Earnings call transcript Q1 2023

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Operator

Good morning. My name is Nadia, and I’ll be the conference operator today. At this time, I would like to welcome everyone to the Paramount Global’s Q1 2023 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Instructions] [Operator

call. I Paramount turn Kristin, Global’s now your time, to call you like begin Southey, Kristin EVP, conference would this the to over may At Investor Relations.

Kristin Southey

the Good time first morning, XXXX call. earnings you everyone. for quarter to us for Thank join our taking

and for are CEO; me our CFO. our President Bob Joining Chopra, Bakish, today’s and discussion Naveen

on Please schedules containing trending note we our site. release, Web have that in earnings addition information to available our supplemental

certain want and with Before on more statements and we that morning, remind statements made risks our I the call involve to uncertainties start uncertainties. forward-looking are filings in detail in this you this SEC. risks are that discussed These

found trending each case, Some supplemental will Reconciliations Investor on of in these results. schedules, information, financial of release and found be adjusted focus Relations remarks Web or in our section which in our earnings can contain our non-GAAP the in today’s be can of financial measures site.

the Bob. I call Now, over turn to will

Bob Bakish

for on the Good of cover The is transform some we balance morning, the big everyone. Thank with me perspective with on the to executing well evolving, joining us. highlights, start landscape as QX are picture. my but as our let will year, plan media remarks Today, Paramount and you it.

our (ph) networks for streaming financially We and century. and have] to operationally, traditional both leveraging media base, build, the are [as to invest scale, in, XXst

are all service core, With the delivering value the to robust engine content shareholders. in long-term our at

with peak and our intersects cyclical as see impact in the a investment financials, softness. We you are of of combination also uncertain macroeconomic ad challenging And environment. navigating the that streaming

on the in to makes and free earnings company to necessary flow this decisions the us making All cash even growth positive more XXXX. focused of return

our align our growth the momentum is level, resources And hone strong. to and cost assets, non-core at end, to areas, fundamental is with because working, strategy divest we structure, our continue that and

and adding progressing objectives. subscribers, streaming increasing towards popular engagement, revenue, business growing producing are content, We key

As that, see things we that several encourage do us. we

ad market, well are broadening and First, we of platforms as transforming. seeing we importantly, more as growing signs usage, seeing a business to deals unquestionable our and both and perhaps are but growing by of as exemplified content value range partnerships. Paramount in the stabilization the consumer community of the is

confident are creation shareholder company’s priority. our the We in execution, value and remains top

this to begin our With our with stronger powered of today is our I’ll DTC a year-over-year underpins content, streaming of for at and It’s more million XX% engine decades, while that, an company XX reached million two Paramount+ big where milestones popular grew dive let’s flagship that the annual monthly and revenue XX momentum, look TV in. that hit users. the content engine active And Pluto run adding million than we quarter, for services. Paramount subs, to global grew rate total subscribers, foundation ever. billion. $X than that’s X.X this our

U.S. Importantly, resonating in both just globally, the are not

as deep like sporting viewers well the hit. hours parties. single the from UEFA our Pluto like broad Maverick; content, Top our crave, with. sports, they don’t we originals rely news they like Paramount+ we Kingstown, In to the saw TV third They quarter, or a of total Gun: Pluto subscriber revenue and Soccer. CBS XX% on year-over-year XX% content of of because And League the series great and film on, by the libraries come King, bold newly franchises slate theatrical Movie, movies TV as as of by Mayor the brand, and Wolf: and NCAA obsessed Pluto, Teen as Champions they for and growth released source driven in are events and across increased year-over-year well some viewing see Paramount+ Tulsa Paramount+ over the just increase, watch global engagement saw a XX% while over TV sequentially, and and subscribe we led XXXX, The broad Paramount+

sign thanks In quarter, driving show to acquisition nearly including two streamed content, bundle is Not this QX, also they Honor on drivers and Showtime. hour an the XX% were of fan both Yellowjackets. Paramount+ top benefited also time in extremely about our see with only as consumption, Paramount+ the Showtime. Your to bases. transition the from This with devoted enthusiastic to We strong Paramount+ dominated Showtime good the as shows

news note of Looking track minutes on I programming content of the power entertainment on Disney+, also at the closet viewers XX% original most XXX the CBS spent HBO the CBS scale across Amazon, CBS and competitor, broadcast more season. That’s broadcast content. would illustrate I minutes combined quarter. programming and quarter would for watched a Hulu, nearly that offerings, accounted watching sports strongly attracts for marquee that than of and to four essential to in consecutive nearly Max, and the is more network and total CBS CBS, with powerful power more testament linear billion times lineup, To the the than broadly, be streaming. its XXth note viewing

at franchises, is in Paramount one it’s of to April debuting great on and us is of grossing This the in highest example the film, it next power VI streaming and with Paramount+ too more our power to not results; keeps extends that on another the performance latest a just XXth on Scream And yet story, domestically franchise. franchise: how installment to And Scream its theatrical installment Scream quarter. growing. the in released VI, opened not of number Pictures which March

benefits base content It’s iconic and has strong advantages look just deploy to on built both content, and franchises see we from again a strategy and drive partnership including revenue play one streaming advertising, launch, engagement, Since with streaming. excellent model, you will our But spans it market stream as that that fan go dual innovative in our out again been picture, it’s subscription and brand. we delivered high how not that ahead. do and consistently Big content.

