Q2 2024 Paramount Global Earnings Call

August 8, 2024

[inaudible]

Felicia: Good afternoon. My name is Felicia, and I'll be the conference operator today. At this time, I would like to welcome everyone to Paramount Global's Q2 2024 Earnings Conference Call. At this time, all lines have been muted to prevent any background noise.

Felicia: Good afternoon. My name is Felicia and I'll be the conference operator today. At this time, I would like to welcome everyone to Paramount Global's Q2 2024 earnings conference call.

Speaker Change: At this time, all lines have been muted to prevent any background noise. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star followed by 1 on the telephone keypad. If you'd like to withdraw your question, please press star followed by 2.

Felicia: After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press the star followed by 1 on the telephone keypad. If you'd like to withdraw your question, please press star followed by 2. In order to get to as many questions as possible, we ask that you please limit yourself to one question. At this time, I would like to turn the call over to Jamie Morris, Paramount Global EVP Investor Relations. You may now begin your conference call.

Speaker Change: In order to get to as many questions as possible, we ask that you please limit yourself to one question. At this time, I would like to turn the call over to Jaime Morris, Paramount Global's EVP Investor Relations. You may now begin your conference call.

Jamie Morris: Good afternoon, everyone. Thank you for taking the time to join us for our second quarter 2024 earnings call. Joining me for today's discussion are Paramount's co-CEOs, Brian Robbins, Chris McCarthy, and George Cheeks, and our CFO, Naveen Chopra. Please note that in addition to the earnings release, we have trending schedules containing supplemental information available on our website. Before we start this afternoon, I want to remind you that certain statements made on this call are forward-looking statements that involve risks and uncertainties.

Jaime Morris: Good afternoon, everyone. Thank you for taking the time to join us for our second quarter 2024 earnings call. Joining me for today's discussion are Paramount's co-CEOs, Brian Robbins, Chris McCarthy, and George Cheeks, and our CFO , Naveen Chopra.

Speaker Change: Please note that in addition to the earnings release, we have trending schedules containing supplemental information available on our website.

Jamie Morris: These risks and uncertainties are discussed in more detail in our filings with the FCC. Some of today's financial remarks will focus on adjusted results. Reconciliations of these non-GAAP financial measures can be found in our earnings release or in our trending schedules, which contain supplemental information and, in each case, can be found in the Investor Relations section of our website. Now, I will turn the call over to Brian. Good afternoon.

Speaker Change: Before we start this afternoon, I want to remind you that certain statements made on this call are forward-looking statements that involve risks and uncertainties. These risks and uncertainties are discussed in more detail in our filings with the SEC.

Felicia Norby: Good afternoon, my name is Felicia Norby, the conference operator today.

Jaime Morris: Some of today's financial remarks will focus on adjusted results.

Brian: Reconciliations of these non-GAAP financial measures can be found in our earnings release or in our trending schedules, which contain supplemental information and in each case can be found in the investor relations section of our website. Now I will turn the call over to Brian.

Felicia Norby: At this time, I would like to welcome everyone to Paramount Global's Q2 2024 earnings conference call. At this time, all lines have been muted to prevent any background noise.

Brian Robbins: Good afternoon, everyone. Thank you for joining us on our second quarter earnings call. I'm Bryan Robbins, and I'm here with my fellow CEOs, Chris McCarthy and George Cheeks. Today, we look forward to updating you on the results of the quarter and the progress we have made on our strategic plan. That includes streamlining the organization, transforming D2C, and optimizing our asset mix. We have been aggressively advancing this plan since we laid it out at our annual meeting of stockholders in early June.

Felicia Norby: After the speakers remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star followed by one on the telephone keypad. If you'd like to withdraw your question, please press star followed by two. In order to get to as many questions as possible, we ask that you please limit yourself to one question.

Jaime Morris: Good afternoon, everyone. Thank you for joining our second quarter earnings call. I'm Bryan Robbins, and I'm here with my fellow CEOs, Chris McCarthy and George Cheeks.

Speaker Change: Today, we look forward to updating you on the results of the quarter and the progress we have made on our strategic plan. That includes streamlining the organization, transforming D2C, and optimizing our asset mix.

Jaime Morris: At this time, I would like to turn the call over to Jamie Morris Paramount Global's EVP investor relations.

Jaime Morris: We have been aggressively advancing this plan since we laid it out at our annual meeting of stockholders in early June , but before we jump in, we'd like to spend a few moments on the transaction with Skydance Media.

Brian Robbins: But before we jump in, we'd like to spend a few moments on the transaction with Skydance Media. As you know, on July 7th, Paramount Global announced the signing of a definitive merger agreement with Skydance, which includes a 45-day go-shop period. We expect to close the deal in the first half of next year.

Brian Robbins: You may now begin your conference call. Good afternoon, everyone. Thank you for taking the time to join us for our second quarter 2024 earnings call. Joining me for today's discussion are Paramount's co CEOs, Brian Robbins, Chris McCarthy and George Cheeks and our CFO, Naveen Chopra. Please note that in addition to the earnings release, we have trending schedules containing supplemental information available on our website. Before we start this afternoon, I want to remind you that certain statements laid on this call are forward looking statements that involve risks and uncertainties.

Jaime Morris: As you know, on July 7th, Paramount Global announced the signing of a definitive merger agreement with Skydance, which includes a 45-day go-shop period.

Brian Robbins: In the meantime, the Skydance and Redbird teams support our strategic plan, and we are continuing to operate business as usual. With that, let's get into our second quarter results and share more details of our progress. Then Naveen will take us through the financials in depth.

Jaime Morris: We expect to deal the close in the first half of next year. In the meantime, the Skydance and Redbird teams support our strategic plan, and we are continuing to operate business as usual.

Speaker Change: With that, let's get into our second quarter results and share more details of our progress. Then Naveen will take us through the financials in depth.

Brian Robbins: These risks and uncertainties are discussed in more detail on our filings with the SEC. Some of today's financial remarks will focus on the justice results. Reconciliation of these non-gap financial measures can be found in our earnings release or in our trending schedules, which contains supplemental information and in each case can be found in the investor relations section of our website.

Brian Robbins: In the quarter, we saw strong results, both in terms of our financials and our content. A few highlights include 43% growth in total company-adjusted orbiter revenue, largely driven by improvement in D2C. Paramount Plus increased revenue 46% year over year.

Naveen: In the quarter, we saw strong results, both in terms of our financials and our content. A few highlights include 43% growth in total company-adjusted OIBDA, largely driven by improvement in D2C.

Speaker Change: Paramount Plus increased revenue 46% year-over-year.

Brian Robbins: Now, I will turn the call over to Brian. Good afternoon, everyone. Thank you for joining our second quarter earnings call. I'm Brian Robbins and I'm here with my fellow CEOs, Chris McCarthy and George Cheeks. Today, we look forward to updating you on the results of the quarter and the progress we have made on our strategic plan. That includes streamlining the organization, transforming D to C and optimizing our asset mix. We have been aggressively advancing this plan since we laid it out at our annual meeting of stockholders in early June.

Brian Robbins: Our content continues to show strength across TV, streaming, and theatrical, and we renewed and expanded our long-standing partnership with one of our largest affiliates, Charter. As we've said before, we've been very focused on modernizing our relationships with distributors, and this innovative multi-year partnership with Charter is a prime example of how we're doing that. The renewal includes the continued carriage of our portfolio of linear cable networks and CBS-owned and operated broadcast stations.

Speaker Change: Our content continues to show strength across TV, streaming, and theatrical.

Speaker Change: And we renewed and expanded our long-standing partnership with one of our largest affiliates, Charter.

Speaker Change: As we've said before, we've been very focused on modernizing our relationships with distributors, and this innovative multi-year partnership with Charter is a prime example of how we're doing that.

Speaker Change: The renewal includes the continued carriage of our portfolio of linear cable networks and CBS owned and operated broadcast stations

Brian Robbins: But before we jump in, we'd like to spend a few moments on the transaction with SkyDance Media. As you know, on July 7th, Paramount Global announced the signing of a definitive merger agreement with SkyDance, which includes a 45-day go-shop period. We expected to deal the close in the first half of next year. In the meantime, the SkyDance and Redbird teams support our strategic plan and we are continuing to operate business as usual. With that, let's get into our second quarter results and share more details of our progress.

Brian Robbins: Also around Labor Day, our Paramount Plus Essential Ad Supported tier will be available to Charter's linear customers. Together, we're enhancing the value we're delivering for our consumers, providing them even more ways to watch our big broad hits across linear and streaming. And for us, it has the potential to expand reach and engagement, lower our customer acquisition costs, and yield much lower churn. And we view this as one potential partnership roadmap for future distributor renewals. In addition to Charter, just last week, we announced a multi-year agreement with Nexstar to renew CBS television network affiliations in 40 markets across the country.

Speaker Change: Also around Labor Day, our Paramount Plus essential ad support interior will be available to Charter's linear customers.

Speaker Change: Together, we're enhancing the value we're delivering for our consumers.

Speaker Change: Providing them even more ways to watch our big broad hits across linear and streaming.

Speaker Change: And for us...

Speaker Change: It has the potential to expand reach and engagement, lower our customer acquisition costs, and yield much lower churn. And we view this as one potential partnership roadmap for future distributor renewals.

Naveen Chopra: Medinavine will take us through the financials in-depth. In the quarter, we saw strong results both in terms of our financials and our content. A few highlights include 43% growth in total company adjusted orbiter, largely driven by improvement in D to C. Paramount Plus increased revenue 46% year over year. Our content continues to show strength across TD, streaming, and theatrical. And we renewed and expanded our long standing partnership with one of our largest affiliates, Charter.

Speaker Change: In addition to Charter, just last week we announced a multi-year agreement with Nexstar to renew CBS television network affiliations in 40 markets across the country. So we continue to have good momentum with our partners.

Chris Mccarthy: So we continue to have good momentum with our partners. Now I'd like to turn the call over to Chris to take you through the basics and the highlights of our plan. Thank you, Bryan. And good afternoon, everyone.

Speaker Change: Now, I'd like to turn the call over to Chris to take you through the upfront and the highlights of our plan.

Chris Mccarthy: We are pleased with our upfront results, particularly in the context of the evolution of the ad market and the scale of new entrants. Linear volume trends were in line with last year, and CPMs were up on a blended basis, driven by sports and broadcasts, which were relatively strong. The digital marketplace was also healthy. We secured commitments in excess of $1 billion across our streaming portfolio, reflecting both the quality and the scale of our assets. With our mix of pay and free, we offer the most efficient reach across premium video.

Chris Mccarthy: Thank you, Brian, and good afternoon, everyone. We are pleased with our upfront results, particularly in the context of the evolution of the ad market and the scale of new entrance.

Chris Mccarthy: Linear volume trends were in line with last year, and CPMs were up on a blended basis, driven by sports and broadcasts which were relatively strong.

Naveen Chopra: As we said before, we've been very focused on modernizing our relationships with distributors. And this innovative multi-year partnership with Charter is a prime example of how we're doing that. The renewal includes the continued charge of our portfolio of linear cable networks and CBS owned and operated broadcast stations. Also around Labor Day, our Paramount Plus essential ad supported tier will be available to Charter's linear customers. Together, we're enhancing the value we're delivering for our consumers, providing them even more ways to watch our big broad hits across linear and streaming.

Speaker Change: The Digital Marketplace was also healthy. We secured commitments in excess of $1 billion across our streaming portfolio reflecting both the quality and the scale of our assets. With our mix of pay and free, we offer the most efficient reach across premium video.

Chris Mccarthy: Now let's walk through the progress we are making against our strategic plan, starting with streamlining the organization. We now tell you that we've identified $500 million in annual runway cost savings across the company. This $500 million is included in the $2 billion of cost efficiencies identified by Skydance. To realize these savings, we are reducing our U.S.-based workforce by approximately 15 percent, and we are primarily focused on two areas.

Speaker Change: Now let's walk through the progress we're making against our strategic plan.

Speaker Change: starting with streamlining the organization. We announced in June that we've identified $500 million in annual run rate cost savings across the company.

Skydance: This $500 million is included in the $2 billion of cost efficiencies identified by Skydance.

Naveen Chopra: And for us, it has the potential to expand reach and engage in lower our customer acquisition costs and yield much lower churn. And we view this as one potential partnership roadmap for future distributor renewals. In addition to Charter, just last week, we announced a multi-year agreement with next star to renew CBS Television Network Affiliations in 40 markets across the country. So we continue to have good momentum with our partners.

Speaker Change: To realize these savings, we are reducing our U.S. based workforce by approximately 15% and we are primarily focused on two areas.

Chris Mccarthy: First, redundant functions within marketing and communications. Second, streamlining our corporate structure, reducing our headcount in finance, legal, technology, and other support functions. These actions will take place in the coming weeks and will largely be completed by the end of the year. As you can imagine, these are difficult decisions to make.

Skydance: First, Redundant Functions Within Marketing and Communications.

Speaker Change: Second, streamlining our corporate structure, reducing our headcount in finance, legal, technology, and other support functions.

Speaker Change: Lee's actions will take place in the coming weeks, and will largely be completed by the end of the year.

Chris Mccarthy: Now I'd like to turn the call over to Chris to take you through the upfront and the highlights of our plan. Thank you, Brian. And good afternoon, everyone. We are pleased with our upfront results, particularly in the context of the evolution of the ad market and the scale of new entrance. Linear volume trends were in line with last year and CPMs were up on a blended basis driven by sports and broadcasts which were relatively strong.

Speaker Change: As you can imagine, these are difficult decisions to make. We've been incredibly talented people of paramount, and these actions are not a reflection of their contributions. Rather, their necessary to transform our organization for the future.

Chris Mccarthy: We have incredibly talented people at Paramount, and these actions are not a reflection of their contributions. Rather, they are necessary to transform our organization for the future. Next, transforming streaming. We are pleased with the progress that we've made and the performance of our direct-to-consumer segment. In Q2, year-over-year profit growth was $450 million and totaled nearly $900 million for the past four quarters. For the fourth year in a row, Paramount Plus is leading the industry in sign-ups, driven by our big, broad hit TV series and blockbuster films. And Pluto continues to be the most widely distributed global fast service, delivering 3.7 billion hours in the first half of 2024.

Speaker Change: Next, transforming streaming. We are pleased with the progress that we've made and the performance of our direct-to-consumer segment.

Speaker Change: In Q2, year-over-year profit growth was $450 million and totaled nearly $900 million to the past four quarters.

Chris Mccarthy: The digital marketplace was also healthy. We secured commitments in excess of $1 billion across our streaming portfolio, reflecting both the quality and the scale of our assets. With our mix of pay and free, we offer the most efficient reach across premium video.

