Paramount (US:PARA)2024-11-08 16:24Financial Data and Key Metrics Changes - Adjusted OIBDA for Q3 2024 was $858 million, reflecting a 20% year-over-year increase, driven by improvements in the D2C business [40] - Total company advertising grew by 2%, with D2C advertising showing strong growth of 18%, an acceleration from 16% in Q2 [41][42] - Affiliate and subscription revenue declined by 1% in Q3, but grew by 1% when excluding the impact of Showtime pay-per-view events [45][46] Business Line Data and Key Metrics Changes - D2C achieved profitability for the second consecutive quarter, with adjusted OIBDA improving by over $1 billion over the past four quarters [8] - Paramount+ added 3.5 million subscribers in Q3, reaching a total of 72 million subscribers, with a year-over-year revenue growth of 27% [47][40] - Pluto delivered its highest consumption ever, with 5.6 billion viewing hours, up 5% year-to-date [18] Market Data and Key Metrics Changes - The NFL on CBS averaged over 20 million viewers in the first five weeks of the season, a 5% increase from the previous year [28] - CBS News 24x7 streaming network saw total minutes watched grow by 56% over 2023 [30] - International advertising revenue benefited from the recognition of previously underreported revenue, contributing approximately $50 million in Q3 [68] Company Strategy and Development Direction - The company is focused on transforming D2C and streamlining operations to achieve $500 million in annual run rate savings [9][19] - The Skydance transaction is expected to close in the first half of 2025, subject to regulatory approvals [10] - The company aims to reach domestic profitability for Paramount+ by 2025, with a focus on content streaming and advertising as key growth levers [49][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position as a standalone entity, driven by hit content and strategic execution [60] - The company anticipates continued top-line growth in Q4, despite expected higher content expenses [86] - Management remains optimistic about the trajectory of the business, particularly in D2C profitability and overall financial goals for 2024 [55][54] Other Important Information - The company is evaluating potential partnerships in streaming to create long-term value for shareholders [18] - The ongoing dispute with Nielsen is being addressed, with management hopeful for a resolution [16] - The company has executed 90% of its planned workforce reductions, aiming to right-size its cost base [19] Q&A Session Summary Question: Discussion on D2C partnerships and profitability timeline - Management highlighted the importance of strategic partnerships and expressed confidence in achieving domestic profitability in 2025, with Pluto already profitable [62][60] Question: Clarity on international market strategy for Paramount+ - Management indicated a market-by-market approach to maximize content value, with various strategies including owned operations and licensing [66] Question: Impact of Nielsen data on advertising sales - Management stated there has been no adverse impact on ad revenue to date and does not expect material impact in Q4 [72] Question: Details on DTC trends and Charter partnership impact - Management noted that the Charter partnership contributed to subscriber growth, with expectations for continued growth over time [82] Question: DTC efficiencies and marketing costs - Management explained that marketing efficiencies are driven by a diverse subscriber base and that programming charges taken earlier in the year have potential benefits for cost amortization [92][93]