TV. To to with in This And as that forward, Walmart step is our very on end, to Paramount+ subscription includes partnership customers. another are launched we to are partnerships for deliver ubiquitous now March, introduce And +Play distribution we we hub continue Pluto thrilled happy Verizon partnership. consumers. third-party the it

Yes, our we've a very but Paramount+ one that from is is this has coming described, TAM broad on via Paramount+ soon, year, with customize of more personal total the This question Delta since entertainment special And to loyalty will investment in strategy producing there X.X than rate, has we double And a that that path that's have access than members device, These originating service. streaming peak U.S. base business no genre. beloved every subscriber a a and ago takes rapid will as scale, launch. on on results. have And the grown investment. just is profitability. streaming planes Members powerful in-flight as that their on represent in to opportunity much fact hits trial their it experience benefits times Paramount+ a to of much that the a free revenue multifaceted what business strategy, to with mobile our a years component a big, are is and alone, across over one TV. scaling related was XXXX two bigger represents and investment we partnerships at led premium

market we industry in topic a cycle Advertising conversation. the health are where of the the is and of

direct earlier, As of improve. seeing will like I continues like ad digital. we're in We we're many stabilization what ad turn, categories, growth side are mentioned we there the in seeing of the market. as signs in market And the what and to

As it are confident that capitalize does, to puts multi-platform position a the strength strategy in of unique us it. on we our

the of events than conversations has ever, right during been our client team have landscape. evolving in series strategy, place with assets Something upfront we of more my and succeed recent to and the leaders agency convinced in

of example, million it creative This are product at with is ad one on reach rapid our a ad and is episode Paramount+. in of targeting whose integrated unique Pluto all monthly is has example. full built advancing years, pace. product whose grown XX That our across in two suite only tech solutions helps and For than ads more combined place capabilities digital investments platforms, And XX% a and proprietary of brands reach EyeQ, our viewers. a advertising streaming

And advertisers and impact question consumers, products company, that on But short-term. no our distributors. top there's headwinds and the in earnings the sought compelling, market across our the also time, for ad our after investments we macroeconomic balance of same that are these at creating investments have impacted sheet the how recognize

Naveen and goals, of So, as flexibility with provide all key creating financial three will we're tactics, deploying value, which, color on. additional shareholder fundamental

parts certain significant saving business. implementing cost across are we First, of our measures

have the non-core with assessing creation & and on restarted Like process. Simon divestiture value where Schuster, executing associated to with the we're opportunities the we sale assets. Second, respect of

enhance deliver will are Finally, amending profitability. we further move our for our decision our ability policy. dividend long-term streaming to as towards shareholders we value This

we we're through the producing manage while As pull. levers may ability it genres platforms. many and our writer some disruption, across confident to we content are popular we cause the ahead, And strike to look in have given

coming Beasts four Mighty Mutant have months. our that an last We Ninja CinemaCon which From massive CBS This - Cruise will The buzz theatrical Rogen's and PAW and approach including Entertainment, Paramount+ in including in move in Vegas. Mayhem in strong of Return theatrical then content, Rise Seth anticipated all of across slate, at starts Mission efficient the August, platforms Patrol: out streaming, The more. broadcast deploy news way. July create drives Turtles: the upcoming in Transformers: in in Mutant and to content which highly with four office of Part Impossible September, and movies week Tom the multi-platform box just in reach Teenage and of sports Dead continue engagement to to One, incredible in Reckoning the and Movie film franchises next revenue June,

Paramount+ films more on NFL including platform, Paramount+ just but the of also Taylor streaming Tours Ops summer, the than Nicole we're XX that just way Kidman Sylvester I to is to Final, in next a by Lioness and will Football run, for Attraction, theatrical see and side Morgan has the and the And League much to the all destination Zoe and unscripted is Sheridan's show a the Stallone. later sports excellent Champions a starring after their with release in slate content. it. Family cup combination make and SEC. playoff mentioned the Freeman of of there Paramount+ CBS Special the the Sure, strong in increasingly excited FedEx debuted the Fatal we Saldana followed coming, accompanying in events, of UEFA return The shortly Big will PGA Stallone year

consistently been and Likewise, share, Paramount+, growing new Loud Nickelodeon including has on all and like movies including The Good news CBS Classic will Mornings, power CBS engagement and Zoey the have XXX, House. Burger Properties, will series based both and favorites Thundermans on from Nick which X, Studios

Nickelodeon slate, Linear, be Showtime Showtime Coming are we which returning the to game with the Showtime finally, early six for like season will we highly we're as very changing Paramount+ product a will summer, Chai, content including about. with and product successful to of begin along thrilled the franchises series the the with offering and this balance to integrate year market collection summer, look excited Paramount+ of This 'XX. this Paramount+ to to multi-platform a integrated bring

rapidly service. will there's household. streaming becomes Paramount+ And So, whole the that engagement, lot once a here as cornerstone a drive for subs and again,

