The paragraph is an introduction to Paramount Global's Q3 2024 Earnings Conference Call. The operator, Nadia, introduces the call and hands it over to Jaime Morris, EVP of Investor Relations, who welcomes participants and introduces the company's Co-CEOs, Brian Robbins, Chris McCarthy, George Cheeks, and CFO, Naveen Chopra. Jaime reminds listeners that the call will include forward-looking statements and provides details about where to find more financial information. Chris McCarthy then speaks, indicating that he and the other Co-CEOs, along with Naveen, will discuss the company's strong quarterly performance and progress against strategic goals, highlighting their success in content and execution.

In the second paragraph of the article, it highlights the strong performance and growth of Paramount's Direct-to-Consumer (DTC) platforms, particularly noting record engagement on Pluto and a significant increase of 3.5 million subscribers on Paramount+. This growth has contributed to Paramount+ being the fourth largest global streaming service and has led to a 25% increase in revenue compared to the previous year. The D2C segment has achieved profitability for the second consecutive quarter, with substantial OIBDA improvement, and the company aims for domestic profitability by 2025. Paramount has been successful in cost reduction efforts, resulting in $500 million in annual savings, while continuing to produce major films and TV series. The Skydance transaction is progressing, with expectations to close in the first half of 2025, pending regulatory approval. George Cheeks then discusses ongoing distribution efforts, highlighting renewal agreements with key partners and the introduction of an ad-supported tier on Paramount+ for charter customers. He also notes the positive impact of political ad spending and the return of NFL and college football on advertising revenue in Q3.

The paragraph discusses the strong growth in digital advertising for Paramount, highlighting the scale and impact of their digital platforms like Paramount+ and Pluto. It mentions the successful launch of "The Summit," connecting ad partners with Paramount content across various media channels, exemplified by a campaign with Pepsi and Gladiator II. The company is addressing a dispute with Nielsen and is optimistic about using alternative measurement solutions. Paramount prioritizes its brand and agency partners, emphasizing content, scale, and value. In terms of strategy, the company is advancing by transforming its direct-to-consumer (D2C) business, reducing costs, and achieving profitability through successful content offerings.

The paragraph discusses Pluto's strong performance, noting a 5% increase in viewing hours to 5.6 billion, driven by improved video on demand features and user experience. The company is considering strategic streaming partnerships with a focus on long-term value. They've also streamlined operations, achieving 90% of a planned $500 million cost-saving effort, primarily through a 15% workforce reduction, and plan to complete this by year-end. They've optimized their asset mix with the sale of their Viacom18 stake set to close in Q4. The focus remains on producing popular films and TV series, with Paramount+ seeing strong launches of hit series like Mayor of Kingstown and Tulsa King, the latter marking a record global debut.

The paragraph highlights significant achievements and upcoming content for Paramount+. It mentions the return of the South Park series in June 2025 and the success of the Lioness series, positioned as a top global series on Paramount+. Additionally, it introduces the new series Landman, set to premiere in November, predicted to be a major hit. The premium tier sees an enhanced Showtime slate, including George Clooney's espionage series The Agency and a new Dexter origin story. On cable, The Challenge's 40th season achieved record viewership, and the MTV Video Music Awards saw its largest audience in four years. The paragraph also mentions The Daily Show's success with Jon Stewart, winning awards and maintaining top late-night show status, while driving significant engagement on Paramount+.

John has extended his stay through 2025, and "Yellowstone" is set to return on the Paramount Network and Paramount+. CBS is experiencing success with football and its new primetime schedule. The NFL on CBS is averaging over 20 million viewers, and streaming on Paramount+ is up 50% year-over-year. CBS Primetime's launch is thriving, with "Tracker" being the most-watched series, "Matlock" the top new show, and "Georgie and Mandy" a successful comedy spin-off. Viewer numbers have seen substantial increases across platforms, and CBS News streaming has grown significantly with expansions and rebranding. This highlights the effective synergy between broadcast and streaming to enhance viewership and content efficiency.