Speaker Change: For the fourth year in a row, Paramount Plus is leading the industry in sign-ups, driven by our big, broad hit TV series and blockbuster films.

Speaker Change: And Pluto continues to be the most widely distributed global fast service, delivering 3.7 billion hours for the first half of 2024. That's up 8% year-over-year, and that marks our highest consumption ever.

Chris Mccarthy: Now let's walk through the progress of making against our strategic plan, starting with streamlining the organization. We announced in June that we've identified 500 million in annual run rate cost savings across the company. This 500 million dollars is included in the two billion of cost efficiencies identified by Skydance. To realize these savings, we are reducing our US-based workforce by approximately 15% and we are primarily focused on two areas. First, redundant functions within marketing and communications.

Chris Mccarthy: That's up 8% year-over-year, and that marks our highest consumption ever. Now, looking ahead, we remain confident that Paramount Plus will reach domestic profitability in 2025. In addition, to further accelerate profitability and to increase our scale and engagement, we are exploring potential strategic partnerships with multiple parties and are in active discussions. Finally, we are optimizing our asset mix. We are aggressively evaluating our portfolio with the goal of improving our balance sheet. The set of assets that make up Paramount Global today were built up through the rise of Linear.

Speaker Change: Now looking ahead, we remain confident that Paramount Plus will reach domestic profitability in 2025. In addition, to further accelerated profitability and to increase our scale and engagement, we are exploring potential strategic partnerships with multiple parties and our interactive discussions.

Speaker Change: Finally, optimizing our asset mix. We are aggressively evaluating our portfolio with the goal of improving our balance sheet.

Chris Mccarthy: Second, streamlining our corporate structure, reducing our headcount and finance, legal, technology, and other support functions. These actions will take place in the coming weeks and will largely be completed by the end of the year. As you can imagine, these are difficult decisions to make. We've incredibly talented people of Paramount and these actions are not a reflection of their contributions. Rather, they are necessary to transform our organization for the future.

George Cheeks: And while we have strong brands and businesses, we must reshape our portfolio to best compete in the future. The assets under consideration are undeniably strong with exciting futures ahead, but they will be better served on their own or as the centerpiece of another business. We look forward to updating you on our progress against the strategic plan over the coming quarters. And now, I'll turn the call over to George to highlight our key content wins in the quarter and talk about what's coming next. Thanks, Chris.

Speaker Change: The set of assets that make a paramount global today were built up through the rise of linear. And while we have strong brand and businesses, we must reshape our portfolio to best compete in the future.

Speaker Change: The assets under consideration are undeniably strong with exciting futures ahead, but will be better served on their own or as the centerpiece of another business.

Chris Mccarthy: Next, transforming streaming. We are pleased with the progress that we've made and the performance of our direct-to-consumer segment.

Speaker Change: We look forward to updating you on our progress against the strategic plan over the coming quarters. And now I'll turn the call over to George to highlight our key content wins in the quarter and talk about what's coming next.

Chris Mccarthy: Global. In Q2, year-over-year profit growth was $450 million and totaled nearly $900 million to the past four quarters. For the fourth year in a row, Paramount Plus was leading the industry and signups driven by our big broad hit TV series and Blackbuster films. And Pluto continues to be the most widely distributed global fast service, delivering 3.7 billion hours for the first half of 2024.

George Cheeks: Our core mission centers on what we do best, creating big, broad hits. This is our first priority, as well as our competitive advantage. Now, in Q2, we had a number of key wins.

George Cheeks: Thanks, Chris. Our core mission centers on what we do best, creating big, broad hits. This is our first priority, as well as our competitive advantage. Now, in Q2, we had a number of key wins.

George Cheeks: CBS finished the 23-24 season as the number one broadcast network in total viewers for the 16th consecutive year, with eight of the top ten shows and the three most-watched new broadcast series, with Tracker, Elzbeth, and NCIS Sydney. On Paramount+, our strong slate drove excellent results, including The Return of Mayor of Kingstown, Criminal Minds, Evil, RuPaul's Drag Race, and The Chi. We also launched new shows, like the South Park special The End of Obesity, the Sonic the Hedgehog spin-off series Knuckles, and A Gentleman in Moscow from Showtime. Q2 brought Bob Marley, One Love, and the UEFA Champions League Final to PPLUS as well.

Chris Mccarthy: That's up 8% year-rear, and that marks our highest consumption ever. Now looking ahead, we remain confident that Paramount Plus will reach domestic profitability in 2025. In addition, to further accelerate profitability and to increase our scale and engagement, we are exploring potential strategic partnerships with multiple parties and are in active discussions.

Speaker Change: On Paramount Plus, our strong slate drove excellent results, including the return of Mayor of Kingstown, Criminal Minds, Evil, RuPaul's Drag Race, and The Chi.

Speaker Change: We also launched new shows, like the South Park Special, the End of Obesity, the Sonic the Hedgehog Spinoff series Knuckles, and a gentleman in Moscow from Showtime.

Chris Mccarthy: Finally, optimizing our asset mix. We are aggressively evaluating our portfolio with the goal of improving our balance sheet. The set of assets that make a Paramount Global today were built up through the rise of linear. And while we have strong brands and businesses, we must reshape our portfolios to best compete in the future. The assets under consideration are undeniably strong with exciting futures ahead, but will be better served on their own or as the centerpiece of another business.

Speaker Change: Q2 brought Bob Marley one love and the U.S. Champions League final to Pete Plus as well. On Comedy Central, the Daily Show with John Stewart is posting significant performance gains, while engagement on Paramount Plus is outperforming last season by over seven times.

George Cheeks: On Comedy Central, The Daily Show with Jon Stewart is posting significant performance gains, while engagement on Paramount Plus is outperforming last season by over seven times. Over at Paramount Pictures, John Krasinski's If delivered another number one domestic box office launch, and Acquired Place Day One saw franchise best performance, beating industry expectations and grossing over $250 million in worldwide box office to date. And to keep this momentum going, we plan the most ambitious slate yet for Paramount+. This includes new seasons of Taylor Sheridan's hit series Tulsa King in September, Lioness in October, and the new series Landman in November, as well as the series finales of Evil and Seal Team.

George Cheeks: Over at Paramount Pictures, John Krasinski's If delivered another number one domestic box office launch, and Acquired Place Day One saw a franchise-best performance, beating industry expectations and grossing over $250 million in worldwide box office to date.

Chris Mccarthy: We look forward to updating you on our progress against the strategic plan over the coming quarters.

Speaker Change: At a keep this momentum going, we plan the most ambitious slate yet for Paramount Plus.

George Cheeks: And now, I'll turn the call over to George to highlight our key content wins in the quarter and talk about what's coming next. Thanks, Chris. Our core mission centers on what we do best, creating big, broad hits. This is our first priority as well as our competitive advantage. Now, in Q2, we have a number of key wins.

Speaker Change: This includes new seasons of Taylor Sheridan's hit series Tulsa King in September , Lioness in October , and the new series Landman in November , as well as the series finales of Evil and Seal Team.

George Cheeks: The Showtime slate kicks off with the new series, The Agency, from George Clooney. And in December, Showtime's biggest franchise ever returns with Dexter, Original Sin. Also heading to Paramount+ are our recent box office hits, the new CBS primetime slate, the new NFL season, and our first full season of Big Ten College Football. The next season's primetime schedule on CBS is one of the strongest I've seen. In addition to 16 returning series, the new shows will include a spinoff of Young Sheldon, the number one comedy on TV, a contemporary reimagining of the classic series Matlock, and a new addition to the NCIS universe. And coming soon to movie theaters, we're releasing the first animated Transformers film in nearly 40 years, starring voiced cast Chris Hemsworth and Scarlett Johansson.

Speaker Change: The Showtime slate kicks off with the new series, The Agency, from George Clooney. And in December , Showtime's biggest franchise ever returns with Dexter, Original Sin.

George Cheeks: CBS finished the 23-24 season as the number one broadcast network in total viewers for the 16th consecutive year, with 8 at the top 10 shows, and the three most-watched new broadcast series with tracker, LSF, and NCIS Sydney. On Paramount Plus, our strong slate drove excellent results, including the turn of mayor of Kingston, criminal minds, evil, RuPaul's drag race, and the shy. We also launched new shows like the South Park Special, The End of Obesity, the Sonic the Hedgehog spin-off series Knuckles, and a gentleman in Moscow from Showtime.

Speaker Change: Also heading to Paramount Plus.

George Cheeks: are recent box office hits.

Speaker Change: The New CBS Primetime Slate, The New NFL Season, and Our First Full Season of Big Ten College Football. Next season's primetime schedule on CBS is one of the strongest I've seen.

Speaker Change: In addition to the 16 returning series, the new shows will include a spin-off of Young Sheldon, the number-one comedy on TV, a contemporary reimagining of the classic series Madlock and a new addition to the NCIS universe.

George Cheeks: Q2 brought Bob Marley one love, and the UEFA Champions League final to P Plus as well. On Comedy Central, the daily show with John Stewart is posting significant performance gains, while engagement on Paramount Plus is outperforming last season by over seven times. Over Paramount Pictures, John Krasinski's IF delivered another number one domestic box office launch, and a quiet place they once saw franchise best performance, beating industry expectations, and grossing over $250 million in worldwide box office to date.

Speaker Change: And coming soon to movie theaters, we're releasing the first animated Transformers film in nearly 40 years, starring voice cast Chris Hemsworth and Scarlett Johansson.

George Cheeks: That's followed by Smile 2, the sequel to one of the most profitable films in the studio's history. In November, Sir Ridley Scott returns to the arena with the highly anticipated Gladiator 2, which just saw its first trailer become one of the most watched ever for Paramount. Then we'll finish the year with Sonic the Hedgehog 3.

Speaker Change: That's followed by Smile 2, the sequel to one of the most profitable films in the studio's history.

Speaker Change: and Navember, so really Scott returns to the arena with the highly anticipated gladiator too, which just saw it first trailer become one of the most viewed ever for Paramount. Then we'll finish the year with Sonic the Hedgehog 3.

Naveen Chopra: We really want to underscore our commitment to operating the business with best-in-class content at the center. We'll continue to deliver for millions of fans around the world. We've got the best creatives in the business, and we're incredibly grateful for their contribution. Thanks so much for joining us today, and with that, I'll turn it over to Naveen. Thank you, George, and good afternoon, everyone.

Speaker Change: Look, we really want to underscore our commitment to operating the business with best-in-class content at the center. We'll continue to deliver for millions of fans around the world. We've got the best creatives in the business, and we're incredibly grateful for their contributions.

George Cheeks: Now, to keep this momentum going, we plan the most ambitious slate yet for Paramount Plus. This includes new seasons of Taylor Sheridan's hit series Tulsa King in September, Lioness in October, and the new series Landman in November, as well as the series finale of Evil and Seal Team. The Showtime Slate kicks off with the new series The Agency from George 10. Also heading to Paramount Plus, our recent box office hits, the new CBS Primetime Slave, the new NFL season and our first full season of Big Ten College football.

Speaker Change: Thanks so much for joining us today, and with that, I'll turn it over to Naveen.

Naveen Chopra: Our Q2 results demonstrate strong execution, continued evolution of our distribution and monetization strategies, and the ongoing power of our creative engine. Financially speaking, this translated to 43% growth in adjusted OEBDA, reflecting a significant improvement in our D2C business, which is delivering healthy top-line growth and improved operating margins. Additionally, balance sheet leverage improved by one-third of a turn since the end of Q1. As always, you'll find a comprehensive review of Q2 results in our press release. So today, I'm going to focus on a few areas of note.

Naveen: Thank you, George, and good afternoon, everyone. Our Q2 results demonstrate strong execution, continued evolution of our distribution and monetization strategies, and the ongoing power of our creative engines.

Naveen: Financially speaking, this translated to 43 percent growth and adjusted orbit a reflecting significant improvement in our D to C business, which is delivering healthy top-line growth and improved operating margin.

George Cheeks: The next season's Primetime schedule on CBS is one of the strongest I've seen. In addition to 16 returning series, the new shows will include a spin-off of Young Sheldon, the number one comedy on TV, a contemporary reimagining of the classic series Matlock, and a new addition to the NCIS universe.

Speaker Change: Additionally, balance sheet leverage improved by one third of a turn since the end of Q1.

Speaker Change: As always, you'll find a comprehensive review of Q2 results in our press release, so today I'm going to focus on a few areas of note.

Naveen Chopra: First Advertising. In Q2, direct-to-consumer advertising grew 16%, benefiting from increased viewing hours across Paramount Plus and Pluto TV, along with higher CPM. In TV media, overall domestic advertising trends were negatively impacted by the fact that sports comprised a smaller share of inventory than in recent quarters. This dynamic somewhat masks the fact that year-over-year growth in non-sports domestic advertising improved relative to Q1. On a total company basis, advertising declined 6% in the quarter.

George Cheeks: And coming soon to movie theaters, we're releasing the first animated Transformers film in nearly 40 years, starring voice cast Chris Hemsworth and Scarlett Johansson. That's followed by Smile 2, the sequel to one of the most profitable films in the studio's history. In November, Sir Really Scott returns to the arena with the highly anticipated Gladiator 2, which just saw its first trailer become one of the most viewed ever for Paramount. Then we'll finish the year with Sonic the Hedgehog 3.

Speaker Change: First, advertising. In Q2, direct-to-consumer advertising grew 16%, benefiting from increased viewing hours across Paramount Plus and Pluto TV, along with higher CPMs.

Speaker Change: In TV media, overall domestic advertising trends were negatively impacted by the fact that sports comprised a smaller share of inventory than it has in recent quarters.

Speaker Change: This dynamic somewhat masks the fact that year-over-year growth in non-sports domestic advertising improved relative to Q1.

George Cheeks: If we really want to underscore our commitment to operating the business with best in class content at the center, we'll continue to deliver millions of fans around the world. We've got the best creators in the business, and we're incredibly grateful for their contributions.

Speaker Change: On a total company basis, advertising declined 6% in the quarter.

Naveen Chopra: Looking ahead, we expect D to C advertising growth in Q3 to be similar to Q2. And linearly, we expect advertising trends in the second half of 24 to improve with the return of live sports, new fall programming, and contribution from political spend. Next, let me turn to affiliate and subscription revenue, which grew 1% in Q2. As a reminder, last year's second quarter included a Showtime pay-per-view event that did not take place this year due to our exit from Showtime Sports at the end of 2023. This comparison reduced the Q2 growth rate by 250 basis points.

Speaker Change: Looking ahead, we expect D-to-C advertising growth in Q3 to be similar to Q2, and in linear, we expect advertising trends in the second half of 24 to improve with the return of live sports, new fall programming, and contribution from political spend.