Before close our priority, generating the fueled I of what powerful I long-term our our it top remains its macro ahead. knows off knows value is partnerships them, franchise us hand to excited on underscoring to content build scale as to platforms, from this that shareholder environment innovative to to the to our want by continues slate stabilize, is strengths, and which path positioned that about the company to how including one a makes succeed, Naveen,

that, I'll hand with And over to Naveen. it

Naveen Chopra

Bob. you, Good morning, Thank everyone.

of reflect and headwinds. in three results the things. to QX continued combination DTC Our momentum macro from I'm impact of strong investment going our business a Today Paramount content, cover

of elements QX First, I'll results. few our additional color provide on a

about for and cash earnings our this of discuss And year I improvement expectations into flow optimizing I'll back-half and our Second, capital XXXX. talk will third, allocation. in free the

$X.X In billion of QX, million. $XXX company we of revenue OIBDA adjusted delivered and total

cash results going focus press entertainment four quarter. areas, a specific Our the comments includes advertising, and on operational flow. my key subscription review revenue, our release and and affiliate financial I'm of to here filmed results, comprehensive for

Affiliate both streaming trends XX% business. continued accelerated paid and in streaming. that growth ecosystem shift from to improving saw evidence growth subscription and linear the yields TV Notably, revenue we quarter, this for material to our

affiliate media year-over-year, increase saw declined up subscriber by TV XX% subscription improvements X% revenue driven Paramount+ QX. in stronger even additions, revenue linear subscription the in streaming, versus year-over-year, and And growth revenue On side, in churn. an was improvement ARPU DTC domestic an

expect QX From with a affiliate year-over-year over integrated several will aided we in ahead, titles continue growth ads in the levels and integration of revenue quarters, healthy the the next ahead seasonally and Paramount+. of the by the Looking part of aligned subscriber key net will and expect QX subscription perspective, we Showtime release which soft content initiatives service, QX. and occur marketing of of throughout rollout to be

by The advertising, decline global advertising let's markets in than weakness media revenue. games XX% consisted Now This advertising. an in international in in NFL TV in ad prior-year. TV XX% QX, market impacted The resulting total and decline experience turn the fewer in was to a in continued decline growth advertising. of DTC and to media X%

of stabilization. are However, signs we seeing market

ad improvement food market, an beverage, and relatively of area saw categories tech buying and Though big web weak. in sports also domestic auto. like travel strength, remain the insurance, services and including key remains we Within pharmaceuticals, categories

trends media milestone we to a QX, respect We're to TV new advertising hit Related expect expect in DTC in in Pluto advertising, global the advertising, reaching TV and what acceleration. QX. And to XX MAU we QX, favorable reported slightly we continue. MAUs. continued this digital expect million in growth milestone With to proud of to we year-over-year be

will we're Pluto's future However, trends growth seeing. be the key engagement driver strong the of revenue

on in QX in XX% Pluto XXXX. growing hours increased after fact, viewing XX% total nearly In

reporting we'll provide rather indicative than more forward, as engagement this growth Going is revenue Pluto's MAUs on opportunity. we quarterly updates believe of

the in part Film film Moving performance year, on versus down timing OIBDA to Entertainment, the due and of revenue to prior and slate. were the

were from Honor quarter, the was QX of Operation without contribution. of the significant relative included released the such incurred day slate Dungeons terms of & prior Dragons: contributed year. which expenses on profitability terms Among to lower Fortune timing, In performance, And Thieves in revenue of last that film the Miramax, to

Filmed in negatively entertainment products impacted OIBDA was macro also softness licensing. driven consumer by

and entertainment June will prior year, due be the Transformers: significantly This against will be film, of released Looking to ahead Beasts, next the down include Gun: comp the filmed our QX, to Rise big year QX tough OIBDA versus will which X. on Top revenue Maverick. franchise

to released also QX. marketing The quarter Impossible, early significant Mission be will include related expenses which in will

we As a expect entertainment QX of filmed a be loss somewhat result timing in dynamics, will OIBDA these that better than QX.

front our for Patrol the of driven and films films Mission: weighted of back-half strong this year, Mutant the expenses the that biggest our significant Given Impossible year are improvement including we franchise expect entertainment Teenage the by half, Ninja filmed lineup in in to Turtles. PAW X, OIBDA

flow previously the timing of was flow, and advertising in million. improvement Moving free free a negative our on positive. will ARPU back-half full-year cash The cash growth, of improvement for $XXX use year be trends. the in flow the the cash slate, reflects to This of our driven QX, of first-half with capital and the for the expectations shared use of streaming XXXX a by back-half in turning film showing the year

Now to capital let's turn allocation.

in As capital we goals threefold. the past, allocation stated are our

First, we want in invest organic to growth.

