Associated media – Linked media
Paramount Global has announced a reduction of 15% in its U.S. workforce, aligning with a comprehensive cost-reduction strategy in anticipation of its upcoming merger with Skydance Media.
The company disclosed plans to achieve $500 million in cost savings, contributing to a broader $2 billion in synergies expected from the Skydance merger. The impending layoffs, scheduled to commence shortly and conclude by year-end, will primarily affect departments such as marketing, communications, finance, legal, technology, and other support roles, as noted during their recent earnings call.
Last month, Paramount confirmed its merger with Skydance Media, initiating a 45-day “go-shop” period that allows it to seek alternative proposals, ending later this month.
Simultaneously, Paramount reported a rise in earnings, driven by an unexpected profit from its streaming sector, marking the first profitable quarter for its direct-to-consumer operations.
Following these announcements, Paramount’s shares surged over 5% in after-hours trading.
In terms of financial performance for the quarter, compared to Wall Street forecasts:
- Adjusted earnings per share stood at 54 cents, surpassing the anticipated 12 cents.
- However, income fell short at $6.81 billion against projections of $7.21 billion.
The company experienced an 11% decline in second-quarter revenues, missing estimates primarily due to lower licensing, television advertising, and cable subscription revenues. This shortfall represents the most significant discrepancy from analyst expectations since February 2020. The downturn in TV licensing revenues posed challenges for analysts’ projections due to variable starting and ending dates.
Despite this, revenue from Paramount+ soared by 46% year-over-year, driven by subscriber growth and increased pricing, although the platform saw a reduction of 2.8 million subscribers following the termination of a partnership in Korea with CJ ENM’s TVing.
Paramount’s streaming services recorded a $26 million profit for the quarter, a turnaround from a $424 million loss the previous year, defying analysts’ expectations of a $265 million loss.
The company remains on target to achieve U.S. profitability for Paramount+ by 2025, aided by price hikes and reduced content expenditure. Notably, the quarterly earnings benefited from the absence of NFL licensing fees, which are set to commence later in the year.
Year-to-date, Paramount’s stock has declined by 31%, impacted by diminishing cable subscribers and a weaker linear TV advertising market. Additionally, the company absorbed a one-time $6 billion impairment charge related to the downturn of its cable networks, following a significant writedown by Warner Bros. Discovery.
This strategic adjustment is part of the conditions from the transaction with Skydance.
Associated media – Linked media
