Paramount Global's Q2 2024 earnings conference call is being led by conference operator Felicia, who introduces the participants including Paramount's Co-CEOs Brian Robbins, Chris McCarthy, and George Cheeks, as well as CFO Naveen Chopra. The call will focus on adjusted results and reconciliations can be found on the company's website. Brian Robbins, along with his fellow CEOs, will update on the company's progress on their strategic plan of streamlining the organization, transforming D2C, and optimizing the asset mix. They will also discuss the recent transaction with Skydance Media.

In the second quarter, Paramount Global announced a merger agreement with Skydance and saw strong financial and content results. They also renewed and expanded their partnership with Charter and announced a multiyear agreement with Nexstar. These partnerships demonstrate their focus on modernizing relationships with distributors and providing more ways for consumers to access their content. This strategy has potential to expand reach, lower costs, and reduce churn.

During the call, Chris McCarthy discussed the company's upfront results and their strategic plan. The upfront results were strong, with linear volume trends in line with last year and increased CPMs. The company also secured over $1 billion in commitments for their streaming portfolio. They have identified $500 million in cost savings and will be reducing their workforce by 15%. This is part of their plan to streamline the organization and transform their streaming segment, which has shown strong profit growth in the past year.

In the fourth year in a row, Paramount+ is leading the industry in sign-ups, driven by successful TV series and films. Pluto, their FAST service, is also performing well with record consumption. They are confident that Paramount+ will reach domestic profitability in 2025 and are exploring partnerships to increase scale and engagement. They are also evaluating their portfolio to improve their balance sheet. In the second quarter, CBS was the top broadcast network and Paramount+ had several successful shows.

The company has had a successful quarter with new shows and movies launching on Paramount+, including hits like Bob Marley: One Love and A Quiet Place: Day One. They plan to continue this momentum with an ambitious slate for Paramount+ that includes new seasons of popular series, a new series from George Clooney on Showtime, and recent box office hits. They also have a strong primetime schedule for CBS with returning series and new shows, as well as upcoming releases in movie theaters, such as an animated Transformers film and the sequel to Smile.

The paragraph discusses the financial results for the second quarter of the company, highlighting the success of their Direct-to-Consumer business and the growth in advertising. It also mentions upcoming releases such as Gladiator 2 and Sonic the Hedgehog 3. The company's commitment to delivering quality content and appreciation for their creative teams is also mentioned. The focus then shifts to advertising, with a 16% growth in Direct-to-Consumer advertising and a decline of 6% in total company advertising. The impact of sports on advertising is also mentioned, with expectations for similar growth in the next quarter.

The article discusses expected improvements in advertising trends in the second half of 2024 due to the return of live sports and new programming. Affiliate and subscription revenue grew 1% in Q2, with D2C subscription revenue increasing by 12%. The exit from a Showtime pay-per-view event in the previous year impacted the growth rate by 250 basis points. Paramount+ saw a 50% increase in subscription revenue and ended the quarter with 68.4 million subscribers. However, subscriber growth was hindered by the planned exit of a partnership in South Korea and elevated churn from the Super Bowl cohort. Net subscriber growth is expected to return in the second half of the year. Global ARPU for Paramount+ increased by 26% due to a price increase and a shift in the subscriber base. A domestic price increase will also take effect later this month.

Monthly pricing for the Paramount+ with Showtime tier will increase by $1 to $12.99 for both new and existing customers. This increase is not expected to have a significant financial impact until the fourth quarter due to the time needed to implement the changes and the fact that the increase only applies to new customers. In the TV Media segment, affiliate revenue declined by 5% due to changes in the pay TV ecosystem. A new distribution agreement with Charter will make the ad-supported tier of Paramount+ available to basic cable subscribers at no additional cost, and revenue from this and future deals will be shared between the TV Media and D2C segments. Licensing revenue declined by 35% in Q2 due to fewer deliveries in the period.

In the second quarter of last year, the delivery of the final season of Jack Ryan and a decrease in licensing revenue affected the company's earnings. However, they expect licensing revenue to increase in the second half of the year with the return of a new fall slate on CBS. The company is also focused on reducing costs and has identified opportunities to save $500 million annually. They expect to execute these actions in the coming weeks and incur a restructuring charge of $300 million to $400 million. They also recorded a $6 billion noncash goodwill impairment charge for their cable network supporting unit. The D2C segment was profitable for the first time since the launch of Paramount+ 3.5 years ago.