shareholders. want balance the third, to we to sheet; return to de-lever capital Second, and

the environment, following. In in uncertain order goals an these doing to macroeconomic to we're continue accomplish

we're respect with First, on efficiency. to focused highly organic growth,

annual billion, While we're $XXX streaming run savings integration business of future rate Showtime. annual $X growing million capturing the of an through our to of expense over

in we expense capture get confident the the about integration, we we're will ability from franchise more And core and to than future even ultimately content $XXX savings. more progress believe our our through million increasingly investments, as

going in programming our fact, illustrates In content ability charge to QX investments concentrate the forward. incurred

to we divesting net Second, by continue manage debt assets. non-core

gives closing Simon have the our several And of We The in us value this for we maximize years and last potentially operating restarted a process combination the see & year. initial of the of transaction Schuster. business confidence the sale for interest asset over a ability this shareholders. path to our strong performance

shares and respect dividend or $XXX dividend continuing annually. shareholders. era return creation of provides will we $X.XX flexibility both actions reducing uncertainty additional which result The to value capital next macro and will reduction, of combination to financial enhances and be of and modification this cash believe strategy our tremendous payment dividend a as will across be to We while This common growth in investment With $X.XX capital million on annualized long-term reflect approximately policy an effective and expense asset in sales to opportunity. quarterly Paramount's allocation returns, savings. change prudent presents organic non-core capital

like and on theatrical, cash franchise key there focused keenly flow narrowing TV the At starts to are as rate with from enable earnings would content earnings execution businesses same to benefit who commercial increases OBIDA losses. across to cash rationalization. licensing flow platforms that monetize deliver our from these which DTC our media which continue several accomplish and I traditional to levers global our content goals. address also media, channels. Finally, to and while time, streaming, us as our leverages linear, contractual are well and improvement And At world-class cost distribution path ongoing TV studios free popular the we preserves

the growth expect segment foreseeable meaningful in as subscriber and of and combination expense a to efficiencies. operating by unlocked of slowing by other well our revenue a in OBIDA this improvement driven And will be generate growth earnings margin future. streaming, as DTC expansion we business Importantly, large and ARPU content in for improvement

in recovery XXXX. and positive we’re company on remain with to advertising free the XXXX. optimization flow cash total streaming meaningful in cost earnings continued In and combination business Overall, our deliver for investment we poised traditional growth track in in peak marketplace,

one a steps positioning earnings to the while build taken integrated Paramount stronger, growth creation. value more We leaner, company and a for have

With that, open questions. the operator, let’s line for

Operator

Instructions] question go Thank Guggenheim. goes you. please first today of ahead. [Operator Our Michael Michael, Morris to

open. is line Your

Michael Morris

Good I’ll you, Bob, firstly on morning. guys. Direct-to-Consumer. Thank ask you

strong subscription revenue had at subscriber and Paramount+. You growth

As the on dividend subscription seems pricing need then, power plan that time second, of have such you now year, ask ask of the little that look you And to level Naveen, to and you a more growth expand apologize that the to is important you and I comments I here? overall, drive consistent forward balance bit subscriber investment growth you the from based through so revenue on reduce with to I why the level can continued you that signal expect this of confidence. had all along, significantly? was dividend your So, are going outward an it your sustained is that

So, what us dig change drove am with help now? can you a hoping bit guys. Thank I specifically little in you, and more that

Bob Bakish

Sure, Mike.

Let it to then dividend pass a little DTC for start, of and the and me Naveen piece. I’ll then more

we momentum So, the to side, very we’re talked a do with beyond, XX subscriber in the year that side importantly path look quarter, associated and look, we continue grow subscriber in as and milestone for and to on million profitability. both see We thrilled revenue continue about the Paramount+. along we the the and to goes

the And us it’s And entertainment, vehicle. is subscriber has saw it’s year. slate day, for good and back-half what our more it which content on the said] in great in the a (ph) for And At we driver starts Paramount+. end of balance people both. engagement. an of the And been of sports, again, to of the with It of the content. news, including is about first which king. for, which look, growth great feel come is on service quarter. of [some is engagement additions success you Focusing immediate the an Paramount+ year, news the really It’s it

side of subscriber up second it of tracks As We softer. quarter for addition in is of then, to to is in of Showtime. to the this we of but And of the out, probably the to clearly the back-half has little -- also Paramount+ year part with Part before terms just large. U.S., the revenue, I the revenue added And seasonally is talk marketing. it base. a again. that the the year that combination writ slate content that want Paramount+ get pick think oh, the I sub the then, about Add

we with working As to continue Walmart partnership know, you is approach, very Paramount+. The our well one including us. for expand

interesting about as Delta. line We well. to going are up That’s to be

side doing marketing of are a the add it. we to bunch on stuff So, to

And We then, are know, as about we as great forward to you feel go price revenue. increase effectuating really move that. we summer. ARPU, a the in

are subscribers, So, drive continue ultimately this profitability. to in down Paramount+ continue to path the revenue, levers place to and

Naveen?

