adverse impact on ad revenue from the Nielsen dispute, and the company is focused on ensuring the economics make sense. The TV media division has about 6,000 domestic employees and 3,000 international, including sports production and local stations.
Q: How does Paramount view deeper streaming partnerships beyond bundles, and how are content costs allocated between DTC and TV media?
A: Chris McCarthy emphasized the company's strong standalone position and strategic partnerships like those with Walmart and Delta Airlines. Naveen Chopra explained that content costs are allocated based on the relative value of content windows, with more costs shifting to streaming as viewership increases.
Q: Can you provide more detail on the impact of the Charter partnership on DTC trends and expectations for Q4 EBITDA?
A: Naveen Chopra noted that the Charter partnership contributed to subscriber growth, with positive early results. He expects most of Q3's overperformance to flow through to the full year, with Q4 benefiting from restructuring and political advertising, despite higher content expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
