Paramount Minus

People are leaving Paramount offices faster than movie goers left the theaters after last year’s disaster of a disaster film The Core. There aren’t a whole lot of “Open to Work” labels on LinkedIn photos after the company’s June 25 town hall, but there are clearly some people who really in need of a bit of career advice.

Management said that they’re going to be working to reduce the budget by $500-million. And it seems that everything—and presumably everyone—is on the table.

For example, the day after the presentation at, ironically, the Paramount Theater, Paramount eliminated the on-line archives of Comedy Central, MTV, TV Land, and CMT, with the strategy being to push those who are looking for old cuts from, say, The Daily Show, to Paramount+. It’s hard to imagine that disc space is particularly costly, but if they’re willing to go to that extent, how can you believe there is something remotely akin to job security there?

During the April 29 Paramount earnings call, they didn’t mention discussion of a potential acquisition by Skydance Media—which I erroneously thought would happen, though this may have been some SEC regulation that prevented the topic.

Nor did anyone discuss, well, movies.

But there were a couple of notable things that were part of the presentation that was meant to make investors feel good about the storied but now evidently troubled company:

First, they introduced new CEOs. That’s right: plural. On April 29 the Paramount board announced that president and CEO Bob Bakish was “stepping down”. His replacements would be George Cheeks, President and CEO of CBS; Chris McCarthy, President and CEO, Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, President and CEO of Paramount Pictures and Nickelodeon. Three people, whose titles would lead me to believe they’ve already got a lot to deal with, are replacing one guy. Somehow the cost-effectiveness of that is dubious.

Board chair Sheri Redstone, who reportedly scuttled the Skydance deal, said, “Paramount Global includes exceptional assets and we believe strongly in the future value creation potential of the Company. I have tremendous confidence in George, Chris and Brian. They have both the ability to develop and execute on a new strategic plan and to work together as true partners.” It takes three people to “develop and execute” when there are “exceptional assets”?

Also, chief financial officer Naveen Chopra mentioned Super Bowl LVIII nine times. As in, “Total company advertising grew 17%, benefiting from Super Bowl LVIII, which contributed 22 percentage points to the growth rate. The game broke records across CBS, Paramount+, and Nickelodeon, a great example of the power of our multi-platform offering. TV Media advertising grew 14 percent in the quarter, including a 23 percentage point contribution from the Super Bowl.” Again, nothing about movies, although one could argue that people tuning in to catch glimpses of Taylor Swift gazing at Travis Kelce did more than its Q1 releases (Mean Girls, The Tiger’s Apprentice, Bob Marley: One Love, and Sweet Dreams).

McCarthy described the approach the triumvirate will undertake for Paramount: “The plan is focused on three pillars. First, make the most of our hit content. Second, strengthen our balance sheet. And third, optimize our streaming strategy.”

Making the most of “hit content” probably goes well beyond making “hit movies.” In the Paramount bio of Brian Robbins it points out that under his tenure both PAW Patrol: The Mighty Movie and Teenage Mutant Ninja Turtles” Mutant Mayhem were released (both 2023) and that the two earned “a combined $2.5B in consumer products revenue.”

Strengthening the balance sheet means things like offloading its share of Viacom18, an India-based media company, earlier this year for $517 million. And, of course, cutting $500 million from the budget.

And then there’s streaming, which Paramount reportedly lost $1.6-billion on in 2023. Good thing they had that PAW Patrol toy revenue. Streaming is important to Paramount (and everyone else) for a simple reason: Recurring revenue.

If you go to a movie, you buy a ticket, and that’s that. If you subscribe to a streaming service you pay significantly more than the price of that ticket and the payments continue month after month until you cancel. The comparative steady stream of income is what these media companies are interested in.

While the Paramount story is far from over, and while there are rumors that it may sell its studio lot (which they built under the supervision of Jesse L. Lasky, a founder of the company, in 1926), what happened at the end of the Q1 earnings call underscores just how bizarre things are right now.

Rather than, as is the norm in such calls, taking questions from investors, upon the end of CFO Chopra’s presentation they played the theme music for Mission: Impossible.