Paramount Global
CEO : Mr. Robert Marc Bakish
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 1.6% YoY | -93.2% | -99.0% | 2023-02-16 |
Bob Bakish says,
Paramount+ Achieved High Subscriber Growth in 2022
- Paramount+ achieved an industry-leading 9.9 million new subscribers in Q4 2022.
- Pluto TV grew with 6.5 million new monthly active users in Q4 2022.
Content Engine Proved Itself at High Level
- Paramount Pictures opened six films at number one and had the strongest performance in broadcast.
- Yellowstone and its expanding universe as the number one show on television.
- Mass market broadcast hits like FBI, NCIS and Fire Country.
- Paramount+ Originals like Criminal Minds: Evolution, Tulsa King, and 1923.
2023 Will Be Another Year of Content Momentum
- 2023 film slate is strong and driven by some of the most popular franchises, including Scream, Mission Impossible, Transformers, and PAW Patrol.
- New CBS series are also being added.
- New series like Fatal Attraction with Lizzy Caplan and Joshua Jackson, Rabbit Hole with Kiefer Sutherland and Lioness with Nicole Kidman and Morgan Freeman.
Paramount+ to Reach Peak Investment Point in 2023
- 2023 is the peak investment year in streaming, and losses are expected to narrow significantly in 2024.
- Price increases for Paramount+ Premium and Essential are expected in the US and select international markets.
- Paramount will also manage spending by focusing on franchises and leaning into our multi-platform advantage.
Paramount+ to Integrate with Showtime
- Paramount+ and Showtime will become Paramount+ with Showtime in the United States, contributing distinctive content and benefiting from revenue and cost.
- The integrated product will be more engaging for consumers, supporting price increases and associated ARPU gains.
Naveen Chopra says,
D2C Business Performance
- Paramount+ witnessed 85% growth in subscription revenue and 48% growth in total D2C subscription revenue due to record subscriber additions with ARPU growth and improvements in churn.
- In Q1, similar levels of D2C subscription revenue growth are expected, reflecting ongoing net subscriber additions and improvement in ARPU.
Advertising Trends
- The ad market experienced weakness in Q4, resulting in a 5% decline in Paramount’s quarterly advertising revenue, with the majority of the decline coming from international markets and FX impacts.
- Short-term, Q1 should yield improved growth rates in the domestic national advertising business. The underlying local ad business is also improving, but lower political spend will be a headwind in Q1 relative to Q4. International ad markets remain relatively weak.
- D2C advertising grew 4% despite the soft demand environment as a result of robust consumption growth on both Paramount+ and Pluto TV, and as the marketplace improves, growth is expected to accelerate.
- Pluto and Paramount+ now have a fully integrated advertising product, so going forward, total D2C advertising growth will be reported instead of stand-alone Pluto revenue.
Cash Flow
- Free cash flow was a use of $500 million for the full year, reflecting streaming investment and weakness in the advertising market.
- Consistent with plans for peak streaming investment in 2023, cash flow is expected to continue to be impacted in advance of meaningful year-over-year improvement in 2024 when the company returns to positive cash flow.
- The focus on working capital optimization meant that the year-over-year change in free cash flow in 2022 was better than the year-over-year change in OIBDA, a trend that is expected to continue in 2023 as the gap between cash content spend and P&L content expense continues to narrow.
Showtime-Paramount+ Integration Plan
- Integration provides a better experience for consumers and unlocks material financial benefits, the most sizable of which will be realized as a reduction in content expense and related marketing.
- The integration will give rise to an impairment charge in Q1 of 2023 as the content portfolio is realigned. The charge is estimated to be in the range of $1.3 billion to $1.5 billion.
- Subscribers to the premium tier of Paramount+ have higher ARPU and lower churn than Showtime OTT customers, so the planned price increase for Paramount+ will further magnify the benefit of migrating customers to a single service.
- The consolidation of Showtime and Paramount+ taking place later this year will lead to the removal of total D2C subscribers from external reporting.
- Over time and in combination with reductions in content expense, the company expects to realize approximately $700 million of future annual expense savings.
Plan for Earnings Growth in 2024
- In 2023, the company will implement a price increase at Paramount+ and start to evolve pricing in core international markets from a single tier to a multi-tier offering, resulting in higher blended ARPU for P+ international.
- Expected growth in advertising ARPU at Pluto and Paramount+ as engagement trends drive inventory growth and expanded monetization opportunities.
- Expectation of continued improvement in churn as the content slate expands and user behavior evolves.
- Expected improvements in leverage on content expense by 2024, as the company generates more revenue for each dollar of incremental content and marketing expense.
- Operating leverage in other components of the D2C business is planned for 2024, including reductions in the growth rate of headcount, product, and technology expenses as the full-year benefits of integrating Showtime and Paramount+ are captured.
- On the traditional business side, rate increases are expected to partially offset ecosystem declines, and the company is focused on operating more efficiently through execution of previously announced transformation initiatives.
Q & A sessions,
Streaming Investment and Differentiated Approach
- Paramount+ is a compelling product for the whole household across the country and around the world
- Their differentiated approach includes multi-platform, franchises, advertising, partnerships, international discipline, and content licensing
- These elements drive a mix of cost and revenue advantages that translate into lower aggregate investment levels and superior long-term strategy margins
Paramount Pictures
- 2022 was an extremely successful year for Paramount Pictures
- 2023 and 2024 slate is increasingly franchise-oriented
- They monetize films both in the theater and on Paramount+
- Their film investment strategy is paying real dividends
Showtime Integration
- They believe there is enormous value to unlock with the integration of Showtime and Paramount+
- If they were to divest the asset, it would have to create more value than their operating plan
General Entertainment
- Differentiation matters and general entertainment works for them in streaming
- Their asset composition and strategy ensure they can build a differentiated content slate and simultaneously create a compelling content ROI
International Market Opportunity
- They believe streaming is a global opportunity, and thus the international markets are an important piece of the equation
- They believe in a global strategy but local market execution
- Their approach leverages existing relationships and assets to accelerate the growth of the business
Advertising Market
- They believe their domestic national ad sales growth will improve in Q1 relative to Q4
- Direct side of the business is a place where they’re advantaged
- The indirect or programmatic side is still soft, but they’re looking for it to turn as the market improves
- They recently reorganized their ad sales force around specific teams aligned with holding companies
No bad stock 