The segment will generate losses in Q3 and Q4 due to content expenses, but the company is on track to achieve profitability for Paramount+ in 2025. They expect significant growth in total company OIBDA and free cash flow in 2024. The company is focused on achieving their goals for 2024, including investing in content assets, finding expense efficiencies, improving profitability, and deleveraging their balance sheet. They believe this approach will create long-term value for shareholders. During the interim period before the Skydance transaction closes, they are focused on aligning their actions with long-term goals and keeping teams motivated. The recent indicators in the linear affiliate marketplace, potentially related to the Charter agreement, were a factor in the goodwill charge.

During the earnings call, Paramount executives discussed the recent cord cutting trend and the timing of their decision to explore licensing Paramount+ content. Brian Robbins stated that Skydance is supportive of their strategic plan and that they are continuing to greenlight projects as usual. Naveen Chopra added that the goodwill impairment charge was due to both linear declines and the value implied by the Skydance transaction. The company is focused on creating value for shareholders through their strategic plan, which includes exploring partnerships and optimizing their asset mix. When asked about licensing Paramount+ content, executives did not provide any additional information.

Chris McCarthy and George Cheeks discuss the success of Paramount+ and their plans for future growth. They are exploring strategic partnerships and joint ventures to increase profitability and reduce costs. They may also license content, but their focus is on driving an unduplicated audience through a combination of broadcast and streaming, with a goal of resolving linear and streaming growth.

The company is seeing growth in both traditional and streaming sports viewership. The CFO expects free cash flow to grow this year, and the CEO mentions the company's global streaming plans. They plan to have a global footprint, but may explore different options.

The paragraph discusses ViacomCBS's plans for international expansion and cost-cutting measures. They are considering strategic partnerships or joint ventures with SVOD players to increase scale and profits. The $500 million cost-cutting target includes the $2 billion from Skydance, and it is unclear how much of that could have been achieved without the acquisition. The company has a new agreement with Charter, which will offer Paramount+ to 9-10 million subscribers. It is unclear how this will affect affiliate revenue for linear networks. Only activated Charter subscribers will be counted.

Naveen Chopra, speaking on behalf of Paramount, addresses a question about cost savings and the Charter deal. He explains that the $500 million cost savings plan is just the first step and that there are other cost reduction plans in the works. He also clarifies that subscribers who activate their Paramount+ benefit through Charter will be counted as Paramount+ subscribers. The revenue from deals like Charter will be split between the TV Media and D2C segments. John Hodulik then asks about the linear pricing on the Charter deal, but Chopra does not provide any further details.

The speaker asks about the economics of the deal with Charter and how it will affect the profitability of Paramount+. Naveen explains that the revenue received is not contingent on whether subscribers activate their accounts or not. He also clarifies that the company's deals with distributors are focused on total company economics and the revenue is allocated between TV Media and D2C segments. The next question is about the value of content on Paramount+ and Naveen explains that it will grow in 2025 when the platform is expected to be profitable.

Naveen Chopra and George Cheeks from CBS address the concerns of affiliates about potential declines in reverse comp fees due to the shift to streaming with Paramount+. They explain that 2024 will look different due to the impact of the writers' strike in 2023 and that there is seasonality in content expenses. They also mention their goal of achieving domestic profitability for Paramount+ in 2025 and acknowledge the challenges faced by affiliates in the changing industry landscape.

The network's role in the partnership is to provide high-quality content with wide reach, which requires investing in hit shows, news programming, and sports rights. The fair value is determined by the strength of the content offering, and CBS is performing well in all areas. The company plans to continue licensing Paramount's content to third parties and sees licensing as a growth driver after 2024. The company is also interested in pursuing additional sports rights in the interim period before the merger closes.

The company is focused on maximizing the value of their content on their own platforms through various revenue streams. They will continue to license their content to third-party platforms while maintaining control of their intellectual property. The company is confident in their sports portfolio but will remain open to opportunities. The co-CEOs are pleased with the company's strong performance in the first half of the year.

The company is proud of their successful TV series and films, and their performance this quarter reflects their efforts to improve. They acknowledge that there is more work to be done, but are confident in their ability to deliver. The call has ended.

This summary was generated with AI and may contain some inaccuracies.