Naveen Chopra: Thanks so much for joining us today, and with that, I'll turn it over to Naveen. Thank you George and good afternoon everyone. Our Q2 results demonstrate strong execution, continued evolution of our distribution and monetization strategies, and the ongoing power of our creative engines.

Speaker Change: Next, let me turn to affiliate and subscription revenue, which grew 1% in Q2.

Naveen Chopra: Financially speaking, this translated to 43% growth in adjusted oivida, reflecting significant improvement in our D2C business, which is delivering healthy top line growth and improved operating margin. Additionally, balance sheet leverage improved by one-third of a turn since the end of Q1.

Speaker Change: As a reminder, last year's second quarter included a Showtime pay-per-view event that did not take place this year due to our exit from Showtime Sports at the end of 2023. This comparison reduced the Q2 growth rate by 250 basis points.

Naveen Chopra: D2C subscription revenue grew 12% in the quarter, with Paramount Plus subscription revenue up 50% year over year. Paramount Plus finished the quarter with 68.4 million subscribers, which is 2.8 million lower than the end of Q1. Two factors impacted subscriber growth this quarter, both of which were built into our expectations for the full year. The biggest factor by far was the planned exit of our hard bundle partnership with TVing in South Korea, which contributed a sizable number of subscribers but limited revenue in OEBDA. Second, domestic sub-growth, though still positive, was hindered by elevated churn from the cohort of subscribers that joined for the Super Bowl in Q1.

Speaker Change: D2C subscription revenue grew 12% in the quarter, with Paramount Plus subscription revenue up 50% year-over-year.

Naveen Chopra: As always, you'll find a comprehensive review of Q2 results in our press release, so today I'm going to focus on a few areas of note. First, advertising. In Q2, direct-to-consumer advertising grew 16%, benefiting from increased viewing hours across Paramount Plus and Pluto TV, along with higher CPMs. In TV media, overall domestic advertising trends were negatively impacted by the fact that sports comprise a smaller share of inventory than it has in recent quarters.

Speaker Change: Paramount Plus finished the quarter with 68.4 million subscribers, which is 2.8 million lower than the end of Q1. Now, two factors impacted subscriber growth this quarter, both of which were built into our expectations for the full year.

Speaker Change: The biggest factor by far was the planned exit of our hard bundle partnership with TVING in South Korea, which contributed a sizable number of subs but limited revenue in OEBDA.

Speaker Change: Second, domestic sub-growth, though still positive, was hindered by elevated churn from the cohort of subscribers that joined for the Super Bowl in Q1.

Naveen Chopra: This dynamic somewhat massed the fact that year-to-year growth in non-sports domestic advertising improved relative to Q1. On a total company basis, advertising declined 6% in the quarter. Looking ahead, we expect D2C advertising growth in Q3 to be similar to Q2.

Naveen Chopra: And we expect Paramount Plus to return to net subscriber growth in the second half of the year, as we benefit from a more consistent cadence of original content now that we're beyond the impacts of the strike. We also expect normalized international subscriber growth for the remainder of the year. Paramount Plus Global ARPU expanded 26% in the quarter, reflecting the impact of the price increase that took effect in Q3 of 2023, as well as a shift in the mix of our international subscriber base to higher ARPU markets.

Speaker Change: And we expect Paramount Plus to return to net subscriber growth in the second half of the year, as we benefit from a more consistent cadence of original content now that we're beyond the impacts of the strike.

Naveen Chopra: And in linear, we expect advertising trends in the second half 24 to improve with the return of live sports, new fall programming, and contribution from political spend.

Speaker Change: We also expect normalized international subscriber growth for the remainder of the year.

Speaker Change: Paramount Plus Global ARPU expanded 26% in the quarter, reflecting the impact of the price increase that took effect in Q3 of 2023, as well as a shift in the mix of our international subscriber base to higher ARPU markets.

Naveen Chopra: Next, let me turn to affiliate and subscription revenue, which grew 1% in Q2. As a reminder, last year's second quarter included a showtime pay-per-view event that did not take place this year due to our exit from showtime sports at the end of 2023. This comparison reduced the Q2 growth rate by 250 basis points. Data C subscription revenue grew 12% in the quarter, with Paramount Plus subscription revenue up 50% year over year.

Naveen Chopra: And, as we announced in June, a subsequent domestic price increase will take effect later this month. Monthly pricing for new Paramount Plus customers on our ad-supported tier will move to $7.99, while existing customers will be grandfathered at the current $5.99 price.

Speaker Change: And as we announced in June , a subsequent domestic price increase will take effect later this month.

Speaker Change: Monthly pricing for new Paramount Plus customers on our ad-supported tier will move to $7.99. Existing customers will be grandfathered at the current $5.99 price.

Naveen Chopra: Paramount Plus finished the quarter with 68.4 million subscribers, which is 2.8 million lower than the end of Q1. At two factors impacted subscriber growth this quarter, both of which were built into our expectations for the full year. The biggest factor by far was the planned exit of our heart bundle partnership with Teaving in South Korea, which contributed a sizeable number of subs, but limited revenue in Oibida. Second, domestic subgrowth, though still positive, was hindered by elevated churn from the cohort or subscribers that joined for the Super Bowl in Q1.

Naveen Chopra: Monthly pricing on our Paramount Plus with Showtime tier will increase by $1 to $12.99 for both new and existing customers. However, we don't expect a meaningful financial impact from the new price increase until Q4, given the time required to implement the price changes across our distribution channels and because the price increase on the ad-supported tier only applies to new customers. In the TV media segment, affiliate revenue declined 5% year over year, largely reflecting ecosystem trends.

Speaker Change: Monthly pricing on our Paramount Plus which showtime tier will increase by $1 to $12.99 for both new and existing customers.

Speaker Change: We don't expect a meaningful financial impact from the new price increase until Q4, given the time required to implement the price changes across our distribution channels, and because the price increase on the ad-supported tier only applies to new customers.

Speaker Change: In the TV media segment, affiliate revenue declined 5% year of a year, largely reflecting ecosystem trends.

Naveen Chopra: Recognizing ongoing changes in the pay-to-be ecosystem, in Q2, we announced an important multi-year distribution agreement with Charter, which seeks to modernize our long-standing relationship. Starting in Q3, Charter will be the first U.S. MVPD to make the ad-supported tier of Paramount Plus available to basic cable subscribers with no incremental cost to the consumer. Accordingly, users who activate a Paramount Plus essential subscription through an MVPD bundle will be counted as Paramount Plus subscribers, and the revenue from the Charter and future MVPD distribution deals that bundle Paramount Plus will be shared between our TV media and D2C sectors.

Speaker Change: Recognizing ongoing changes in the pay TV ecosystem, in Q2 we announced an important multi-year distribution agreement with Charter, which seeks to modernize our long-standing relationship.

Naveen Chopra: And we expect Paramount Plus to return to net subscriber growth in the second half of the year. As we benefit from a more consistent cadence of original content, now that we're beyond the impacts of the strike, we also expect normalized international subscriber growth for the remainder of the year. Paramount Plus global RPU expanded 26% in the quarter, reflecting the impact of the price increase that took effect in Q3 of 2023, as well as a shift in the mix of our international subscriber base to higher RPU markets.

Speaker Change: Starting in Q3, Charter will be the first U.S. MVPD to make the ad-supported tier of Paramount Plus available to basic cable subscribers with no incremental cost to the consumer.

Speaker Change: Accordingly, users who activate a Paramount Plus essential subscription through an MVPD bundle will be counted as Paramount Plus subscribers.

Naveen Chopra: And as we announced in June, a subsequent domestic price increase will take effect later this month. Monthly pricing for new Paramount Plus customers on our ad-supported tier will move to $7.99. Existing customers will be grandfathered at the current $5.99 price. Monthly pricing on our Paramount Plus with showtime tier will increase by $1 to $12.99 for both new and existing customers.

Speaker Change: and the revenue from charter and future MVPD distribution deals that bundle paramount plus will be shared between our TV media and data C-Sex.

Naveen Chopra: We believe this type of bundle is an efficient way to grow Paramount+ and can yield many of the same benefits we've experienced in the international markets where we've adopted a similar approach. These bundles ensure that Paramount and our distributors are full participants in the transition of viewing from linear to streaming. Looking ahead to Q3, we expect TV media affiliate revenue growth to decelerate modestly relative to Q2, reflecting the dynamics I just mentioned and the impact of exiting Showtime Sports. Next, I'll touch on licensing.

Speaker Change: We believe this type of bundle is an efficient way to grow Paramount Plus and can yield many of the same benefits we've experienced in the international markets where we've adopted a similar approach.

Speaker Change: These bundles ensure that Paramount and our distributors are full participants in the transition of viewing from linear to streaming.

Naveen Chopra: We don't expect a meaningful financial impact from the new price increase until Q4, given the time required to implement the price changes across our distribution channels, and because the price increase on the ad-supported tier only applies to new customers.

Speaker Change: Looking ahead to Q3, we expect TV media affiliate revenue growth to decelerate modestly relative to Q2, reflecting the dynamics I just mentioned and the impact of exiting Showtime Sports.

Naveen Chopra: Our licensing and other revenue declined 35%. As I've noted previously, licensing revenue growth tends to be bumpy due to the timing of deliveries. And that continued to be the case in Q2, as there were fewer deliveries in the period relative to Q2 of 2023. For example, Q2 of last year included delivery of the final season of Jack Ryan. The quarter was also impacted by a lower volume of licensing in the secondary market.

Naveen Chopra: In the TV media segment, affiliate revenue declined 5% year by year, largely reflecting ecosystem trends. Recognizing ongoing changes in the pay TV ecosystem, in Q2, we announced the important multi-year distribution agreement with Charter, which seeks to modernize our longstanding relationship. Starting in Q3, Charter will be the first U.S. MVPD to make the ad-supported tier of Paramount Plus available to basic cable subscribers with no incremental cost to the consumer. Accordingly, users who activate a Paramount Plus essential subscription through an MVPD bundle will be counted as Paramount Plus subscribers, and the revenue from Charter and future MVPD distribution deals that bundle Paramount Plus will be shared between our TV media and D to C segments.

Speaker Change: Next, I'll touch on licensing.

Speaker Change: Our licensing and other revenue declined 35%.

Speaker Change: As I've noted previously, licensing revenue growth tends to be bumpy due to the timing of deliveries.

Speaker Change: And that continued to be the case in Q2, as there were fewer deliveries in the period relative to Q2 of 2023. For example, Q2 of last year included delivery of the final season of Jack Ryan.

Speaker Change: The quarter was also impacted by a lower volume of licensing in the secondary market.

Naveen Chopra: And we expect licensing revenue to return to growth in the second half of the year, particularly with the return of a new fall slate on CBS in Q4, although we do expect a modest decline in licensing revenue for the full year. In parallel with our efforts to maximize revenue, we're also highly focused on unlocking incremental cost savings. And as you've heard Chris, George, and Bryan describe, we've identified opportunities to streamline the organization that are expected to yield $500 million of annualized cost reduction. Importantly, this $500 million is included in the $2 billion of cost efficiencies identified by Skydance. And we're aligned in moving quickly to realize them.

Speaker Change: And we expect licensing revenue to return to growth in the second half of the year, particularly with the return of a new fall slate on CBS in Q4, although we do expect a modest decline in licensing revenue for the full year.

Speaker Change: In parallel with our efforts to maximize revenue, we're also highly focused on unlocking incremental cost savings.

Speaker Change: And as you've heard Chris, George, and Bryan describe, we've identified opportunities to streamline the organization that are expected to yield $500 million of annualized cost reductions.

Naveen Chopra: We believe this type of bundle is an efficient way to grow Paramount Plus, and can yield many of the same benefits we've experienced in the international markets where we've adopted a similar approach. These bundles ensure that Paramount and our distributors are full participants in the transition of viewing from linear to string.

Speaker Change: Importantly, this $500 million is included in the $2 billion of cost efficiencies identified by Skydance, and we're aligned in moving quickly to realize them.

Naveen Chopra: Gaming. Looking ahead to Q3, we expect TV media affiliate revenue growth to decelerate modestly relative to Q2, reflecting the dynamics I just mentioned and the impact of exiting showtime sports.

Naveen Chopra: We expect to execute these actions in the coming weeks such that we can reach the full $500 million run rate expense reduction as we enter 2025. And in connection with these actions, we expect to incur a restructuring charge of approximately $300-$400 million in Q3, the cash impact of which will occur over the next several quarters. The last part of our Q2 results I want to address is the goodwill impairment charge recorded in the quarter.

Speaker Change: We expect to execute these actions in the coming weeks, such that we can reach the full $500 million run rate expense reduction as we enter 2025.

Speaker Change: And in connection with these actions, we expect to incur a restructuring charge of approximately $300-400 million in Q3, the cash impact of which will occur over the next several quarters.

Naveen Chopra: Next, I'll touch on licensing. Our licensing and other revenue declined 35%. As I've noted previously, licensing revenue growth tends to be bumpy due to the timing of deliveries. And that continued to be the case in Q2, as there were fewer deliveries in the period relative to Q2 of 2023. For example, Q2 last year included delivery of the final season of Jack Ryan. The quarter was also impacted by a lower volume of licensing in the secondary market.

Speaker Change: The last part of our Q2 results I want to address is the goodwill impairment charge recorded in the quarter.

Naveen Chopra: During Q2, we assessed the relevant factors that could impact the fair value of our reporting units, including the estimated total company market value indicated by the Skydance transactions and recent indicators in the linear affiliate marketplace. As a result, we recorded a $6 billion non-cash goodwill impairment charge for our cable networks reporting unit at TV Media.

Speaker Change: During Q2, we assessed the relevant factors that could impact the fair value of our reporting units, including the estimated total company market value indicated by the Skydance transactions and recent indicators in the Linear Affiliate Marketplace.

Naveen Chopra: And we expect licensing revenue to return to growth in the second half of the year, particularly with a return of a new fall slate on CBS in Q4, although we do expect a modest decline in licensing revenue for the full year. In parallel with our efforts to maximize revenue, we're also highly focused on unlocking incremental cost savings. And as you've heard, Chris, George, and Brian describe, we've identified opportunities to streamline the organization that are expected to yield 500 million of annualized cost reductions.

Speaker Change: As a result, we recorded a $6 billion non-cash, goodwill impairment charge for our cable networks reporting unit at TV Media.

Naveen Chopra: Now, before moving on to questions, I'd like to share some additional information regarding our expectations for the remainder of the year. Our D2C segment was profitable this quarter, our first profitable quarter since Paramount Plus launched three and a half years ago. And although the segment will generate losses in Q3 and Q4 due to the timing of content expenses, we're on course to achieve Paramount Plus domestic profitability in 2025. And for the full year 2024, the progress in D2C profitability means we continue to expect significant growth in total company OEBDA, and Free Cash Flow will grow relative to 2023.