Naveen Chopra

just point DTC dividend. Mike, add a question Yes. things the then Thanks, And on and few Bob. address I’ll your the on

on particularly ARPU a I said, number combination talked shift tiers, see on of a those. about well as of as favorable to both subscriber would to Bob mix DTC, growth with growth As is continue we the this Bob respect ARPU, of geography. there growth. a just drivers add, channels, from terms in

We’re trends ARPU an from perspective. also growth seeing ad good some

growth So, it hours from sub, that terms in seeing engagement, of to that’s nice going are going the benefits and like. to per to continue we forward. growth contribute And

And proposition significant all and P+ streaming strong. pricing and said, is pricing pieces value on traditional without in services And Bob other successfully think place think, worth a us for are churn impact I the on reiterating, the engagement The incredibly which the service as for getting to, both piece, really deeper. I then, relative to is television growth. and only I remains pay mentioned, raise

what step encouraged are really do So, by this very we’re can there. just year. be first And we to we taking going the

there think both to down grow future road, internationally. I and domestically the also price opportunities

DTC. that’s So,

macro the macro to no environment made our momentum allocation we but the for I see continued gotten that is both today, less capital has has environment, not our we obviously And in opportunity then, debate policy, there current company appropriate the growth a is But dividend, reality the complex. operating for capital build. streaming the on respect that are has totally the with policy your to question the allocation look, think compelling changes

we all doing savings. their balance So, to That significant returning flexibility. to translate exactly as capital some for are does $X.XX. while to the million quarterly really shareholders. dividend it’s sheet what $XXX that’s annually optimize still reducing for mentioned Roughly, And to by prudent companies cash

in intend than one I to streaming. that more question, your planned of the two, would mean the the does And previously spend dividend elements emphasize not on we of that reduction

You thing do should benefit de-lever other think the ingredient along that help is really and cost sheet, a is intended our with of sales also as management value is, like have. reducing this of cash in which the key generally balance smart non-core to goal asset initiatives dividend an which uncertain macro is a to course, long-term environment. primary creating we of shareholder the And in continued

Kristin Southey

Okay. question. Operator, take next can we the

Operator

goes question next The Sachs. go ahead. Brett, Feldman Brett you. of please Goldman Thank to

line open. Your is

Brett Feldman

Yes.

think Naveen, significant expressed cash TV years. confidence you’ll media great generation of segment taken question. I to that see you the a at you the number have continue for of

but the OpEx good opportunity get related sort cutting against make in there content the Thank cost operating cost. P&L are other to with headway of you contain you any I opportunities the could as questions business. to We get of you flexibility out the environment? terms go can And of the and you deeper core of the drive think the in you affiliate to dynamic we into fee, continue P&L talk about some appreciate to that all highlighted rate rate if of the efficiencies within the think grapple little then, non-sports about you. lot a

Naveen Chopra

top dynamics for in the though as of impact that that in than declines are X%, important QX, pay-TV is were the linear in that here the because is the We the Yes, even revenues, saw much rate somewhat us see sure, as linear terms line overall. traditionally sub you increases and given And said that of advertising which for mitigated, some question. linear both financial combination Brett. is of side the system declines shift. base evolving, well, offset where what obviously just you revenue in affiliate affiliate ecosystem which Thanks lower

costs way, where programming, lower about, some lower, continuing specifically doing genres, which cost are of even are to that the opportunities to of production adopting results respect evolve that's programming localization, produces the very our compelling like includes content levers offshore the more to there cost to with significantly things you which are continue very, numerous some AI like variety factor for economics. moving asked really transitioning mix and high-quality on by exercise. formats, But of we we That base, things

So, on lots to programming side. do the

we a are efficiencies do budgets where And find approach evolving makes also, taking we where marketing and programming, disciplined Beyond so headcount highly can to and efficiently. there. sense to continuing it

also but do we things our is little licensing, non-core Then to international call which doing are marketplace. around opportunity revenue-related, in, some we business it, more see expand licensing

these combination of So, which the cash continue be that the the means ecosystem of media way ability I some cost TV mitigate of lot will the side, think of the earnings source OIBDA forward. while about on declines it, in our of really it's levers a the combination to going on top line, to significant flow also a exercising

Kristin Southey

Operator?

Operator

Ben, please Ben question Thank to goes go Stanley. you. Swinburne ahead. next The of Morgan

open. Your line is

Ben Swinburne

obviously on about dividend morning. board was guidance your do that spending And you the The this I that determine you the getting on just see of timing, about have then and management money, the that any been while. any lot. revenues a dividends how cash mentioned had You time this the of over hear outflow. there you just been Thanks time but macro, these guys a lot think for ad the spending team like seems dividend also lever, talked right better? you other for Thank you some wanted to see more in improving. to ad markets on market you. add? a back catalysts could Naveen, talking content if time? cash on affiliate you now, weak just lot headwinds content looked to but magnitude, big are the at another around That decline? the I Were I Good is the cut company for just a Can cash have biggest because your front, the the give content us saving Maybe spending

Naveen Chopra

helpful the for we strong that. I the is Yes, and I of said having the it like. are create balance environment dividends, think to there, think most sheet Ben. go With really sheet should as the shareholders. we is I value to order much as something will look macro financial think in providing what just finding possible is about cautious And as about And our to flexibility reverse that respect look, I balance ways a

that is the So, very much motivation there.