The paragraph outlines Paramount Picture's successful releases and upcoming projects. It highlights significant box office performances, such as "A Quiet Place" and "Transformers One". It mentions the record-breaking premiere of "Smile 2" and anticipates strong momentum for the rest of the year with releases like "Gladiator II", generating excitement for its award season prospects. Additional upcoming titles include "September 5", the third "Sonic the Hedgehog" film, and "Better Man". Looking ahead, Paramount promises a diverse slate for 2025, catering to a wide audience.

The paragraph discusses the progress and achievements of Paramount in the third quarter. It highlights the excitement around upcoming films and franchises, including the eighth Mission Impossible, a Naked Gun reboot, and animated series like Smurfs and SpongeBob. The paragraph transitions to financial updates, reporting a 20% year-over-year increase in adjusted OIBDA to $858 million, driven by growth in their direct-to-consumer (D2C) business, which saw an 18% increase in advertising revenue. While TV Media advertising declined by 2%, this was an improvement from the previous quarter, aided by the return of football and political spending. Additionally, international advertising benefited from previously underreported revenue.

In the upcoming Q4, TV Media advertising growth is projected to be similar to Q3, benefiting from increased political spending, but will be limited by reduced sports inventory. The Q4 forecast excludes additional revenue adjustments from third-party underreporting. Affiliate and subscription revenue declined by 1% in Q3 due to the absence of Showtime pay-per-view events from the previous year, which affected the growth rate negatively by 270 basis points. Without this impact, there was a 1% increase, driven by direct-to-consumer growth counterbalancing linear declines. The TV Media segment saw a 6.6% decrease in affiliate revenue, reflecting industry trends and the Showtime pay-per-view loss. D2C subscription revenue rose 6.8%, with Paramount+ revenue up 27% year-over-year, adding 3.5 million subscribers to total 72 million. This growth was fueled by international bundles, NFL and college football returns, new originals, and theatrical releases. Q4 is expected to see continued subscriber growth for Paramount+ due to more original content, despite no new hard bundle partnerships. Global ARPU for Paramount+ increased by 11% but was moderated by last year’s price hike and a shift toward lower-tier and hard bundle subscribers.

In the article's paragraph, the company discusses financial dynamics related to price changes and subscriber adjustments, impacting ARPU growth into Q4. While the company achieved D2C profitability in Q3 due to revenue growth and cost management, Q4 is expected to see losses due to increased content and marketing expenses. Licensing and other revenues experienced a decline, largely due to decreased secondary market activity and home entertainment revenues, and are projected to continue declining throughout 2024. This decline is partially due to strategic decisions to prioritize internal content platforms. The company reported $214 million in free cash flow for Q3, reducing leverage, but anticipates negative free cash flow in Q4 due to content spending and $150 million in restructuring costs.

The paragraph discusses Paramount's financial outlook for 2024. The company expects no negative impact on leverage due to anticipated proceeds from a Viacom18 transaction. Paramount is on track to achieve financial goals, including significant growth in OIBDA and sustained free cash flow growth. This progress is aided by improvements in direct-to-consumer (D2C) profitability and cost-saving initiatives. Paramount aims to further grow its streaming services, improve cost efficiency, and continue investing in its content portfolio. The paragraph concludes with the operator opening the floor for questions, with Ben Swinburne from Morgan Stanley asking about the strategy and profitability related to the company's D2C and international operations.

In the paragraph, executives from Paramount discuss their current financial performance and future outlook for Paramount+ and its associated businesses. They express pride in the revenue growth and profitability achieved by Paramount+, highlighting a 27% growth in revenue for the quarter. They emphasize their strategy and execution in maintaining momentum as a standalone entity while being open to strategic partnerships that could further enhance value. Looking ahead, they project achieving full-year domestic profitability by 2025. Naveen Chopra points out that the domestic segment is expected to be profitable next year, with Pluto already profitable. The international segment of Paramount+ is anticipated to become profitable 12 to 18 months after the domestic business.