Speaker Change: Now, before moving on to questions, I'd like to share some additional information regarding our expectations for the remainder of the year. Our D to C segment was profitable this quarter, our first profitable quarter since Paramount Plus launched three and a half years ago.

Speaker Change: And although the segment will generate losses in Q3 and Q4 due to the timing of content expenses, we're on course to achieve Paramount Plus domestic profitability in 2025.

Naveen Chopra: Importantly, this 500 million is included in the 2 billion of cost efficiencies identified by Skydance. And we're aligned in moving quickly to realize them. We expect to execute these actions in the coming weeks, such that we can reach the full $500 million run rate expense reduction as we enter 2025.

Speaker Change: and for the full year 2024, the progress in D to C profitability means we continue to expect significant growth in total company oil today.

Naveen Chopra: And in connection with these actions, we expect to incur a restructuring charge of approximately three to 400 million in Q3, the cash impact of which will occur over the next several quarters.

Speaker Change: and free cash flow will grow relative to 2023.

Naveen Chopra: We continue to operate in a dynamic environment, but it's clear that our focus on execution is producing results. We're not standing still during this interim period before the transaction closes. We remain focused on achieving our goals for 2024, which means investing in key content assets, finding expense efficiencies, improving profitability, deepening partnerships, and deleveraging our balance sheet. We believe this approach will create value for shareholders over the long term. With that, Operator, please open the line for questions.

Speaker Change: We continue to operate in a dynamic environment, but it's clear that our focus on execution is producing results.

Speaker Change: We're not standing still during this interim period before the transaction closes. We remain focused on achieving our goals for 2024, which means investing in key content assets, finding expensive efficiencies, improving profitability, deepening partnerships, and delivering our balance sheet.

Naveen Chopra: The last part of our Q2 results I want to address is the goodwill and payment charge recorded in the quarter. During Q2, we assess the relevant factors that could impact the fair value of our reporting units, including the estimated total company market value indicated by the Skydance transactions and recent indicators in the linear affiliate marketplace.

Speaker Change: We believe this approach will create value for shareholders over the long term.

Speaker Change: With that, Operator, please open the line for questions.

Felicia: Thank you. The first question comes from Michael Morris from Guggenheim. Your line is open, please go ahead.

Speaker Change: Thank you. The first question comes from Michael Morris from Guggenheim. Your line is open, please go ahead.

Naveen Chopra: As a result, we recorded a $6 billion non-cash goodwill impairment charge for our cable networks reporting unit at TV media.

Michael Morris: Thank you. Good afternoon.

Michael Morris: I wanted to follow up first on Brian's comments about operating the business during the period between now and when the Skydance transaction will close. How are you ensuring that these steps that you're taking on things like strategic partnerships that you reference, how are you making sure that those are aligned with the long-term goals after that transaction is completed? Is Skydance involved in these things during the interim period? And then also, how do you keep the teams motivated when there's some uncertainty about what the future may hold for the business?

Speaker Change: [inaudible]

Michael Morris: Thank you, good afternoon. I wanted to follow up first on Brian's comments.

Naveen Chopra: Now, before moving on to questions, I'd like to share some additional information regarding our expectations for the remainder of the year. Our D to C segment was profitable this quarter. Our first profitable quarter since Paramount Plus launched three and a half years ago. And although the segment will generate losses in Q3 and Q4 due to the timing of content expenses, we're on course to achieve Paramount Plus domestic profitability in 2025. And for the full year 2024, the progress in D to C profitability means we continue to expect significant growth in total company, Oyveda.

Speaker Change: about operating the business during the period between now and when the Skydance transaction will close.

Michael Morris: How are you ensuring that these steps that you're taking on things like strategic partnerships that you reference, how are you making sure that those are aligned with the long-term goals after that transaction is completed?

Speaker Change: Is Skydance involved in these things during the interim period?

Speaker Change: and then also, how do you keep the team's motivated when there's some uncertainty about?

Speaker Change: and what the future may hold for the business.

Michael Morris: So that's my first question. And then maybe for Naveen, on the Goodwill charge, you noted that recent indicators in the linear affiliate marketplace were part of what triggered that. Can you expand on that at all? What were the recent indicators? Did it have to do with the charter agreement? And given that cord cutting has been going on for quite a while, why was now the time that it was triggered beyond just the transaction, as you mentioned? Thank you.

Speaker Change: So that's my first question. And then maybe for Naveen, on the goodwill charge, you noted the recent indicators in the linear affiliate marketplace.

Naveen Chopra: And free cash flow will grow relative to 2023. We continue to operate in a dynamic environment, but it's clear that our focus on execution is producing results. We're not standing still during this interim period before the transaction closes. We remain focused on achieving our goals for 2024, which means investing in key content assets, finding expensive efficiencies, improving profitability, deepening partnerships, and de-leveraging our balance sheet.

Speaker Change: We're part of what trigger that. Can you expand on that at all? What were the recent indicators? Did it have to do with the charter agreement? And you know, given the court cutting thing going on for quite a while, why was now the time that that was triggered beyond just the transaction as you mentioned? Thank you.

Brian Robbins: Sure, Mike. This is Bryan.

Speaker Change: This is Brian, I'll jump in first.

Speaker Change: As I said in the prepared remarks,

Naveen Chopra: We believe this approach will create value for shareholders over the one-term.

Speaker Change: Skydance is very supportive of our strategic plan, it's business as usual for us.

Felicia Norby: Would that operator please open the line for questions? Thank you.

Brian Robbins: I'll jump in first. As I said in the prepared remarks, Skydance is very supportive of our strategic plan. It's business as usual for us, and we continue to greenlight projects in the normal course of business. Now, in terms of Skydance's involvement, it is what you would expect in any M&A transaction. There are very specific, limited things that we will consult with them on.

Michael Morris: and we continue to green light projects in the normal course of business.

Michael Morris: The first question comes from Michael Morris from Guggenheim. Your line is open. Please go ahead. Thank you. Good afternoon. I wanted to follow up first on Bryan's comments about operating the business during the period between now and when the skydance transaction will close. How are you ensuring that these steps that you're taking on things like strategic partnerships that you reference? How are you making sure that those are aligned with the long-term goals after that transaction is completed? Is skydance involved in these things during the interim period? And then also, how do you keep the teams motivated when there's some uncertainty about what the future may hold for the business?

Speaker Change: Now, in terms of Skydance involvement, it is what you would expect in any M&A transaction.

Speaker Change: There are very specific limited things that we will consult with them on.

Brian Robbins: But to the second part of your question, we are just aggressively advancing our strategic plan with our teams. We've talked during the prepared remarks about our actions to streamline the organization, our focus on exploring partnerships as we transform Paramount Plus for the future, and the ongoing discussions to optimize our asset mix. And we believe our plan will create value for shareholders over the long term. Thanks, Bryan. And so, Mike, let me...

Speaker Change: But to the second part of your question, we are just aggressively advancing our strategic plan with our teams.

Speaker Change: We've talked during the prepare remarks about our actions to streamline the organization, our focus on exploring partnerships as we transform our Mount Plus for the future, and beyond going discussions to optimize our asset mix.

Speaker Change: We believe our plan will create value for shareholders over the long term.

Brian Robbins: That's my first question. Maybe for Navine, on the Goodwill Charge, you noted the recent indicators in the linear affiliate marketplace were part of what triggered that. Can you expand on that at all? What were the recent indicators that it had to do with the charter agreement? And given the court cutting has been going on for quite a while, why was now the time that that was triggered beyond just the transaction as you mentioned?

Michael Morris: Thanks, Bryan. And so, Mike, let me...

Naveen Chopra: Responding to your question on the Goodwill impairment charge, there are really a couple of things going on there. So first, obviously, linear declines are part of the analysis here. But the other part of this is that really drives the magnitude of the goodwill impairment charge is the value that's implied by the Skydance transaction. Because the way the accounting works on this is we need to reconcile the value of our individual reporting with the enterprise value for the entire company that's implied by the transaction. So it's really the combination of those things. And you know, what that results in is the, you know, basically $6 billion non-cash goodwill impairment charge that is specific to our cable network reporting.

Mike: Respond to your question on the goodwill in Permanent Charge. There's really a couple things going on there.

Speaker Change: So, first, obviously, linear declines are part of the analysis here, but the other part of this is that it really drives the magnitude of the goodwill impairment charge.

Speaker Change: is the value that's implied by the Skydion's transaction, because the way the accounting works on this is we need to reconcile the value of our individual reporting unit.

Brian Robbins: Thank you. Sure, Mike. This is Bryan. I'll jump in first. As I said in the prepared remarks, skydance is very supportive of our strategic plan. It's business as usual for us and we continue to green light projects in the normal course of business. Now, in terms of skydance involvement, it is what you would expect in any M&A transaction. There are very specific limited things that we will consult with them on. But to the second part of your question, we are just aggressively advancing our strategic plan with our teams.

Speaker Change: with the enterprise value for the entire company that's implied by the transaction.

Speaker Change: So it's really the combination of those things and, you know, what that results in is the, you know, basically $6 billion non-cash goodwill impairment charge that is specific to our cable network reporting unit.

Brian Robbins: We talked during the prepared remarks about our actions to streamline the organization, our focus on exploring partnerships as we transform Paramount Plus for the future and the ongoing discussions to optimize our asset mix. And we believe our plan will create value for shareholders over the long term.

Speaker Change: Thanks, Mike. Operator, next question, please.

Felicia: The next question comes from Robert Fishman from Moffett Naterson. Please go ahead; your line is open.

Speaker Change: An ex-question comes from Robert Fishman from Moffat, Naveen, please go ahead, your line is open

Felicia: Good afternoon, everyone. Anything more that you can share on how you're approaching exploring the licensing of Paramount Plus content, maybe just originals or just broadly speaking? Or are you evaluating that licensing in the context of the other JV structures that you were talking to? And then, on a separate note, just trying to understand any updated thoughts or how you guys are thinking about using premium sports as part of Paramount Plus, and whether or not the charter deal or future distribution agreements that include Paramount Plus will influence those strategies, given the importance that NFL and other content is to the exclusive within the pay-to-view ecosystem. Thank you. Hey, Robert, it's Chris.

Robert Fishman: Good afternoon everyone. Anything more that you all can share on how you're approaching exploring the licensing of Paramount Plus?

Robert Fishman: content, maybe just originals or just broadly speaking? Or are you evaluating that licensing in the context of the other JV structures that you were talking to? And then on a separate note,

Naveen Chopra: Thanks, Bryan.

Naveen Chopra: And so, Mike, let me respond to your question on the Goodwill in Paramount Charge. There's really a couple of things going on there. So, first, obviously, linear declines are part of the analysis here. But the other part of this is that that really drives the magnitude of the Goodwill in Paramount Charge is the value that's implied by the skydance transaction. Because the way the accounting works on this is we need to reconcile the value of our individual Unit with the enterprise value for the entire company that's implied by the transaction. So it's really the combination of those things. And, you know, what that results in is the, you know, basically $6 billion non cash, goodwill impairment charge that is specific to our cable network reporting unit.

Speaker Change: Just trying to understand any updated thoughts or how you guys are thinking about using premium sports.

Michael Morris: Thanks, Mike.

Felicia Norby: Operator, next question, please.

Speaker Change: as part of Paramount Plus, and whether or not the charter deal or future distribution agreements that include Paramount Plus influence those strategies given the importance that NFL and other content is to the exclusive within the pay TV ecosystem. Thank you.

Chris Mccarthy: Hey, Robert, it's Chris. I'll take the first half for that. And then I'll pass it to George to talk about sports.

Robert Fishman: Hey Robert, it's Chris. I'll take the first half of that and then I'll pass to George to talk about the sports piece.

Chris Mccarthy: First, let me start by saying we're very pleased with the success that we've had to date with Paramount Plus. It has amassed 68 million global subscribers. And the power of our content, both our originals and our library, is doing the hard work here. It's driving a lot of that, those subscribers and driving our business. Now as we look forward, in 2025, we're on the path to hit domestic profitability, but we think there's an opportunity to accelerate that, both just in the US and globally.

George Cheeks: First, let me start by saying we're very pleased with the success that we've had to date with Paramount+. We've amassed 68 million global subscribers, and the power of our content, both our originals and our library, is doing the hard work here, it's driving a lot of that.

George Cheeks: those subscribers and driving our business. Now, as we look forward in 2025, we're on path to hit domestic profitability.

George Cheeks: But we think there's an opportunity to accelerate that both just in domestic and globally. And so we're looking at a series of opportunities, whether they come in the form of strategic partnerships or joint ventures,

Chris Mccarthy: So we're looking at a series of opportunities, whether they come in the form of strategic partnerships or joint ventures. And really, the benefit here is to get greater scale. It will better improve our content offering, reduce our cost, and drive long-term value, and increase profits both in the short term and in the long term. And we're exploring all these opportunities, and we're going to be very opportunistic about that. So that includes a series of partnerships that could potentially involve some licensing, but we'll also be licensing content in addition to that. Now, I'm going to toss this over to George to talk about sports. Thanks, Chris.

Robert Fishman: The next question. Question comes from Robert Fishman, from Moffat, Nathan, and please go ahead. Your line is open.

Robert Fishman: Good afternoon, everyone. Anything more that you all can share on how you're approaching exploring that the licensing of Paramount Plus content, maybe just originals or just broadly speaking, or are you evaluating that licensing in the context of the other JV structures that you're talking to. And then on a separate note, just trying to understand any updated thoughts or how you guys are thinking about using premium sport as part of Paramount Plus, and whether or not that the charter deal or future distribution agreements that include Paramount Plus influence those strategies given the importance that NFL and other content is to the exclusive within the pay TV ecosystem.

George Cheeks: I'm really the benefit here is to get greater scale, better improve our content offering, reduce our cost and drive long-term value and increase profits both in the short term and the long-term.

George Cheeks: And we're exploring all these opportunities, and we're going to be very opportunistic about that. So, that includes a series of partnerships that could potentially involve some licensing, but we'll also be licensing content in addition to that.

George Cheeks: So let me toss it over to George to talk about...

Chris Mccarthy: So on the sports point, basically, our strategy here and our focus is that broadcast and streaming together drive an unduplicated audience and really resolve linear in streaming growth. So when we look at our sort of sports portfolio, we're looking at it through both lenses because the beauty of this is that we're seeing growth on both sides. For example, last NFL season, NFL and CBS were up 5% year over year, and the streaming audience on Paramount Plus was up more than 50%. So we're seeing growth for our affiliates, and we're seeing growth in streaming.