would spend a since question building we possible to streaming. is I we With strategy one, over had how really Paramount+ things, focused content cash respect to we out your few as for on deploy as related being number say which a in content have efficient time, very on launched

you we a platforms We cost-efficient. very fundamentally sharing heavily to the never across cost capital maximize We ally. which of expansion. into more remember, very and reduce abandoned content to embrace took third-party our If and approach licensing, concept lean we franchises, are international efficient

be I is savings, And actually stopping content mean expense indicated. not what originally million the means for of and be that expansion spend. content. last Now, of think And always we efficient which as DTC that time not that quarter, more the than Showtime are future That's of we than there. more we should XXX decided one to Paramount+, does to all reasons I said even that content ways looking XXXX are also which integrate noted less we we

linear on across order pushing means the efficiencies the even combination content earlier, than in and of and what we will international That additional genre even development streaming today. both things of special referenced budget, even I to means things assumed effect unlock have franchises, size, spend And et some cetera. harder think we are formats, focus bigger I We find the looking likely those at more mix, savings.

Kristin Southey

Operator, we the question. next can take

Operator

Thank you. The to ahead. of next go America of question Reif please Jessica Securities. Jessica, Ehrlich goes Bank

Your line is open.

Jessica Reif Ehrlich

and and prepared approach linear? you for and in potentially near-term? challenges, Maybe year. then, expectations, Can will talk you. upfront over about it give have this secular taken your you you're, the given moving on Thank like to a macro care current advertising, And do least reduce ward writers strike, the a you how at maybe us different think spend the

Bob Bakish

of Yes, those. I both take sure, Jessica. will

Let a that writers can come are of today, me fairly audiences our multifaceted hope essential and a it's and creating there that everyone strike also it's ask. works the a content fair with, It's writers enjoy but for part a to quickly, across gap big we do little shorter. say really bit resolution Starting we an first. pretty platform, to really is

an pull, duration. been to have allow through We that to we've obviously and even many for manage if us levers So, do strike planning the it's extended to will this.

in of terms we lot can, so in can. a those to levers, speak, the the content In have

of as Late-Night, leader, with So, and as well a a a range that, to really the Add not definitely unscripted that's broad for sports, while. exceptional things and reality like consumers we notice anything won't where affected. are

And in and overall. a look, we so, position do have more we areas again, can those leadership necessary, if

and part to Naveen demographics, leverage our Plus, of we one have we broader from moving can in anyway, that. libraries strategy, pull finally schedules. offshore Plus, media which fill production, the we series, been of on the largest touched features cetera, et which television multiple have as prehistoric to

OIBDA, think ultimately cash. your slightly at long question to financial So, well-positioned flat wondering because depends we navigate the the and in of of in a accretive on it really this to dilutive ultimately really it how point but and terms revenue, by we of sure you're strike, But on probably case, function duration to it's again, to are lasts. that, I'm impact, way,

come said side, something been, given long you proposition popular next content, in differently. it's and advertising our the that's retail referring differentiated time, to picture integration, Super we we for to associated realigned think we're force way, a to it on platform I our including Over ad big alternate portfolio, realign and doing We I Also upfront about with strong their differently, been industry-leading sports, creative advertisers ever in terms frankly lot will you're have by course, our it's a Bowl, and sales the of it. as agencies, of doing grade did I've which our August. so when to, events, something the measurement, a

turnkey So, knowledgeable you business, agency that's your team where access. business dedicated now if now you are do have easier us, holding it's you and serving give about you a can again, particularly with company, to

to of respect a upfront, couple the With this year. we did things differently

a not really anymore costs of after in big party wrapped one way rare and And was liked contracts move it format model. with buyer efficient that's it. effective new old based it that It effective that was They old us, resonated targeting feedback presentation it's on of that's In aggregate got, events the the groups. clients nine earlier, in a specific upfront really for clearly and the the with less significantly strong model and fact, our room. By then we event better. in It day. because for those of we kind we the just huge intimate. It's more two-way really more did quality the more in one conversation,

on are great feel the in et very get it of early and to make upfront. live it price, call. to And volume, again, going at of into cetera, that. we what's So, end the I'm stages negotiation, doesn't we about the day, comment not the active on because sense it's the going an on;

that in. that's are against about in the we by going say, without settles, here, definitely do will executing way, I clearly I feeling good Paramount of plan. it plan so the we it, demonstrate into ad the have And we a that believe the So, will when dust getting it. space, power

Kristin Southey

Okay. Operator?

Operator

question please Thank you. of ahead. LightShed The to Rich, next Greenfield go Partners. Rich goes

line Your is open.

Rich Greenfield

just Paramount+, side relatively done assume I healthy bunch it peers you've on revenue wondering clip your basis, question. deals a I $X are subs about through sub taking personal of structural the But that looks the I'm are $XX. of what is versus couple, a time that Paramount+, of Paramount+, per I'm Bob or I in the that's that production I'd a first or Thanks And part like And meaning something content your leveraging upwards sort on engagement overall bigger a of terms ad pretty you're somewhat talking sort with becomes wondering still got $X advertising to per more sense get of engagement of sort as headcount, the drive equation. to were you just on before driven. wise user And day or you Naveen, following-up side small doing there. for mean love Paramount+, and of the cost partners. that of growing are spent on of about then spend marketing

wondering XX,XXX you at What's sort on look in cable media How employee MTV, of much of employee like network, really get? I core forward? without just I'm think get pressure that with eating CBS, cetera. the right, sort the lower headcount smaller like year can Like the count going last network, ended how the go you the into cut is the you employees, et next reducing half how five about think years? an count sort Thanks. over of strength do much can

