The strategy to license Yellowstone and other major properties to rival streaming services like Peacock and HBO Max, which Paramount Global CEO Bob Bakish has called “unfortunate,” is out the window, according to CFO Naveen Chopra.
“We’re no longer licensing big, franchise IP to third parties. Back in the day when Paramount didn’t have its own streaming service, that was the best way to monetize content,” Chopra said during an appearance today at MoffettNathanson’s 9th annual Media and Communications Summit. “Today, that doesn’t necessarily make sense. As some of those things come up, we’ll keep them for our owned and operated platform.”
Moderator Michael Nathanson cited heavy viewing on Netflix of Paramount shows like NCIS, wondering if that demand would persuade the company to continue selling off those rights. In answering, Chopra didn’t bring up any specific shows. He joined the company, then known as ViacomCBS, in August 2020, after a large licensing deal was made with NBCUniversal for Yellowstone, and another one for South Park on HBO Max. Before the expansion and rebranding of streaming service Paramount+ in 2021, the company had tended to operate as an “arms dealer,” capitalizing on surging buy-side demand for film and TV content. That was particularly true for Viacom before it merged with CBS to create what is now Paramount Global at the end of 2019.
The other significant shift in strategy, Chopra noted, is a significant reduction in production by Paramount for third-party distributors. “The reality is, that’s a pretty low-margin business anyway,” he said. “It doesn’t make sense strategically to enable our competitors with that content.”
Apart from occasional one-off opportunities to produce for others, Chopra said the company would see a “huge strategic benefit in dialing that back,” mainly because the working capital required to fund that production could be redeployed for internal purposes.
Asked about Warren Buffett’s Berkshire Hathaway recently taking a $2.6 billion stake in Paramount, Chopra said it was an “exciting” development. Since the investment was revealed on Tuesday, Paramount shares have risen 14%. In Chopra’s view, the validation from Buffett affirms the Paramount strategy of blending emerging assets like streaming with more mature (but still quite lucrative) ones like linear TV and theatrical film distribution.
“Until very recently, the conventional wisdom was, ‘All these traditional legacy assets are just a boat anchor to growing in streaming and shed them as quickly as possible and be all-in on streaming,'” the CFO said. “What everybody is recognizing now is that, no, those assets are actually the things that will allow you to build a streaming business that can actually generate profits and create value. And we’re pressing our advantage on that.”
Asked about Paramount’s film strategy, Chopra said the company has become comfortable with what it calls the “fast-follow” release pattern, in which select new releases move to Paramount+ after 45 days only in theaters.
Data indicate that the “vast majority” of box office revenue is typically captured within 45 days, the exec said, and marketing for the theatrical opening can then benefit the streaming launch, as it did with The Lost City, Jackass Forever and Scream. The approach is still case-by-case, Chopra added, and major tentpoles like the upcoming Top Gun: Maverick are likely to have a longer exclusive theatrical run.
“You should see that movie in the theater,” the CFO said, after joking earlier in the session that he left Amazon to come work for Paramount in order to see an early screening of the film. “It will stay in the theater for a longer period of time.”
The timing of when Maverick will reach streaming is still to be determined. Star and producer Tom Cruise said this week as the film had its world premiere in Cannes that he was never going to sign off on a day-and-date scheme for the film, which was sidelined for two years by Covid. Cruise and director Christopher Nolan are among the few members of the talent community capable of forcing studios to relent in their drive to move feature films quickly to streaming.
While the chaos and disruptions of the pandemic forced a number of changes to long-established movie windows, Chopra said, “I think it’s created a lot of value. Post-45 days, these windows weren’t really generating a ton of value. When we see what these titles can do for streaming, when they’re brought over in a reasonable period of time, it’s tremendous” in terms of both subscriber acquisition and engagement.
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