George Cheeks: Sports. Thanks, Chris. So on the sports point, so basically our strategy here and our focus is that broadcast and streaming together.

George Cheeks: Drive an unduplicated audience and really resolve linear and streaming growth. So when we look at our sort of sports portfolio We're looking at it through both angles because the beauty of this is that we're seeing growth on both sides For example last NFL season

Robert Fishman: Thank you. Hey, Robert. It's Chris. I'll take the first half of that. And then I have passed the George to talk about sports piece. First, let me start by saying we're very pleased with the success that we've had to date with Paramount Plus, the mass 68 million global subscribers. And the power of our content, both our originals and our library is doing the hard work here. It's driving a lot of that.

George Cheeks: NFL on CBS was up 5% year over year, and the streaming audience on Paramount plus is up more than 50%. So we're seeing growth for our affiliates, and we're seeing growth in streaming.

Speaker Change: Thank you for watching, see you in the next video.

Speaker Change: For operator next question, please.

George Cheeks: The next question comes from Ben Swinburne from Morgan Stanley. Please go ahead. Your line is open.

Speaker Change: Next question comes from Ben Swinburne from Morgan Stanley. Please go ahead your line and open.

Robert Fishman: Those subscribers and driving our business. Now, as we look forward in 2025, we're on path to hit domestic profitability. But we think there's an opportunity to accelerate that both just in domestic and globally. And so we're looking at a series of opportunities, whether they come in the form of strategic partnerships or joint ventures. And really, the benefit here is to get greater scale. It better improve our content offering, reduce our cost and drive long term value and increase profits, both in the short term and the long term.

Ben Swinburne: Thank you. Good afternoon, everybody.

Ben Swinburne: Thank you. Good afternoon, everybody. Naveen, could you tell us a little bit about how you're thinking about free cash flow?

Naveen Chopra: Naveen, could you tell us a little bit about how you're thinking about free cash flow for the second half of the year and kind of where you think leverage might end at year end, if you can share that with us? And then I think one of the areas that you guys have talked about kind of re-evaluating or evaluating are your international streaming plans. And I know you mentioned the changes in South Korea, but what's the update there?

Ben Swinburne: second half of the year and kind of where you think leverage might end at year end, to the extent you can share that with us.

Speaker Change: And then I think one of the areas that you guys have talked about kind of reevaluating or evaluating or your international streaming plans that I know you mentioned.

Speaker Change: So few chirps were heard I don't know that the changes in South Korea, but what's the update there? Do you guys see an opportunity to optimize this business outside the United States and maybe improve the profitability or reduce the losses there? Just would be interested in an update on that front as well. Thank you.

Naveen Chopra: Do you guys see an opportunity to kind of optimize this business outside the United States and maybe improve the profitability or reduce the losses there? I would be interested in an update on that front as well. Thanks.

Robert Fishman: And we're exploring all these opportunities. And we're going to be very opportunistic about that. So that includes a series of partnerships that could potentially involve some licensing things, but we'll also be licensing content in addition to that.

Naveen Chopra: Yeah, so Ben, I'll take the first part of your question on cashflow.

Speaker Change: Yeah, so Ben, I'll take the first part of your question on cash flow and then I'll turn it over.

Chris Mccarthy: and then I'll turn it over to Chris to comment on our thoughts on international streaming. I think that the cash flow answer is actually pretty straightforward. You know, we said at the beginning of the year that our plan was to deliver growth in free cash flow in 24 alongside significant growth in OIBDA, adjusted OIBDA, and I continue to see the year playing out that way, so, excuse me, playing out that way. So, no real change to our expectations. Today, we have a global footprint with Paramount+.

Speaker Change: to Chris to comment on our thoughts on international streaming.

Speaker Change: I think the castle answer is actually pretty straightforward, you know, we said at the beginning of the year that our plan was to deliver growth in free castle in 24 alongside significant growth in Odeida, Justin Odeida.

George Cheeks: So when we look at our sort of sports portfolio, we're looking at it through both angles because the beauty of this is that we're seeing growth on both sides. For example, last NFL CPS was up 5% year over year and the streaming audience at Paramount Plus was up more than 50%. So we're seeing growth for our affiliates and we're seeing growth in streaming.

Speaker Change: and I continue to see the year playing out that well. So, excuse me, playing out that way. So, no real change or expectations.

Chris Mccarthy: Today, we have a global footprint with Paramount Plus and Pluto, and moving forward, we expect to have, or we'll plan to have, excuse me, a global footprint. Now, how that footprint looks may change.

Speaker Change: Thanks, I mean, hey, Ben, listen, you know, today we have a global footprint with Paramount Plus.

Speaker Change: and Pluto, and moving forward, we continue, we expect to have, or we'll plan to have, excuse me, a global footprint. Now how that footprint looks may change. We're going to be very opportunistic about exploring all of our options here.

Chris Mccarthy: We're going to be very opportunistic about exploring all of our options here. The overwhelming majority of the economics are going to be driven out of the U.S. market as they are today in the content space, and so we want to take a thoughtful approach about how we look at each market internationally. Now, that could come in the form of strategic partnerships with maybe platforms who already have a great, tremendous amount of reach on their platform, in which case, we'll be reducing our cost by not having to have our own platform, or it could come in the form of a joint venture with one or more S5 players, in which case, we could get greater scale, increase long-term value, and drive greater profits. So we have lots of interest from many different partners in this area, and we're exploring all of that, and we look forward to updating you as we progress.

Ben Twinburn: Next question comes from Ben Twinburn from Morgan Stanley. Please go ahead. Your line is open. Thank you. Good afternoon, everybody.

Speaker Change: You know, the overwhelming majority of the economics are going to be driven out of the

Speaker Change: in the content space. And so we want to be take a thoughtful approach about how we look at each market internationally. Now that can come in the form of strategic partnerships with maybe platforms who already have great tremendous amount of reach and a platform.

Naveen Chopra: Naveen, could you tell us a little bit about how you're thinking about free cash flow, second half of the year and kind of where you think leverage might end at your end because you can share that with us. And then I think one of the areas that you guys have talked about kind of reevaluating or evaluating are your international streaming plans. And I know you mentioned the changes in South Korea. But what's the update there?

Speaker Change: and in which case will be reducing our cough by not having to have our own platform or they could come in the form of a joint venture with one or more S5 players. In which case we could get greater scale and increase long-term value and drive greater profits.

Naveen Chopra: Do you guys see an opportunity to kind of optimize this business outside the United States? And maybe improve the profitability or reduce the losses there just would be interested in an update on that from as well.

Speaker Change: So, we have lots of interest from many different partners in this area, and we're exploring all of that, and we look forward to updating you as we progress.

Chris Mccarthy: Thank you. Yeah, so that I'll take the first part of the question on cash flow and then I'll turn it over to Chris to comment on our thoughts on international streaming. I think that the cash flow answer is actually pretty straightforward. Yeah, we said at the beginning of the year that our plan was to deliver growth in free cash flow in 24 alongside significant growth in Obeda, Justin Obeda. And I continue to see the year playing out that well.

Speaker Change: Thanks, Ben. Operator, next question, please.

Felicia: The next question comes from Rich Greenfield from Light Shed Partners. Please go ahead.

Speaker Change: The next question comes from Rich Greenfield from Light Shed Partners. Please go ahead.

Rich Greenfield: Hi, thanks for taking the questions. I got a couple.

Rich Greenfield: Hi, thanks for taking the questions. I got a couple. First, just from a very high level, I think...

Rich Greenfield: First, just from a very high level, I think you've all talked about the $500 million being inclusive of the $2 billion from Skydance. Skydance is a pretty small company in the scheme of the media world. Could you help us understand what of the $2 billion couldn't you accomplish without Skydance? Meaning, could the $500 million be more like a billion and a half on your own? I am just trying to understand the difference between those two cost-cutting numbers.

Speaker Change: You've all talked about the $500 million being inclusive of the $2 billion from Skydance.

Chris Mccarthy: So excuse me, playing out that way. So no real change for our expectations. Chris, thanks. I mean, hey, Ben, listen, you know, today we have a global footprint with Paramount Plus and Pluto. And moving forward, we continue, we expect to have or we'll plan to have, excuse me, a global footprint. Now how that footprint looks may change. We're going to be very opportunistic about exploring all of our options here. You know, the overwhelming majority of the economics are going to be driven out of the US market as they are today in the in the content space.

Rich Greenfield: Skydance is a pretty small company in the scheme of the media world. Could you help us understand what of the $2 billion couldn't you accomplish without Skydance? Meaning, could the $500 million be more like a billion and a half on your own? Just trying to understand the difference between those two cost-cutting numbers.

Rich Greenfield: And then on the charter agreement that you referenced, you're going to obviously now be giving Paramount Plus. If you actually shift the allocation, meaning if I think about how you account for this between your various divisions, is there now a reduction in how much affiliate revenue is going to the linear networks with a commensurate allocation of dollars to Paramount Plus? I'm just trying to understand as you turn this on for those subscribers.

Speaker Change: and then on the charter agreement that you reference.

Rich Greenfield: Um...

Speaker Change: You're going to obviously now be giving Paramount Plus

Speaker Change: to, you know, I think about nine to 10 million charters video subscribers

Chris Mccarthy: And so we want to be take a thoughtful approach about how we look at each market internationally. Now that could come in the form of strategic partnerships with maybe platforms who already have great tremendous amount of reach and a platform. In which case, we'll be reducing our cost by not having to have our own platform or they could come in the form of a joint venture with one or more as five players in which case we could get greater scale.

Speaker Change: Do you actually shift the allocation, meaning if I think about how you account for this?

Speaker Change: between your various divisions. Is there now a reduction in how much affiliate revenue is going to the linear networks?

Speaker Change: with a commensurate allocation of dollars to Paramount+. I'm just trying to understand as you turn this on.

Rich Greenfield: And then just a housekeeping point, I think you mentioned, is it only charter subs that you activate that are counted? Or does every subscriber get Paramount Plus and is treated as a subscriber on Paramount's books?

Chris Mccarthy: We have increased long-term value and drive greater profits. So we have lots of interest from many different partners in this area and we're exploring all of that and we look forward to updating you as we progress. Thanks, Ben.

Speaker Change: to those subscribers. And then just a housekeeping point, I think you mentioned, is it only charter subs that activate that you get that are counted? Or does every subscriber get Paramount Plus and is treated as a subscriber on Paramount's books? Thanks so much for taking the questions.

Naveen Chopra: Operator, next question, please. The next question comes from Rich Greenfield from Lightshed Partners. Please go ahead. Hi, thanks for taking the questions. I got a couple. First, just from a very high level. I think you've all talked about the 500 million being inclusive of the two billion from Skydance. Skydance is a pretty small company in the scheme of the media world. Could you help us understand what of the two billion couldn't you accomplish without Skydance, meaning could the 500 million be more like a billion and a half on your own?

Rich Greenfield: Thanks so much for taking the time.

Naveen Chopra: Yeah, hi, Rich. It's Naveen.

Richard Smith: Yeah, hi, Richard Smith and I'll try to touch on all of those. So starting with you a question on cost savings, as you pointed out, you know, we're moving forward on 500 million of cost savings.

Speaker Change: But I think it's important to understand that that's sort of step one. We are also working on a variety of other cost reduction plans that are part of our long-term plan.

Richard Smith: Those are significant, they're material, they won't all happen necessarily at the same point in time.

Naveen Chopra: Just trying to understand the difference between those two cost-cutting numbers. And then on the charter agreement that you reference, you're going to obviously now be giving Paramount Plus to, you know, I think about nine to 10 million charters, video subscribers. Do you actually shift the allocation, meaning if I think about how you account for this between your various divisions, is there now a reduction in how much affiliate revenue is going to the linear networks with a commensurate allocation of dollars to Paramount Plus? Unless I'm just trying to understand as you turn this on to those subscribers.

Naveen Chopra: I'll, I'll try to touch on all of those. So starting with your question on cost savings, as you pointed out, we're moving forward on 500 million in cost savings. But I think it's important to understand that that's sort of step one. We are also working on a variety of other cost reduction plans that are part of our long-term plan. Those are significant, they're material, they won't all necessarily happen at the same point in time, and they go beyond headcount.

Richard Smith: and they go beyond headcount.

Richard Smith: You know, we've made most of the $500 million savings that you'll see in the near term is headcount related, but we do think that there are opportunities to significantly reduce cost.

Naveen Chopra: You know, we've made most of the $500 million savings that you'll see in the near term are headcount related, but we do think that there are opportunities to significantly reduce costs in other areas as well. And you know, those plans, I think, have helped inform a number of the ideas that comprise the $2 billion that Skydance has referenced. With respect to your question on the charter deal,

Richard Smith: and other areas as well. And, you know, those plans, I think, have helped inform a number of the ideas that comprise the $2 billion that Skydance has referenced.

Richard Smith: Um...

Richard Smith: with respect to your question on the charter deal.

Naveen Chopra: sort of in reverse order. The way that this works is...

Naveen Chopra: Yes, subscribers who activate that benefit, if you will, meaning they associate their charter account with a set of P plus credentials, those are subs that we will count as Paramount Plus subscribers. And if someone does not activate them, they don't count as a subscriber. And when they do activate, then we start to allocate a certain amount of the fees that we receive from Charter to P plus. What you'll see in our externally reported financials as a result of that is

Speaker Change: sort of in reverse order. The way that this works is, yes, subscribers who activate that, that benefit, if you will, meaning they

Speaker Change: Associates with a set of P Plus credentials. Those are subs that we will count as Paramount Plus subscribers, and if someone does not activate them, they don't count as a sub.

Naveen Chopra: And then just a housekeeping point. I think you mentioned it's only charter sub that activate that you get that that are counted or does every subscriber get Paramount Plus and is treated as a subscriber on Paramount's books. Thanks so much for taking, in the questions. Yeah, hi, Richard Smithine. I'll try to touch on all of those. So starting with your question on cost savings, as you pointed out, we're moving forward on 500 million of cost savings.

Speaker Change: and when they do activate, then we start to allocate a certain amount of the fees that we receive from Charter to P Plus.

Richard Smith: What you'll see in our externally reported financials as a result of that is that the revenue from deals like Charter, where we're providing Paramount Plus credentials in a bundle, will be split or be shared between the TV media segment and the D2C segment.

Naveen Chopra: who contributed to this meeting?

Naveen Chopra: But I think it's important to understand that that's sort of step one. We are also working on a variety of other cost reduction plans that are part of our long term plan. Those are significant. They're material. They won't all happen necessarily at the same point in time. And they go beyond head count. You know, we've made a most of the 500 million savings that you'll see in a near term is head count related.