In the paragraph, Jaime Morris and Bryan Kraft discuss Paramount+'s international expansion strategy, with Chris McCarthy highlighting the importance of global content monetization. Paramount+ is adopting a market-by-market approach to maximize value, which may involve owned and operated models, partnerships, or licensing, depending on the market. The overall goal is to monetize their content effectively. Additionally, Bryan Kraft inquires about the impact of prior international ad sales revenues under partner misreporting, which Naveen is expected to address.

In this paragraph, Naveen Chopra discusses the impact of underreported revenue on international advertising in Q3, estimating it to be around $50 million and noting no further adjustments are expected for the next quarter. Rich Greenfield from LightShed Partners questions the company about the financial implications and advertising challenges resulting from the absence of Nielsen data, which has persisted for over a month, longer than previous impasses. He inquires about any subsequent effects on CBS or cable network advertisers, and mentions the company's use of VideoAmp instead of Nielsen. Rich also seeks information on the number of employees remaining in the TV media division after cost-cutting measures. George Cheeks addresses the Nielsen issue, emphasizing that it is not primarily about affordability.

The paragraph discusses the shift from linear to streaming audiences in the media industry and its impact on spending decisions. It emphasizes the importance of aligning costs, like Nielsen fees, with ad revenue generation and highlights that there has been no adverse effect on ad revenue so far. Furthermore, it mentions staffing related to sports production and local stations, despite technical difficulties in the conversation. Additionally, it touches on potential interest in streaming collaborations or app integrations, referencing a competitor with a strong sports and film offering, indicating potential customer overlap.

In the paragraph, Chris McCarthy discusses the growth and profitability of Paramount+ and Pluto, highlighting successful partnerships with companies like Walmart and Delta Airlines. These partnerships are strategically designed to add value and attract new consumers. McCarthy emphasizes their ongoing strategic assessment to enhance the value proposition and indicates no current changes in their strategy. Naveen Chopra is then invited to address the accounting question regarding content cost allocation between direct-to-consumer (D2C) and TV media segments.

The paragraph is part of a Q&A session during a business discussion. Steve addresses the allocation of content costs between streaming and traditional linear platforms, explaining that as viewership shifts to streaming, more costs will be allocated accordingly. Michael Morris from Guggenheim then asks about Direct-to-Consumer (DTC) trends, especially the partnership with Charter and its impact on third-quarter results, including customer activation and churn. He also inquires about the strong EBITDA growth of 20% year-over-year in the third quarter and whether this performance might lead to increased costs in the fourth quarter or affect the full-year outlook. Naveen Chopra responds, indicating he will address both questions.

The paragraph discusses the contribution to subscriber growth in the recent quarter from both international markets, aided by a new hard bundle, and domestic markets, specifically mentioning the Charter bundle. Despite its early stage, the Charter bundle has shown promising results. The over-performance in the third quarter was mainly due to the DTC segment, with a noted improvement in marketing efficiency. The positive impact of restructuring actions, modest in Q3, is expected to be realized more fully in Q4, along with an anticipated boost from political advertising and generally strong advertising revenues. Some challenges are also expected ahead.

The paragraph discusses the financial expectations and strategies for the upcoming quarters, particularly focusing on content and marketing expenses. They anticipate higher content costs in Q4 due to sports and streaming originals, with some marketing expenses shifting from Q3 to Q4. Despite these costs, they expect the strong performance from Q3 to contribute positively to the full year's results and feel well-prepared for 2025 due to advancements in direct-to-consumer (D2C) services and profitability improvements in that area. Naveen Chopra highlights marketing efficiencies within D2C and emphasizes the advantage of a diverse subscriber base across multiple channels and partnerships which enhances their D2C performance. Additionally, there is mention of potential cost amortization benefits related to previous programming charges.

The paragraph discusses a company's effective go-to-market strategy, which has led to reduced acquisition costs and subscriber churn, positively impacting their financial performance. The focus is on top-line growth, subscriber and ARPU growth, and improving marketing efficiencies to drive profitability. Brian Robbins expresses gratitude to participants, highlights strong quarterly performance in streaming and advertising, and notes progress in business efficiency. He credits the success to talented teams and creative partners and looks forward to future updates. The operator concludes the call.

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