Bob Bakish

Naveen, DTC? with why start you the ad don't placement

Naveen Chopra

sure. Yes,

P+. So, And begins Rich, your to momentum short monetization, there. on engagement. engagement the we've really about bullish That ARPU as opportunity is relates question on really it opportunity grow we're strong ad to very with and seen answer at

sequentially, engagement. QX In results, both sub see I per fact, And and further the and actually growth we'll look double-digits, grew year-over-year. viewing hours our expect you if at

and bundle, really expand grow programming the the think watched service, that slate who data I at folks to in as we about use Paramount+. recommendations, better there's strategy, even point the there, those As in form standalone continues more is and customers the optimizing like, interesting XX% frankly, the they awareness the continues more as content the and get titles than customers XX% time to Showtime relevant a of spend current on P+

market significant particularly improves. opportunity to monetization, when for means to opportunity continue So, for there's grow ad us which clearly engagement, significant the ad

even is frankly, quite current encouraging. trajectory the So,

up both and a engagement on ad a quarter basis. year-over-year similar I this think ARPU sequential was domestic double-digits to

So, there. big opportunity value creation

Bob Bakish

and focused Yes, seven clearly cable the about Rich very five we this we groups could years if are networks going and time umbrella you side, the at of start question fully networks. cost point, had with organizationally an something you the your side, ago, probably set each as built programming started on we when think it's to conversation on look out

one the U.S. economics, it come through I'm today, call consolidation, cable And master side to forward we kind to now international have in group a of here to the going Fast in the the group. slight consolidation running of with back networks second. U.S. in the into networks step effectuating that And Showtime they're is latest and exception, on all the effectively middle we're a which the cable

second a savings and cetera. we goes along we et we how of group seen road kinds from that go. economic a significant Paramount all was integrated managed it season to look the organization, to goes did recently, And kinds of now there. how we Launchpad in of benefit Your on we'll those And there model extract we're just as launched set to easier things was one portfolio And of to operating back than as structure that more cross are the we what this if single probably to on Honor, goes that the network. can do That of promo, And right show of we for think And we networks middle a question there's we've the previously. to continue mine. example, so, And And is the we to would, on the Yellowstone the integrating much that into with continue you use call of again, that the Showtime. most content, further at, way. what in ask back

look the management outside know, networks. cost. to of International, As those the the again, you globalized there's we've One you things U.S. is two should going and now

language place we that, related going feeds with specific is can all to team local tracks, whole has opt And a portfolio which way multiple It's to we shared of run it's you where thinking are country future. that kinds and from in how to Chris's and a efficiently more feeds about the have ultimately efficiencies. So, effectively. outs back

But what on to So, headcount there forward. could we going are go get the extract very be. focused not that is we into benefits I'm rest is assured, something as to and will we continue specific

Kristin Southey

Okay. Operator, we can question. take the next

Operator

ahead. Robert next MoffettNathanson. go Fishman to The question Robert, you. Thank please of goes

is open. Your line

Robert Fishman

one related for and Bob I one morning. got one good Naveen. for Hi,

content third-parties, the a content terms licensing to to First selling to how interpret and Netflix, keeping IP that spinoff you shift or maybe much selling positive third-parties, to licensing, out it called cashflow exclusive away that thoughts us as instead from your Bob, you earlier in exclusive next of like we to keeping key back to international latest speak for then help your give free can the on should And own your platforms off whether movie to year? getting specifically, does SpongeBob Paramount+? Naveen, of

Bob Bakish

Robert. sure, Yes,

components, side. a time, general, franchise that So, been it views drives incremental key operated adversely fundamentally look acquisition are the on our subscriber content or the co-exclusive strategy first really our We subscribers. a that's balanced advantage, in for content, certainly believe there's fact window great no used other a generates the with library here, and we affect but on think real to In good be doesn't franchise third-parties basis approach, and owned to incremental back revenues, and the an because it rationality of the monetizing we on is incremental our mostly do two licensing. basis. people which change outlier content at impressions, are keeping to that, same pivoting for with believe with And in strategic effect platforms on margins, you've to seen we Paramount+, content O&O a non-exclusive

remember, international we streaming much. a fully to markets penetrated very yet the is on basis. in with a top a do time, We're place, particularly as you global Paramount+ big in the things markets. from XX time It's Yes, But know. isn't world pretty franchise nine

We rest and that this main dual IP strategy. upside, but opportunities can So, very we that's in view basis. broader content to that franchises point on drive licensing of on licensing. some haven't against to financial that, changed model a And believe continue of believe we the thing core of is be there important world opportunities licensing. licensing with we But O&O broader particularly including licensing have a evaluate streaming, combined framework our are

Naveen?

