Paramount Global’s CFO said the company will take a $1.3 billion to $1.5 billion hit in the current first quarter mostly on content as it restructures its streaming business, absorbing Showtime into Paramount+.
On a post-earnings conference call, Naveen Chopra said the combined service will raise prices: the rebranded Paramount+ with Showtime will go from $9.99 to $11.99 a month. The Paramount+ essential tier, without Showtime, will rise a buck from $4.99 to $5.99, for new and existing customers.
That will continue to boost Par’s substantial streaming revenue as it hits peak streaming investment and operating losses in 2023, he said, reiterating plans to move towards streaming profitability and overall positive free cash flow for the company in 2024. The integration of Showtime will be a major contributor. He anticipated $700 million in future annual expense savings.
“A single service requires less content to acquire and retain subscribers than two independent services,” Chopra said. Showtime has higher churn. And its viewers tend to congregate around a handful of franchises that represent half of its content amortization expense.
This combo “makes Paramount+ the definitive multi-platform service in the streaming space,” he said with significant cost savings across content, marketing, operations and tech, as well as revenue padded by the price hike, which he thinks will take since “the integrated product will be more engaging for consumers.”
The Showtime shocker, which combines the premium cable network content with Paramount+ in streaming and linear, was announced recently and will take effect in the third quarter. It’s resulted in leadership changes and significant layoffs there.
Paramount shares were down today as Wall Street analyts grilled the execs on financial metrics and strategy, especially a specific streaming trajectory to profits. That still remains a bit fuzzy but 2024 is the “important inflection point.”
Bakish acknolwedged that the fourth quarter was squeezed by ongoing streaming spend exacerbated by macro headwinds, namely a struggling ad market on the TV Media side. He see improvement in advertising and expects a rebound in the back half of the year.
The execs stressed the business’s new focus on multiplatform and franchise content that drives viewers and revenue. So the company has been paring down its slate. Showtime won’t be proceeding with new series Three Women, starring Shailene Woodley and has opted not to pick up Season 2 of two freshman drama series: Let the Right One In, starring Demián Bichir, and American Gigolo, headlined by Jon Bernthal.
Paramount+ reported 56 million subscribers in Q4, up 9.9 million. Global DTC subs passed 77 million.
Par is the latest company to announce a big restructuring charge for content writedowns after hits by Warner Bros. Discovery, Disney, Starz and AMC Networks.
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