Paramount Global recently announced its first earnings report since the Skydance deal was revealed, showcasing its commitment to a $500 million cost-savings plan and its goal of achieving sustained profitability in streaming by 2025. The company outlined various strategies to achieve these objectives, including workforce reductions and exploring potential strategic partnerships for Paramount+.
In an effort to streamline operations and reduce costs, Paramount disclosed plans to cut approximately 15 percent of its U.S.-based workforce, targeting redundant functions within marketing, communications, finance, legal, technology, and other support areas. These actions are expected to be completed by the end of the year, with a restructuring charge of $300 million to $400 million anticipated in the third quarter.
Paramount Global, which had 21,900 employees worldwide as of the end of 2023, had previously eliminated around 800 positions in February. The company is also evaluating potential partnerships for Paramount+ to enhance its profitability, including licensing agreements, joint ventures, or partnerships. Additionally, Paramount is reassessing its portfolio to optimize its balance sheet and ensure competitiveness in the evolving media landscape.
Co-CEO Chris McCarthy emphasized the need to reshape Paramount’s assets to better align with future market demands. The company aims to leverage its strong brands and businesses by potentially divesting certain assets or integrating them into other businesses to maximize their value.
Despite facing challenges such as a decline in Paramount+ subscribers and an operating loss of $5.3 billion, Paramount reported positive developments in its second-quarter earnings. Direct-to-consumer revenue increased by 13 percent year-over-year to $1.8 billion, with an adjusted profit of $26 million compared to a loss of $424 million in the previous year. These improvements were attributed to revenue growth and cost reductions in marketing and content.
While Paramount+ experienced a decline in subscribers due to the planned exit from a hard bundle agreement in South Korea, the company expects to resume net subscriber growth in the second half of the year. Paramount+ revenue grew by 46 percent year-over-year, driven by subscription and advertising revenue growth.
The recent agreement to sell control of Paramount Global to a consortium led by Skydance and RedBird Capital marks a significant development for the company. The 45-day go-shop window allows Paramount to explore alternative offers, with the potential for an extension if a serious bidder emerges. However, if Paramount chooses not to proceed with the Skydance offer, a $400 million breakup fee may apply.
In conclusion, Paramount Global’s strategic initiatives aim to position the company for long-term success in the competitive streaming market. By implementing cost-saving measures, exploring strategic partnerships, and optimizing its asset portfolio, Paramount is working towards achieving sustained profitability and transforming its business for the future.