Naveen Chopra: But we do think that there are opportunities to significantly reduce cost in other areas as well. And, you know, those plans, I think, have helped inform a number of the ideas that comprise the $2 billion that Skydance has referenced. With respect to your question on the charter deal, sort of in reverse order, the way that this works is, yes, subscribers who activate that benefit, if you will, meaning they associate their charter account with a set of P plus credentials, those are subs that we will count as Paramount Plus subscribers.

Speaker Change: Thanks, Rich. Operator, next question.

Felicia: The next question comes from John Hodulik from UBS. Please go ahead. Your line is open.

Speaker Change: The next question comes from John Hodulik from UBS. Please go ahead, your line is open.

John Hodulik: Great, thanks. Just to follow up on Richard's question, just anything you can tell us about, and maybe it doesn't matter anymore, because it's all blended together, but just the linear pricing you got on the charter side of the charter deal. And then I guess from a DTC standpoint, you know, the subscribers have to add to activate for you guys to get paid. But number one, are you guys going to sort of market the service, or what can you do to sort of drive penetration within those charter subbases?

John Hodulik: Thanks, just to follow up to Rich's question, just anything you can tell us about and maybe it doesn't matter anymore, look at this all blended together, but the linear pricing you got on the charter side, on the charter deal, and then...

Speaker Change: I guess.

Speaker Change: from a DTC standpoint, you know, the subscribers have to add to activate for you guys to get to get paid. But number one, are you guys going to sort of

Naveen Chopra: And if someone does not activate, then they don't count as a sub. And when they do activate, then we start to allocate a certain amount of the fees that we receive from charter to P plus. What you'll see in our externally reported financials as a result of that is that the revenue from deals like charter where we're providing Paramount Plus credentials in a bundle will be split or be shared between the TV media segment and the D to C segment. Thanks, Rich.

Speaker Change: Market to Service, or what can you do to sort of drive penetration within those charter sub-bates? And then do they, is there a engagement or sort of consumption issue as well? Once they activate once, then you sort of get paid going forward. Just any color, I'm just trying to get a sense of...

John Hodulik: And then do they have an engagement or sort of consumption issue as well? Is it once they activate once, then you sort of get paid going forward? Any color. I'm just trying to get a sense of really what the overall economics of that deal are. Thanks.

Speaker Change: with the overall economics of that U.R.

Naveen Chopra: Yeah, sure, John. It's Naveen again. Let me try it.

Speaker Change: Thanks.

Naveen Chopra: I'm going to clarify that a little bit.

Naveen: Yeah, sure, John . It's Naveen again. Let me try to clarify that a little bit. I think it may be helpful to remember that the way that we structure our deals with distributors, and I'm not going to get into any specific deal.

Naveen: is with a focus on total company economics, you know, that used to be largely about cable and broadcasts in premium linear networks. Now it includes all of those things plus obviously paramount plus.

Naveen: and so independent of how those things may be delineated for contractual purposes, for our financial reporting, we allocate those fees between, as I said earlier, our TV media segment and our D to C segment.

Naveen Chopra: Intern International, Bob Collins, Anna Jacobs, and Beau Vos So the revenue that we receive is not contingent on whether or not

Naveen Chopra: Operator, next question. The next question comes from John Hodelick from UBS. Please go ahead. Your line is open. Great. Thanks. Just to follow up to Rich's question. Anything you can tell us about, and maybe it doesn't matter anymore, look at this all blended together, but the linear pricing you got on the charter side on the charter deal. And then I guess from a D to C standpoint, the subscribers have to activate for you guys to get paid.

Naveen: So, the revenue that we receive is not contingent on whether somebody activates or not. It's all part of the overall economics of our arrangement with the distributor.

unknown: Podcast Does this show transfer 1-1, meaning you don't have to watch the previous one? Answer these 5 questions and you might even win a $1000 cash prize! Let us know who won, and you may guess the winning user in the comments. Thanks for watching. Please like this video and subscribe.

Naveen Chopra: of the overall economics of our arrangement with the distributors.

Naveen: Thanks, John, operator next question.

Felicia: The next question comes from Steven Cahall from Wells Fargo. Please go ahead.

Speaker Change: The next question comes from Stephen K. Hall from Wells Fargo, please go ahead.

Naveen Chopra: But number one, are you guys going to sort of market the service, or what can you do to sort of drive penetration within those charter sub-bases? And then do they, is there an engagement or sort of consumption issue as well? Once they activate once, then you sort of get paid going forward. Just any color, I'm just trying to get a sense of what the overall economic to that deal are. Thanks.

Steven Cahall: Thanks. So, Naveen, just a few more on Paramount Plus profitability. Can you talk about the value of content that you expect on Paramount Plus this year from an amortization perspective, especially as you move into the back half of the year when it's a little heavier? And with the guidance you have for next year, how much do you think that content value is going to grow in 2025? And just a housekeeping one on it: you said you'd be profitable for Paramount Plus in 2025. Is that different from 425, as in a positive number for the full year?

Speaker Change: Thanks, so Naveen, just a few more on Paramount Plus profitability, can you talk about the value of content that you expect on Paramount Plus this year from an amortization perspective.

Speaker Change: Specially as you move into the back half of the year when it's a little heavier, and with the guidance you have for next year, how much do you think that content value is going to grow in 25?

Naveen Chopra: Yeah, sure, John. Let me try to clarify that a little bit. I think it may be helpful to remember that the way that we structure our deals with distributors, and I'm not going to get into any specific deal, is with a focus on total company economics. You know, that used to be largely about cable and broadcast and premium linear networks. Now it includes all of those things plus, obviously paramount plus. House.

Speaker Change: and just a housekeeping one on it, you said you'll be profitable for paramount plus.

Speaker Change: In 2025, is that different from 425 as in a positive number for the full year?

Steven Cahall: And then also, George, some out there have been indicating that reverse comp fees should really start to moderate or even decline because of the shift to streaming with things like Paramount Plus. What do you think about those station affiliate relationships and what their fair cost is for CBS national programming? I think a lot of TV station margins are a lot higher than the CBS network's margins, so I'm just wondering about what you think is a fair way to share those economics, especially as the company's entering into this cost-cutting and more cash-generative mode that you all talked about. Thank you.

Speaker Change: and then also George CBS Affiliate, some out there have been indicating that reverse comp fees should really start to moderate or even decline.

Speaker Change: because of the shift of streaming with things like Paramount Plus.

Speaker Change: How do you think about those station-affiliate relationships and what their fair cost is of CBS national programming? I think a lot of TV station margins are a lot higher than the CBS network's margins, so I'm just wondering about what you think is a fair way to share those economics, especially as the company's entering into this cost-cutting and more cash-generative mode that you all talked about. Thank you.

Naveen Chopra: And so independent of how those things may be delineated for contractual purposes, for our financial reporting, we allocate those seeds between, as I said earlier, our TV media segment and our D to C segment. So, the revenue that we receive is not contingent on whether somebody activates or not. It's all part of the overall economics of our arrangement with the distributor. Thanks, John, operator, next question.

Naveen Chopra: Yeah, hey, Steve. It's Naveen.

Speaker Change: Yeah, hey Steve, it's Naveen. I'll start on the first part and then hand it to George to address the second part.

Naveen Chopra: I'll start on the first part and then hand it to George to address.

Speaker Change: So, in terms of content expense on Paramount+, a few things to keep in mind. So, number one,

Naveen Chopra: Second part. So in terms of content expense on Paramount Plus, there are a few things to keep in mind. So number one, obviously 2024 is going to look sort of different on a year over year basis relative to 23, just given that it was a highly strike-impacted year in 23. We're going to have more content in the back half of 24 than we did last year. Also remember that our content has seasonality. So one of the reasons that Paramount Plus was profitable, excuse me, the D2C segment was profitable in Q2 was because it was a lighter quarter in terms of content.

Speaker Change: Obviously, 2024 is going to look sort of different on a year-over-year basis relative to 2023, just given that it was a highly strike-impacted year in 2023, we're going to have more content in the back half of 2024 than we did last year.

Steven Cahall: The next question comes from Steven Cahall from Wells Fargo. Please go ahead. Thanks. So, Naveen, just a few more on Paramount Plus profitability. Can you talk about the value of content that you expect on Paramount Plus this year from an amortization perspective, especially as you move into the back after the year when it's a little heavier. And with the guidance you have for next year, how much do you think that content value is going to grow in 25?

Speaker Change: Also remember that there is seasonality in our content expense.

Speaker Change: So, one of the reasons that Paramount Plus was profitable, excuse me, the D2C segment was profitable in Q2 was because it was a lighter quarter in terms of content, in particular we don't have as much sports expense in the quarter as we do in the back half of the year.

Naveen Chopra: In particular, we don't have as much sports expenditure in the quarter as we do in the back half of the year. And that, frankly, is one of the reasons why the main goal...

Steven Cahall: And just a housekeeping one on it, you said you'll be profitable for Paramount Plus in 2025. Is that different from 425 as in a positive number for the full year? And then also, George, CBS affiliate some out there have been indicating that reverse comp fees should really start to moderate or even decline because of the shift to streaming with things like Paramount Plus. How do you think about those station affiliate relationships and what their fair cost is of CBS national programming?

Speaker Change: And that, frankly, is one of the reasons why the main goal we're focused on, and this relates to the other part of your question.

Naveen Chopra: We're focused on, and this relates to the other part of your question, driving domestic profitability for Paramount Plus in 2025, which is intended to be a full year goal. And I think that is obviously the more important measure of profitability, making sure that

Speaker Change: is driving domestic profitability for paramount plus in 2025, which is intended to be a fully year goal. And I think that is obviously the more important measure of profitability is making sure that the business is profitable, not just in a particular quarter, but on a clear basis.

George Cheeks: External Affairs, Personal Infrastructure Services, RPI, Managing Cadets, Online Wellness, Organizing Things George, sure. So, Steve, we're keenly aware...

Steven Cahall: I think a lot of TV station margins are a lot higher than the CBS networks margins. So, I'm just wondering about what you think is a fair way to share those economics, especially as the company is entering into this cost-cutting and more cash-generative mode that you all talked about. Thank you.

George Cheeks: George? Sure. So Steve, we're keenly aware of the changing industry dynamics and the challenges that our affiliates are facing. Now, our role as a network in this partnership is to provide best-in-class content with maximum reach, and this means we've got to continue to invest in producing hit shows, our news programming, and investing in sports. Now, in terms of fair value, fair value is really determined by the strength of our content.

George Cheeks: George? Sure.

George Cheeks: So see, we're keenly aware of the changing industry dynamics and the challenges that our affiliates are facing. Now, our role as the network in this partnership is to provide best and class content with maximum reach. And this means we've got to continue to invest in producing hit shows, our news programming, and investing in sports rights.

Naveen Chopra: Hey Steve, it's Navine. I'll start on the first part and then hand it to George to address the second part. So, in terms of content expense on Paramount Plus, a few things to keep in mind. So, number one, obviously 2024 is going to look sort of different on a year-over-year basis relative to 23, just given that it was a highly strike-impacted year in 23. We're going to have more content in the back half of 24 than we did last year.

George Cheeks: Now, in terms of the fair value, the fair value is really determined by the strength of our content offering.

George Cheeks: And the good news here is that CBS is delivering on all fronts. I mean, we're number one in prime, number one in Daytime, and number one in Late Night. We have an incredible sports portfolio led by the NFL, but including college football, NCAA, and golf. So again, our job is to make sure that we're providing best-in-class content for our affiliates to justify the content fees that we charge.

Speaker Change: And the good news here is that CBS is delivering on all fronts. I mean, we're number one in Pride, number one in daytime, number one in late night. We have an incredible sports portfolio led by the NFL, but including college football, NCAA, and golf. So again, our job is to make sure that we're providing best-in-class content for our affiliates to justify the content fees that we charge them.

Naveen Chopra: Also, remember that there is seasonality in our content expense. So, one of the reasons that Paramount Plus was profitable, excuse me, the D to C segment was profitable in Q2, was because it was a lighter quarter in terms of content, in particular, we don't have as much sports expense in the quarter as we do in the back half of the year. And that, frankly, is one of the reasons why the main goal we're focused on, and this relates to the other part of your question, is driving domestic profitability for Paramount Plus in 2025, which is intended to be a full-year goal. And I think that is obviously the more important measure of profitability is making sure that the business is profitable, not just in a particular quarter, but on a full-year basis. George?

Speaker Change: Thanks Steve. Operator, we have time for one last question.

Felicia: Of course, the last question comes from Bryan Kraft from Deutsche Bank. Please go ahead.

Speaker Change: Of course, the last question comes from Bryan Kraft from Deutsche Bank. Please go ahead.

Bryan Kraft: Thank you. I had to, if I could, just first, how is the company approaching licensing Paramount's content to third parties, you know, relative to the prior regime? And related, I know Naveen talked about the outlook for the rest of this year for licensing. I realize there are a lot of moving pieces with the strikes, but the question is whether you think after 2024, licensing will still be a growth driver for the company.

Bryan Kraft: Oh, thank you.

Bryan Kraft: I had to first, how is the company approaching licensing paramounts content that third parties, you know, relative to the prior regime and related, I know Naveen talked about the outlook for the rest of this year for licensing.

Speaker Change: and I realize there are a lot of moving pieces with strikes, but the question is whether you think

Speaker Change: After 2024 licensing will still be a growth driver for the company.

Bryan Kraft: And then the second one is, just wondered if you talked a bit about the importance of sports. Would you be interested in, or will you pursue additional sports rights that might be coming up for renewal over the next couple of years that you don't currently have in this interim period before the merger closes, or is that something that would be revisited kind of post-merger? Thank you.

Speaker Change: And then the second one is, just was wondering if you talked a bit about the importance of sports.

George Cheeks: Sure. So, see, we're keenly aware of the changing industry dynamics and the challenges that our affiliates are facing. Now, our role as a network in this partnership is to provide best-in-class content with maximum reach. And this means we've got to continue to invest in producing hit shows, our news programming, and investing in sports rights. Now, in terms of the fair value, the fair value is really determined by the strength of our content, offering.

Speaker Change: Would you be interested in or will you pursue additional sports rights that might be coming up for renewal over the next couple of years that you don't currently have in this interim period before the merger closes or is that something that

Speaker Change: would be revisited kind of post-merger. Thank you.

Bryan Robbins: Sure, Bryan. This is Bryan.

George Cheeks: And the good news here is that CBS is delivering on all fronts. I mean, we're number one in pride, number one in daytime, number one in late night. We have incredible sports portfolio led by the NFL, but including college football NCAA and golf. So again, our job is to make sure that we're providing best in class content for our affiliates to justify the content speeds that we charge. Thanks, Steve.

