Paramount (PARA) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total company revenue grew 2% year over year, excluding the Super Bowl, reaching $7.2 billion [5][19] - Direct to Consumer (D2C) revenue increased by 9% year over year to $2 billion, with subscription revenue growing 16% [20] - Adjusted OIBDA improved to $688 million, reflecting year-over-year improvements in D2C and filmed entertainment [19][20] - Free cash flow was $123 million, including $108 million in restructuring payments [19] Business Line Data and Key Metrics Changes - D2C OIBDA improved by nearly $180 million year over year, with a loss of $109 million [5][20] - TV Media advertising revenue, excluding the Super Bowl, was flat year over year, with OIBDA at $922 million [21] - Filmed Entertainment revenue increased by 4% year over year to $627 million, with OIBDA of $20 million compared to a loss of $3 million in the previous year [22] Market Data and Key Metrics Changes - Paramount Plus ended the quarter with 79 million global subscribers, up 11 million year over year, including 1.5 million new subscribers in the quarter [6] - Global watch time per user on Paramount Plus increased by 17% year over year, and churn improved by 130 basis points [6] - Pluto TV's global viewing time increased by 26% year over year, although monetization was softer than expected [11] Company Strategy and Development Direction - The company is prioritizing key investments while streamlining non-content expenses due to macroeconomic uncertainties [5] - A differentiated content strategy focusing on fewer, bigger breakthrough original series is driving growth, with Paramount Plus having 25% of the top 10 SVOD originals [7] - The company plans to achieve domestic profitability for Paramount Plus in 2025 and is focused on leveraging its content library and iconic IP [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite macroeconomic challenges, emphasizing strong engagement and content-driven growth [5][26] - The company anticipates that supply-demand dynamics in digital advertising will stabilize over time, leading to improved monetization [11][31] - Management acknowledged potential impacts from macroeconomic uncertainties, particularly in advertising, but remains focused on expense management and strategic investments [26][67] Other Important Information - The company is expanding the Yellowstone franchise with three new series set to premiere in the coming quarters [8] - The success of Sonic the Hedgehog 3 contributed significantly to the Filmed Entertainment segment's performance [22] - The company is on track to close a pending transaction with Skydance in the first half of the year [19] Q&A Session Summary Question: Advertising pressure on Pluto and digital advertising - Management acknowledged the impact of new entrants in the digital supply space but expects supply-demand dynamics to balance out over time [31] Question: FCC's potential impact on affiliate revenue - Management emphasized the mutually beneficial relationship with affiliates and expressed confidence in securing partnerships despite potential regulatory changes [34] Question: Licensing strategy for library content versus original content - Management views content licensing as a growth business but believes in using valuable IP to grow owned assets while still considering selective licensing opportunities [38] Question: Expectations for linear declines and streaming growth - Management indicated that subscriber declines in linear TV are expected to continue, while streaming growth is driven by subscriber growth, churn improvements, and ARPU [46][47] Question: Current relationship with Taylor Sheridan and potential acquisition of 101 Studios - Management expressed satisfaction with the current partnership with Taylor Sheridan and indicated no plans to acquire 101 Studios, preferring to maintain the existing relationship [51][54] Question: Interest in bundling and joint ventures - Management is open to exploring bundling opportunities but emphasizes a disciplined approach to ensure value and audience growth [60] Question: Upside in TV media performance - Management attributed the strong performance to CBS's broadcast slate and sports, which helped offset softness in the digital landscape [65]