Paramount Global’s latest earnings call had a notable absence: CEO Bob Bakish.
Paramount is reeling from shareholder pushback against a pending merger with private-equity-backed production company Skydance Media that is expected to reduce the value of shares in the company. The potential merger is Paramount’s way of getting fast cash to boost its balance sheet and tackle outstanding debt.
After four directors left the company’s board earlier this month, it reportedly pushed out CEO Bob Bakish on Monday. (Bakish privately opposed the merger, too.) On the same day, Skydance also proposed a new final offer to Paramount that would allocate more payout to certain shareholders and less to Chairwoman Shari Redstone.
Meanwhile, company division heads have jumped in to help steer the ship as the new Office of the CEO – George Cheeks, Chris McCarthy and Brian Robbins – but the studio’s plans for the potential merger and new leadership remain unclear.
In the meantime, Paramount is flexing its streaming and advertising muscles to marketers and media buyers ahead of this year’s upfront season, which kicks off next month.
Paramount’s total revenue rose to $7.7 billion in its Q1, a 6% increase from this time last year. Advertising – particularly on the streaming front – was a “highlight” of the previous quarter, said CFO Naveen Chopra during the company’s Q1 earnings call on Monday. (Awkward timing.)
In the absence of its CEO amid a drama-filled leadership shakeout, Paramount didn’t take any questions from investors during the call.
Just keep streaming
It did, however, tout its growth trajectory on the streaming advertising front.
Paramount+ gained 3.7 million subscribers last quarter. Together, advertising and subscriber growth drove a 51% revenue increase year over year for the company’s eponymous streaming service alone.
Ad revenue from streaming campaigns rose 31% YOY – compared with 17% YOY growth for total ad revenue, including linear – thanks in large part to the Super Bowl in February.
“Sports continue to overdeliver” on Paramount’s subscriber and advertising growth, Chopra said, citing the NFL playoffs and NCAA college basketball games as other examples.
Considering football fans drove a surge in Paramount’s subscriber numbers late last year, it’s logical to assume the studio will continue relying on sports to boost sign-ups and engagement enough to stay in the buy side’s good books. Although Paramount didn’t share updates on its plans for sports programming, instead keeping its first Bakish-less earnings call as brief as possible.
Besides, sports fans who sign up for Paramount spend 90% of their viewing time watching nonsports content, Bakish told investors earlier this year.
For now, rising ad revenue for streaming explains why the average revenue per Paramount+ user jumped 26% YOY.
Going forward, Paramount’s priorities will be “strengthening our balance sheet and optimizing our streaming strategy,” McCarthy said on Monday’s earnings call in Bakish’s absence.
But will the promise be enough to convince advertisers that Paramount is a safe investment despite the drama boiling over behind closed boardroom doors?
Paramount shares rose nearly 3% on Monday after news of Bakish’s departure broke leading up to the earnings call, suggesting that investors, at least, seem to approve.
Exclusive merger talks should wrap on Friday.