Naveen Chopra

Yes.

nice we're Number respect the international component. few that margin stuff contributor. a that, and of things. the about of for you particularly not impact channels. I'd going though, a give It's high specific any produced one, numbers already licensing be So, business, with other it Obviously, Rob, that financial largely there, to has a so to sort been say is can business

be this can I a suspect the unlike it'll little original which margin, a production And contributor. nice business, time. one So, over grow lower is

what apply. More cash and that ARPU, and revenue and about We flow Paramount+ earnings important growth importantly, 'XX. the quarter, to i.e. for to remember drivers they expecting are there and free are growth growth. significant potential last those it's talked have. And in multiple subscribers think them in to I they continue We see were

top as other We places. tracking that of content inventory both mean Showtime we promotional unlocks utilization content as savings are slowing through which leverage, Paramount+, and That marketing in and line in more nicely significant get cetera. as terms spend, content as efficiencies et of benefit and in the well streaming growth see integration you well does will

So, will those remain the confident them. into 'XX, we what deliver big in and are drivers

Kristin Southey

take question. can we another Operator,

Operator

you. The Doug goes please ahead. Doug, question Credit Thank Mitchelson Suisse. to of next go

open. is line Your

Doug Mitchelson

Thanks so the for much taking question.

drivers of flow mentioned more is that you thinking there operating selling broadly Simon growth, and hoping are other flow DTC, just it you're bridge, So, free you beyond Thank you or the much. unclear just was outline Naveen, from as I'm could preamble, if And further of are then, positive considering curious, so are the beyond simple you there? on & sort assets cash other the I kind through of on Schuster, growth? cash EBITDA there flowing XXXX, free

Bob Bakish

and throw to asset Yes, I sales, Naveen. the to will speak

to might the involve shareholder potential value. divesting, by asset, of those on things. We all ways have or partnering three way, and done That an looking for maximize always acquiring are we

we everything. So, at look

before, about As level to is of feel buyer superior back interest. We market in to is its & remarks, the opportunity with I bought we there the we and both indicated which Schuster. of are market given it what there, was frankly, in it good the my Simon the when lot substantially creation interest, operating performance, now very value

to we closing And see depending going I'm bunch we that. to that of do, see a there always about -- really; up looking transaction there, deal ends good speculation not might shareholder a year. comment we're feel speculative ways again this we being, a on what is buyer any out is potentially value. type ultimate reinforce maximize we buyer So, for those other on to who of pack all the

Naveen?

Naveen Chopra

Yes. flow, And drive through you operational that some on of it business Doug, 'XX. of free think into just will, the if with sort respect I to will I question took the cash your levers,

streaming, end, more capital of this flow, also pure to in in see the significant the where a that spend. -- cash it to P&L years few we while for the financial And sort takes there about improvement to a is think amortization. free growth expect because saw a contributor last you as OIBDA dynamic, side but cash improvements it expense of talked We the then working about benefits in ramped If you show little of of yes, are we side nature of perspective. up have up, over a big content from of the through just to that that

because from over couple perspective content years, a real cash really will next those P&L dynamics. of the growth 'XX converge. the and in significantly. content start and to into to the going And see be slow But is cash benefits very working there expense going to will to capital you get of a rate you starts where actually growth start that of beyond place What is

Kristin Southey

our Operator, last we Okay. can question. take

Operator

you. Thank

of Cusick goes go JPMorgan. final ahead. Phil, Our question to please Phil

is line Your open.

Phil Cusick

'XX talked Naveen, then, trending Hi, churn in. given the cost revenue from the cohorts have around think but mature? Thank is How the should integration? how around before, retail I we Showtime in about you. And thank and does 'XX content not growth maybe subscribers lower base you overall, for in you goals me DTC. heard and Paramount+ comment this getting about your the

Naveen Chopra

Yes, thanks, Phil.

of but ahead content indicated. position on respect talked we'll plans originally say, with respect of of market, the to a to integration noted in Showtime with et bullish where a to on are XXXX first about bit very in and our think we subs ad cetera. Paramount+ terms we I puts in we our be that this last little actually There in growth puts call, to be spending overall. with and continued goals, growth are, terms So, of some would 'XX about Paramount+, we've expense, revenue what's less respect going takes I the than we does DTC

we the relative So, the to very DTC of general, plan. our trajectory excited I continue think about business in be to

really continues of I are question retail characteristics, answer drive churn one the short portfolio ingredients we perspective, going those nice on and that's get revenue from we that to think that's more pretty key the engagement, in consistent the improve. beneficial is Regarding partnerships and improvements definitely saw churn theme the expand, all of continues as to growth QX, a it's to place, see in been in churn things content forward. going We

So, we like we there. what are seeing

Bob Bakish

have look, that, to have conviction. emphasize with And that we closing, we and Yes. want in momentum, I importantly,

this growth, while environment, dynamic navigating streaming market-leading driving know on for positive free well our focus that return of us pack to making XXXX. and we're significant profitability, growth, to in and flow decisions macroeconomic going are will we So, cash streaming earnings the position a

we appreciate are laser-focused. and Thank everyone. we talk will So, We to be your soon. well, support, you you

Operator

today’s call. Thank you. joining. This much now you concludes so Thank for

You may lines. disconnect your now

Paramount Global (PARA) 4 May 232023 Q1 Earnings call transcript