Paramount (US:PARA)2021-11-04 19:13Financial Data and Key Metrics Changes - Total company revenue grew 13% year-over-year to $6.6 billion, driven by growth across all revenue streams [7][34] - Adjusted OIBDA fell 3% to $1 billion due to increased programming and production spend [34] - Adjusted diluted EPS was $0.76, and adjusted free cash flow was a use of $187 million in the quarter [34][36] - Cash on hand at the end of the quarter was $4.8 billion, with total debt of $17.7 billion, resulting in a 2.5x net leverage ratio [35] Business Line Data and Key Metrics Changes - Streaming revenue grew 62% year-over-year, with subscription revenue increasing 79% to $548 million [30][31] - Pluto TV ended Q3 with 54.4 billion global monthly active users (MAUs), and its revenue grew 99% year-over-year [32] - Advertising revenue, excluding streaming, grew 1% to $1.9 billion, impacted by political spend and the sale of CNET [32][34] Market Data and Key Metrics Changes - Affiliate revenue grew 2% year-over-year to $2.1 billion, driven by distribution and contractual rate increases [33] - Licensing and other revenue increased 18% to $1.5 billion, reflecting a higher volume of licensing deliveries [34] Company Strategy and Development Direction - The company is focused on streaming as a key growth area, leveraging its content library and production capabilities [10][11] - Partnerships with T-Mobile and Sky are seen as strategic moves to enhance distribution and subscriber acquisition [49][61] - The company plans to change segment reporting to better reflect its focus on direct-to-consumer streaming services [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the streaming strategy, highlighting strong subscriber growth and engagement metrics [9][30] - The company anticipates continued strong total streaming revenue growth rates in Q4, expecting to surpass a $5 billion annual run-rate [36] - Management acknowledged challenges in the advertising market but expects growth in Q4 due to new programming [33] Other Important Information - The company is investing heavily in content, with streaming content expenses expected to double in 2021 compared to 2020 [37] - The upcoming content pipeline for Q4 includes significant new releases aimed at driving subscriber growth [27][36] Q&A Session Summary Question: Insights on the T-Mobile deal and its impact - Management confirmed that the T-Mobile deal targets their postpaid customer base and is expected to accelerate subscriber growth over time [45][52] - The deal is structured to have a lower ARPU but is expected to yield high lifetime value due to lower churn rates [54] Question: Timing and impact of the Sky partnership - The Sky partnership will launch in the UK in the first half of 2022, with additional markets to follow [61] Question: Composition of global streaming subscribers - A significant majority of new subscribers in Q3 came from Paramount+, with both premium and essential tiers contributing [64] Question: Evolving content strategy for Paramount - Management is focused on leveraging franchises and optimizing content windowing strategies to maximize engagement and subscriber growth [68] Question: Future of licensing revenue - Licensing revenue is evolving, with a focus on fulfilling legacy deals while shifting towards owned and operated streaming content [82]