Bryan Kraft: Sure, Bryan. This is Bryan. I'll take the first part of the question. You know, for us, licensing is not either-or. It's actually more. It's about driving more revenue, more reach, and more relevance for our content.

Bryan Robbins: I'll take the first part of the question. You know, for us, licensing is not either-or. It's actually more than that.

Bryan Robbins: It's about driving more revenue, more reach, and more relevance for our content. But, first and foremost, I think we're focused on maximizing the first-run value of our content on our owned and operated platforms and channels, whether that's through advertising, affiliate, or subscription revenues. And then, of course, windowing is key, and it always has been key.

Speaker Change: But first and foremost, I think we're focused on maximizing the first run value of our content on our own denoperator platforms and channels, whether that's through advertising, affiliate or subscription revenues.

Felicia Norby: Operator, we have time for one last question. Of course, the last question comes from Bryan Kraft from Deutsche Bank. Please go ahead. Thank you. I had to, if I could just first, how was the company approaching licensing Paramount content, the third parties, you know, relative to the prior regime? And related, I know Naveen talked about the outlook for the rest of this year for licensing. And I realize there are a lot of moving pieces with strikes.

Speaker Change: and then of course windowing is key and it always has been key and we will still continue to license our content if there are party platforms and fortunately for us.

Bryan Robbins: And we will still continue to license our content to third-party platforms. And fortunately for us, our content is in demand. It's in demand from consumers, and it's in demand from other platforms.

Bryan Kraft: Our content is in demand. It's in demand from consumers and it's in demand from other platforms.

Bryan Robbins: And we believe that not only do we drive more revenue by licensing to third-party platforms, but it also increases the demand for that content on our own platforms by opening it up to new eyeballs on other people's platforms and then driving them back to our own. So we will continue to license. We're very focused on creating the greatest opportunity while continuing to control our IP, and there's always going to be timing dynamics that are reflected in performance.

Bryan Kraft: and we believe that not only do we drive more revenue by licensing to third party platforms.

Felicia Norby: But the question is whether you think after 2024 licensing will still be a growth driver for the company. And then the second one is just was wondering if you talked a bit about the importance of sports? Would you be interested in or will you pursue additional sports rights that might be coming up for renewal over the next couple of years so you don't currently have in this interim period before the merger closes?

Bryan Kraft: But it also increases the demand of that content on our own platforms by opening it up to new eyeballs on other people's platforms and then dropping back to our own.

Bryan Kraft: So, we will continue to license, we're very focused on creating the greatest opportunity while continuing to control our IP.

Bryan Kraft: There's always going to be timing dynamics that are reflected in performance, but given the power of our content and IP, long-term licensing is a compelling business for us.

Bryan Robbins: But given the power of our content and IP, long-term licensing is a compelling business for us. And this is George, and on your sports question, Bryan, so first of all, I would say we feel really, really good about our current sports portfolio. We've got our core marquee franchises. But that being said, we'll always be opportunistic. In fact, we recently closed two soccer deals with EFL and Serie A.

Felicia Norby: Or is that something that would be revisited kind of post-merger? Thank you. Sure, Bryan. This is Bryan. I'll take the first part of the question. You know, for us licensing is not either or. It's actually more. It's about driving more revenue, more reach, and more relevance for our content. But first and foremost, I think we're focused on maximizing the first-round value of our content on our owned and operated platforms and channels, whether that's through advertising, affiliate, or subscription revenues.

George Cheeks: So we will always be open to the market. But we're going to always take this disciplined approach and make sure that our goal is to ensure that we're giving the right sports portfolio for both broadcast and for. Thanks, George. And this is Chris. I'm going to close it out.

George Cheeks: and this is George and on your sports question, Brian, so first of all I would say we still really, really good about our current sports portfolio. We've got our core marquee franchises.

Speaker Change: But that being said, we'll always be opportunistic, in fact, we recently closed two soccer deals with EFL and Tiriya. So we will always be open in the market, but we're going to always take this discipline approach and make sure that our goal is to ensure that we're giving the right sports portfolio for both broadcast and for streaming.

Felicia Norby: And then of course, windowing is key and it always has been key. And we will still continue to license our content to third-party platforms. And fortunately for us, our content is in demand. It's in demand from consumers and it's in demand from other platforms. And we believe that not only do we drive more revenue by licensing to third-party platforms, but it also increases the demand of that content on our own platforms by opening it up to new eyeballs on other people's platforms and then driving back to our own.

Chris: Thanks, George. And this is Chris. I'm going to close it out. And on behalf of my fellow co-CEOs, we'd like to thank you for joining us for our call today.

Chris Mccarthy: And on behalf of my fellow co-CEOs, we'd like to thank you for joining us on our call. As you can see from our results, we're off to a very strong start in the first half of the year, executing well against our strategic plan. We continue to deliver some of the biggest, broadest hit TV series and blockbuster films with a high hit ratio, and our performance this quarter reflects the power of that content and the actions that we've taken to strengthen the company. Now, looking ahead, we're clear-eyed about the additional work that needs to happen, and we are confident we will deliver. We look forward to updating you on our progress.

Speaker Change: As you can see from our results, we're off to a very strong start in the first half of the year, executing well against our strategic plan.

Chris: We continue to deliver some of the biggest, broadest hit TV series and blockbuster films with a high hit ratio. And our performance this quarter reflects the power of that content and the actions that we've taken to strengthen the company.

Chris: Now, looking ahead, we're clear-eyed about the additional work that needs to happen, and we are confident we will deliver.

Chris Mccarthy: Thank you everyone for joining us, and have a good evening. Thank you, everyone. This concludes today's call. You may now disconnect your line. Thanks for watching. United Vision, Uncross!

Chris: We look forward to updating on our progress, thank you everyone for joining us and have a good evening.

Felicia Norby: So we will continue to license. We're very focused on creating the greatest opportunity while continuing to control our IP. And there's always going to be timing dynamics that are reflected in performance. But given the power of our content and IP, long-term licensing is a compelling business for us.

Felicia: Thank you, everyone. This concludes today's call. You may now disconnect your line.

Speaker Change: Thank you everyone, this concludes today's call, we may now disconnect your line.

Speaker Change: [inaudible]

Bryan Kraft: And this is George and on this undersports question, Brian. So first of all, I would say we still really, really good about our current sports portfolio. We've got our core marquee franchises. But that being said, we'll always be opportunistic. In fact, we recently closed two soccer deals with EFL and Syria. So we will always be open in the market, but we're going to always take this discipline approach and make sure that our goal is to ensure that we're giving the right sports portfolios for both broadcasts and for- Streaming. Thanks, George.

Chris Mccarthy: And now this is Chris.

Chris Mccarthy: I'm going to close it out. And on behalf of my fellow co-searchos, we'd like to thank you for joining us for our call today. As you can see from our results, we're off to a very strong start in the first half of the year, executing well against our strategic plans. We continue to deliver some of the biggest, broadest-to-tv series and blockbuster films with a high hit ratio. And our performance, this quarter reflects the power of that content and the actions that we've taken to strengthen the company. Now, looking ahead, we're clear-eyed about the additional work that needs to happen and we are confident we will deliver. We look forward to updating on our progress.

Speaker Change: [inaudible]

Felicia Norby: Thank you everyone for joining us and have a good evening. Thank you everyone.

Speaker Change: [inaudible]

unknown: October 25, 2013 U.S. Department of State [music]

Speaker Change: Thank you very much for watching.

Felicia Norby: Dr. Paret, Dr. Paret, John[inaudible][inaudible] you very much, thank you very much,[inaudible] you very much, thank you very much[inaudible][inaudible] right, I'm not sure if I'm right, I'm not sure if I'm right, I'm not sure if I'm right[inaudible] Paramount Global's EVP Investor Relations.

Felicia: Good afternoon. My name is Felicia, and I'll be the conference operator today. At this time, I would like to welcome everyone to Paramount Global's Q2 2024 earnings conference call. At this time, all lines have been muted to prevent any background noise.

Felicia: Good afternoon. My name is Felicia and I'll be the conference operator today. At this time, I would like to welcome everyone to Paramount Global's Q2 2024 Earnings Conference Call.

Felicia: At this time, all lines have been muted to prevent any background noise.

Felicia: After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press the star followed by 1 on the telephone keypad. If you'd like to withdraw your question, please press star followed by 2. In order to get to as many questions as possible, we ask that you please limit yourself to one question. At this time, I would like to turn the call over to Jaime Morris, Paramount Global's EVP, Investor Relations. You may now begin your conference call.

Felicia: After the speaker's remarks, there will be a Q&A session.

Felicia: If you would like to ask a question during this time, simply press star followed by 1 on the telephone keypad. If you'd like to withdraw your question, please press star followed by 2.

Felicia: In order to get to as many questions as possible, we ask that you please limit yourself to one question. At this time, I would like to turn the call over to Jaime Morris, Paramount Global's EVP Investor Relations. You may now begin your conference call.

Jamie Morris: Good afternoon, everyone. Thank you for taking the time to join us for our second quarter, 2024 earnings call. Joining me for today's discussion are Paramount's co-CEO's Brian Robbins, Chris McCarthy, and George Cheeks, and RCFO, Naveen Chopra.

Jamie Morris: Please note that in addition to the earnings release, we have trending schedules containing supplemental information available on our website.

Jamie Morris: Before we start this afternoon, I want to remind you that certain statements made on this call are forward-looking statements that involve risks and uncertainties. These risks and uncertainties are discussed in more detail on our filings with the SEC.

Jamie Morris: These risks and uncertainties are discussed in more detail in our filings with the FCC. Some of today's financial remarks will focus on adjusted results. Reconciliations of these non-GAAP financial measures can be found in our earnings release or in our trending schedule, which contains supplemental information and, in each case, can be found in the investor relations section of our website. Now, I will turn the call over to Brian. Good afternoon.

Jamie Morris: Some of today's financial remarks will focus on the judge's results.

Jamie Morris: Reconciliation of these non-gap financial measures can be found in our earnings release or in our trending schedule, which contains supplemental information and in each case can be found in the Investor Relations section of our website. Now I will turn the call over to Brian.

Brian Robbins: Good afternoon, everyone. Thank you for joining our second quarter earnings call. I'm Bryan Robbins, and I'm here with my fellow CEOs, Chris McCarthy and George Cheeks.

Brian Robbins: Today we look forward to updating you on the results of the quarter and the progress we have made on our strategic plan. That includes streamlining the organization, transforming D to C and optimizing our asset next.

Brian Robbins: We have been aggressively advancing this plan since we laid it out at our annual meeting of stockholders in early June , but before we jump in, we'd like to spend a few moments on the transaction with Skydance Media.

Jaime Morris: You may now begin your conference call. Good afternoon, everyone. Thank you for taking the time to join us for our second quarter 2024 earnings call. Joining me for today's discussion are Paramount's Co-CEOs, Brian Robbins, Chris McCarthy, and George Cheeks, and our CFO, Naveen Chopra. Please note that in addition to the earnings release, we have trending schedules containing supplemental information available on our website. Before we start this afternoon, I want to remind you that certain statements laid on this call are forward looking statements that involve risks and uncertainties.

Brian Robbins: As you know, on July 7, Paramount Global announced the signing of a definitive merger agreement with Sky Dance, which includes a 45-day Go Shop period.

Brian Robbins: We expect to deal with clothes in the first half of next year. In the meantime, the Sky Dance and Redbird teens support our strategic plan, and we are continuing to operate business as usual.

Brian Robbins: With that, let's get into our second quarter results and share more details of our progress. Then Naveen will take us through the financials in depth.

Jaime Morris: These risks and uncertainties are discussed in more detail on our filings with the SEC. Some of today's financial remarks will focus on the justice results. Reconciliation of these non-GAAP financial measures can be found in our earnings release or in our trending schedules, which contains supplemental information, and in each case can be found in the Investor Relations section of our website.

Brian Robbins: In the quarter, we saw strong results, both in terms of our financials and our content. A few highlights include 43% growth in total company-adjusted orbiter, largely driven by improvement in D2C.

Brian Robbins: Plus, Paramount Plus increased revenue 46% year over year.

Brian Robbins: Now, I will turn the call over to Brian. Good afternoon, everyone. Thank you for joining our second quarter earnings call. I'm Brian Robbins, and I'm here with my fellow CEO, Chris McCarthy, and George Cheeks. Today, we look forward to updating you on the results of the quarter and the progress we have made on our strategic plan. That includes streamlining the organization, transforming D2C, and optimizing our asset NYX. We have been aggressively advancing this plan since we laid it out at our annual meeting of stockholders in early June, but before we jump in, we'd like to spend a few moments on the transaction with SkyDance Media.

Brian Robbins: Our content continues to show strength across TV, streaming, and theatrical. And we renewed and expanded our long-standing partnership with one of our largest affiliates, Charter. As we've said before, we've been very focused on modernizing our relationships with distributors, and this innovative multi-year partnership with Charter is a prime example of how we're doing that. The renewal includes the continued carriage of our portfolio of linear cable networks and CBS-owned and operated broadcast stations. Also, around Labor Day, our Paramount Plus Essential Ad Supported tier will be available to Charter's linear customers.

Brian Robbins: Our content continues to show strength across TV, streaming and theatrical.

Brian Robbins: And we renewed and expanded our long-standing partnership with one of our largest affiliates, Charter.

Brian Robbins: As we said before, we've been very focused on modernizing our relationships with distributors and this innovative multi-year partnership with Charter is a prime example of how we're doing that.

Brian Robbins: As you know, on July 7th, Paramount Global announced signing of a definitive merger agreement with SkyDance, which includes a 45-day Go Shop Period. We expect to deal the close in the first half of next year. In the meantime, the SkyDance and Redbird teams support our strategic plan, and we are continuing to operate business as usual.

Speaker Change: The renewal includes the continued courage of our portfolio of linear cable networks and CVS on the operating broadcast stations.

Brian Robbins: Also, around Labor Day, our Karmount Plus, essential ad supported here, will be available to Charter's linear customers.

Brian Robbins: Together, we're enhancing the value we're delivering for our consumers, providing them with even more ways to watch our big broad hits across linear and streaming. And for us, it has the potential to expand reach and engagement, lower our customer acquisition costs, and yield much lower churn. And we view this as one potential partnership roadmap for future distributor renewals. In addition to Charter, just last week, we announced a multi-year agreement with Nexstar to renew CBS television network affiliations in 40 markets across the country.

Brian Robbins: Together, we're enhancing the value we're delivering for our consumers.

Brian Robbins: Providing them even more ways to watch our big broad hits across linear and streaming.

Brian Robbins: and for us...

Brian Robbins: It has the potential to expand reach and engagement, lower our customer acquisition costs, and yield much lower churn. And we view this as one potential partnership roadmap for future distributor renewals.

