Paramount Skydance’s No. 1 priority is closing its acquisition of Warner Bros. Discovery – and convincing investors that the proceedings are going as planned.
During Paramount Skydance’s Q2 earnings call on Tuesday, CEO David Ellison limited his remarks to a brief, two-minute monologue about the company’s confidence in the intended merger.
“We’re continuing to advance our proposed [acquisition of] Warner Bros. Discovery,” Ellison told investors, noting that the deal will create a “stronger, creative-first company with the scale to compete against Netflix, Amazon, Apple and others.” Ellison added that the deal will “benefit consumers, theatrical exhibition and creators alike.”
But Hollywood talent, consumers and regulators don’t necessarily share his conviction. Paramount Skydance currently faces three lawsuits recently filed by the Writers Guild of America, a Paramount shareholder and a coalition of 12 state attorneys general. All three suits allege that the intended merger will harm talent and consumers by reducing competition. Even so, Paramount Skydance remains confident that the transaction will close, Ellison said.
In the meantime, Paramount Skydance remains focused on streaming advertising monetization. The company plans to grow ad revenue by continuing its efforts to consolidate the tech stacks behind its streaming properties.
Talking shop
Streaming is the clear growth engine for Paramount Skydance (as it is for just about every major media company with a streaming business). While the company’s overall revenue grew 1% year over year in Q2, revenue for Paramount+ alone jumped 16% YOY.
Paramount Skydance credits its streaming growth to higher engagement and subscriber retention resulting from an expanding content slate, including live sports. The company saw a 12% jump in ARPU for streaming subscribers. Paramount+ also added 2 million subscribers last quarter, bringing its total up to nearly 82 million subscribers.
ARPU for the Paramount+ ad tier should “absolutely” continue growing as the company strives to equalize monetization across subscriber plans, said CFO Dennis Cinelli.
One priority to improve monetization is centralizing the ad tech stacks behind Paramount Skydance’s three primary streaming properties: Paramount+, the free streaming platform Pluto TV, and BET+, which is co-owned and operated by Tyler Perry Studios.
“We’re on track to converge our tech stacks by the end of the summer,” Ellison said, referring to the company’s self-imposed deadline. The goal is “unifying the data that was previously siloed between the three separate services,” he said. The merged tech stacks should improve the company’s ability to monetize its streaming ad inventory much more efficiently.
When buyers get a comprehensive view of audience and advertising data across platforms, they can more closely target and personalize advertising for better results. At least according to Paramount Skydance’s upfront pitch earlier this year.
Oh, and speaking of upfronts: While Paramount Skydance didn’t share an exact number to quantify ad dollars, the company says that upfront commitments grew by double digits. It also claims it saw the strongest upfront season since before the CBS-Viacom merger back in 2019, when the company was called ViacomCBS.
But upfront negotiations are over, and Paramount Skydance is focused on its top priority: closing its acquisition of WBD amidst all the lawsuits and naysayers.
