The company plans multibillion dollar costcutting measures, while ramping up spending on content
Paramount Skydance posted tepid earnings on Monday, giving investors their first look at how the company is faring under its new ownership.
The company reported $6.7 billion in revenue for the quarter, essentially flat from a year ago and just missing analysts estimates. Revenue was dragged down by an 11% drop in its linear TV division.
Overall, Paramount posted a loss of $257 million for the quarter. That amounted to 37 cents per share, a steep drop from the same quarter last year.
It’s an indication that Ellison still has a long road ahead of him as he looks to turn around the aging media company that he paid $8 billion for back in August. In his first earnings call at the helm, he highlighted strategic changes that he hopes will pay off over the coming year, such as cost-cutting measures and investments in streaming.
“While we’re still in the early stages,” he said on a call with analysts, “we’re energized by the progress we’ve made and the clear path ahead.”
Paramount’s stock closed up 9% on Tuesday as the market responded well to Ellison’s optimistic promises about savings and investments.
In a letter to shareholders accompanying the release, Ellison highlighted $3 billion in expected savings. Part of that will come from layoffs, a process which began last month when Paramount laid off about 1,000 employees. In his letter, Ellison said they expect another 1,600 job cuts in the coming months, most of which will result from divesting in businesses in South America. The company also hopes to save money by consolidating technology used to run its three different streaming platforms.
The company said it plans to spend more than $1.5 billion next year on original shows and upping the studio’s yearly film output to 15. This continues Ellison’s spending spree that included a 7-year $7.7 billion deal with the UFC and rumors of as many as three major bids for rival studio Warner Bros. Discovery.
“Our goal is to be a global scale streaming service,” Ellison said. “So from that standpoint, we are going to invest accordingly.”
Ellison didn’t offer specifics on what those investments will be, though.
“We don’t know what that $1.5 billion is being directed towards,” said Dan Rayburn, an independent analyst covering the media industry. “What type of content? Live? On-demand? Sports? Kids? Comedies? We don’t know.”
Paramount is looking to beef up its content offerings to attract subscribers to Paramount+, its lagging streaming service. In the third quarter, revenue from its streaming business, which is primarily made up of its Paramount+ platform, grew more than 16% year-over-year.
With cable TV in precipitous decline, the company is depending on streaming to be the future. Paramount+ posted 79.1 million users this quarter, up 9.9% from a year ago. Those numbers, while positive, still puts it in a distant 4th place compared to its peers.