Naveen Chopra: With that, let's get into our second quarter results and share more details of our progress.

Naveen Chopra: Medina Veen will take us through the financials in-depth. In the quarter, we saw strong results both in terms of our financials and our content. A few highlights include 43% growth in total company adjusted orbiter, largely driven by improvement in D to C. Paramount Plus increased revenue 46% year over year. Our content continues to show strength across TV, streaming, and theatrical. And we renewed and expanded our longstanding partnership with one of our largest affiliates, Charter.

Brian Robbins: In addition to Charter, just last week we announced a multi-year agreement with Nexstar to renew CBS television network affiliations in 40 markets across the country. So we continue to have good momentum with our partners.

Chris Mccarthy: Now, I'd like to turn the call over to Chris to take you through the upfront and the highlights of our plan.

Speaker Change: Thank you, Bryan. And good afternoon, everyone. We are pleased with our upfront results, particularly in the context of the evolution of the ad market and the scale of new entrants.

Chris Mccarthy: Linear volume trends were in line with last year, and CPMs were up on a blended basis, driven by sports and broadcasts which were relatively strong.

Naveen Chopra: As we said before, we've been very focused on modernizing our relationships with distributors and this innovative multi-year partnership with Charter is a prime example of how we're doing that. The renewal includes the continued charge of our portfolio of linear cable networks and CBS owned and operated broadcast stations. Also around Labor Day, our Paramount Plus essential ad supported tier will be available to Charter's linear customers. Together, we're enhancing the value we're delivering for our consumers, providing them even more ways to watch our big broad kids across linear and streaming. And for us, it has the potential to expand reach and engagement, lower our customer acquisition costs, and yield much lower churn. And we view this as one potential partnership roadmap for future distributor renewals.

Chris Mccarthy: Now, let's walk through the progress we're making against our strategic plan, starting with streamlining the organization. We announced in June that we've identified $500 million in annual run rate cost savings across the company. This $500 million is included in the $2 billion of cost efficiencies identified by Skydance. To realize these savings, we are reducing our U.S.-based workforce by approximately 15 percent, and we are primarily focused on two areas.

Chris Mccarthy: Now let's walk through the progress of making against those strategic plans.

Chris Mccarthy: Starting with streamlining the organization. We announced in June that we've identified 500 million in annual run rate cost savings across the company.

Chris Mccarthy: This $500 million is included in the $2 billion of cost efficiencies identified by Skydance.

Chris Mccarthy: To realize these savings, we are reducing our U.S. based workforce by approximately 15% and we are primarily focused on two areas.

Chris Mccarthy: First, redundant functions within Marketing and Communications. Second, streamlining our corporate structure, reducing our headcount in finance, legal, technology, and other support functions. These actions will take place in the coming weeks and will largely be completed by the end of the year. As you can imagine, these are difficult decisions to make.

Naveen Chopra: In addition to Charter, just last week, we announced a multi-year agreement with NextR to renew CBS Television Network Affiliations in 40 markets across the country. So, we continue to have good momentum with our partners.

Chris Mccarthy: First, redundant functions within marketing and communications.

Chris Mccarthy: Second, streamlining our corporate structure, reducing our headcount in finance, legal, technology, and other support functions.

Chris Mccarthy: These actions will take place in the coming weeks and will largely be completed by the end of the year.

Chris Mccarthy: Now I'd like to turn the call over to Chris to take you through the upfront and the highlights of our plan. Thank you, Brian, and good afternoon, everyone. We are pleased with our upfront results, particularly in the context of the evolution of the ad market and the scale of new entrants. Linear volume trends were in line with last year, and CPMs were up on a blended basis driven by sports and broadcasts which were relatively strong.

Chris Mccarthy: As you can imagine, these are difficult decisions to make. We have incredibly talented people at Paramount, and these actions are not a reflection of their contributions. Rather, they are necessary to transform our organization for the future.

Chris Mccarthy: Next, transforming streaming. We are pleased with the progress that we've made and the performance of our direct-to-consumer segment.

Chris Mccarthy: In Q2, year-over-year profit growth was $450 million and totaled nearly $900 million to the past four quarters.

Chris Mccarthy: For the fourth year in a row, Paramount Plus is leading the industry in sign-ups, driven by our big, broad hit TV series and blockbuster films.

Chris Mccarthy: Now let's walk through the progress of making against a strategic plan, starting with streamlining the organization. We announced in June that we identified 500 million in annual run rate cost savings across the company. This 500 million dollars is included in the 2 billion of cost efficiencies identified by Skydance. To realize these savings, we are reducing our US based workforce by approximately 15%. And we are primarily focused on two areas. First, redundant functions within marketing and communications.

Chris Mccarthy: And Pluto continues to be the most widely distributed global fast service, delivering 3.7 billion hours for the first half of 2024. That's up 8% year-over-year, and that marks our highest consumption ever.

Chris Mccarthy: Now, looking ahead, we remain confident that Paramount Plus will reach domestic profitability in 2025. In addition, to further accelerate profitability and increase our scale and engagement, we are exploring potential strategic partnerships with multiple parties and are in active discussions. Finally, optimizing our asset mix. We are aggressively evaluating our portfolio with the goal of improving our balance sheet. The set of assets that make up Paramount Global today were built up through the rise of Linear.

Chris Mccarthy: Finally, optimizing our asset mix. We are aggressively evaluating our portfolio with the goal of improving our balance sheet. The set of assets that make up Paramount Global today were built up through the rise of Linear. And while we have strong brands and businesses, we must reshape our portfolio to best compete in the future.

Chris Mccarthy: Second, streamlining our corporate structure, reducing our headcount and finance, legal, technology, and other support functions. These actions will take place in the coming weeks and will largely be completed by the end of the year. As you can imagine, these are difficult decisions to make. We've incredibly talented people at Paramount and these actions are not a reflection of their contributions. Rather, they are necessary to transform our organization for the future.

Chris Mccarthy: And while we have strong brands and businesses, we must reshape our portfolio to best compete in the future. The assets under consideration are undeniably strong with exciting futures ahead, but they will be better served on their own or as the centerpiece of another business. We look forward to updating you on our progress against the strategic plan over the coming quarters. And now, I'll turn the call over to George to highlight our key content wins in the quarter and talk about what's coming next. Thanks, Chris.

Chris Mccarthy: The assets under consideration are undeniably strong with exciting futures ahead But will be better served on their own or as the centerpiece of another business

Chris Mccarthy: Next, transforming streaming. We are pleased with the progress that we've made and the performance of our direct-to-consumer segment. In Q2, year-over-year profit growth was $450 million and totaled nearly $9 million to the past four quarters. For the fourth year in a row, Paramount Plus was leading the industry in Sinus, driven by our big broad hit TV series and Blackbuster films. And Pluto continues to be the most widely-distributed global fast service delivering 3.7 billion hours for the first half of 2024.

Chris Mccarthy: We look forward to updating you on our progress against the strategic plan over the coming quarters. And now I'll turn the call over to George to highlight our key content wins in the quarter and talk about what's coming next.

George Cheeks: Our core mission centers on what we do best, creating big, broad hits. This is our first priority, as well as our competitive advantage. Now, in Q2, we had a number of key wins. CBS finished the 23-24 season as the number one broadcast network in total viewers for the 16th consecutive year, with eight of the top ten shows and the three most-watched new broadcast series with Tracker, Elzbeth, and NCIS Sydney. On Paramount+, our strong slate drove excellent results, including The Return of Mayor of Kingstown, Criminal Minds, Evil, RuPaul's Drag Race, and The Chi.

George Cheeks: Thanks, Chris. Our core mission centers on what we do best, creating big, broad hits. This is our first priority as well as our competitive advantage. Now, in Q2, we had a number of key wins.

George Cheeks: CBS finished the 23-24 season as the number one broadcast network in total viewers for the 16th consecutive year with made at a top 10 shows and the three most watched new broadcast series with Tracker, L.B. and N.S. and N.S. Sydney.

Chris Mccarthy: That's up 8% year-rear and that marks our highest consumption ever. Now looking ahead, we remain confident that Paramount Plus will reach domestic profitability in 2025. In addition, to further accelerate profitability and to increase our scale and engagement, we are exploring potential strategic partnerships with multiple parties and are in active discussions.

George Cheeks: On Paramount Plus, our strong slate drove excellent results, including the return of Mayor of Kingston, Criminal Minds, Evil, RuPaul's Drag Race, and the Shai.

George Cheeks: We also launched new shows, like the South Park special The End of Obesity, the Sonic the Hedgehog spin-off series Knuckles, and A Gentleman in Moscow from Showtime. Q2 brought Bob Marley, One Love, and the UEFA Champions League Final to PPLUS as well.

George Cheeks: We also launched new shows, like the South Park Special, the End of Obesity, the Sonic the Hedgehog Spinoff series Knuckles, and a gentleman in Moscow from Showtime.

Chris Mccarthy: Finally, optimizing our asset mix. We are aggressively evaluating our portfolio with the goal of improving our balance sheet. The set of assets that make a Paramount Global today were built up through the rise of linear. And while we have strong brands and businesses, we must reshape our portfolio to best compete in the future. The assets under consideration are undeniably strong with exciting futures ahead but will be better served on their own or as a centerpiece of another business. We look forward to updating you on our progress against the strategic plan over the coming quarters.

George Cheeks: Q2 brought Bob Marley, One Love, and the UEFA Champions League Final to PPLUS as well. On Comedy Central, The Daily Show with Jon Stewart is posting significant performance gains while engagement on Paramount Plus is outperforming last season by over seven times.

George Cheeks: On Comedy Central, The Daily Show with Jon Stewart is posting significant performance gains, while engagement on Paramount Plus is outperforming last season by over seven times. Over at Paramount Pictures, John Krasinski's If delivered another number one domestic box office launch, and A Quiet Place Day One saw a franchise best performance, beating industry expectations and grossing over $250 million in worldwide box office to date. And to keep this momentum going, we plan the most ambitious slate yet for Paramount+. This includes new seasons of Taylor Sheridan's hit series Tulsa King in September, Lioness in October, and the new series Landman in November, as well as the series finales of Evil and Seal Team.

George Cheeks: And now, I'll turn the call for the George to highlight our key content wins in the quarter and talk about what's coming next. Thanks, Chris. Our core mission centers on what we do best, creating big, broad hits. This is our first priority as well as our competitive advantage. Now, in Q2, we have a number of key wins. CBS finished the 2324 season as a number one broadcast network in total viewers for the 16th consecutive year.

George Cheeks: Now, to keep this momentum going, we've planned the most ambitious slate yet for Paramount Plus.

George Cheeks: This includes new seasons of Taylor Sheridan's hit series Tulsa King in September , Lioness in October , and the new series Landman in November , as well as the series finales of Evil and Seal Team.

George Cheeks: The Showtime slate kicks off with the new series, The Agency, from George Clooney. And in December , Showtime's biggest franchise ever returns with Dexter, Original Sin.

George Cheeks: With 8 at the top 10 shows and the three most-watched new broadcast series with Tracker, Elbeth, and NCIS Sydney. On Paramount Plus, our strong slate drove excellent results, including the return of Mayor of Kingston, Criminal Minds, Evil, RuPaul's Drag Race, and the Shy. We also launched new shows like the South Park Special, The End of Obesity, The Sonic the Hedgehog Spin-Off Series Knuckles, and a gentleman in Moscow from Showtime. Q2 brought Bob Marley one love and the UEFA Champions League final to P Plus as well.

George Cheeks: Also heading to Paramount+, our recent box office hits.

George Cheeks: The new CBS primetime slate, the new NFL season, and our first full season of Big Ten College Football. Next season's primetime schedule on CBS is one of the strongest I've seen.

George Cheeks: In addition to 16 returning series, the new shows will include a spin-off of Young Sheldon, the number one comedy on TV, a contemporary reimagining of the classic series Matlock, and a new addition to the NCIS universe.

George Cheeks: And coming soon to movie theaters, we're releasing the first animated Transformers film in nearly 40 years, starring voice cast Chris Hemsworth and Scarlett Johansson. That's followed by Smile 2, the sequel to one of the most profitable films in the studio's history. In November, Sir Ridley Scott returns to the arena with the highly anticipated Gladiator 2, which just saw its first trailer become one of the most watched ever for Paramount. Then we'll finish the year with Sonic the Hedgehog 3.

George Cheeks: And coming soon to movie theaters, we're releasing the first animated Transformers film in nearly 40 years, starring voice cast Chris Hemsworth and Scarlett Johansson.

George Cheeks: On Comedy Central, the daily show with John Stewart is posting significant performance gains, while engagement on Paramount Plus is outperforming last season by over seven times. Over a Paramount Pictures, John Krasinski's IF delivered another number one domestic box office launch, and a quiet place day one saw franchise best performance, meeting industry expectations, and grossing over $250 million in worldwide box office to date. State.

George Cheeks: That's followed by Smile 2, the sequel to one of the most profitable films in the studio's history.

George Cheeks: In November , Sir Ridley Scott returns to the arena with the highly anticipated Gladiator 2, which just saw its first trailer become one of the most viewed ever for Paramount. Then we'll finish the year with Sonic the Hedgehog 3.

Naveen Chopra: If we really want to underscore our commitment to operating the business with best-in-class content at the center, we'll continue to deliver for millions of fans around the world. We've got the best creatives in the business, and we're incredibly grateful for their contribution. Thanks so much for joining us today, and with that, I'll turn it over to Naveen. Thank you, George, and good afternoon, everyone.

Naveen Chopra: Look, we really want to underscore our commitment to operating the business with best-in-class content at the center. We'll continue to deliver for millions of fans around the world. We've got the best creatives in the business, and we're incredibly grateful for their contributions.

George Cheeks: Now to keep this momentum going, we plan the most ambitious slate yet for Paramount Plus. This includes new seasons of Taylor Sheridan's hit series Tulsa King in September, Lioness in October, and the new series Landman in November, as well as the series finale of Evil and Seal Team. The showtime slate kicks off with the new series, The Agency, from George original sin. Also heading to Paramount Plus, our Reese's box office hits, the new CBS primetime slate, the new NFL season, and our first full season of Big Ten College football.

Naveen Chopra: Thanks so much for joining us today, and with that, I'll turn it over to Naveen.

Naveen Chopra: Our Q2 results demonstrate strong execution, continued evolution of our distribution and monetization strategies, and the ongoing power of our creative engines. Financially speaking, this translated to 43% growth in adjusted OEBDA, reflecting a significant improvement in our D2C business, which is delivering healthy top-line growth and improved operating margins. Additionally, balance sheet leverage improved by one-third of a turn since the end of Q1. As always, you'll find a comprehensive review of Q2 results in our press release, so today I'm going to focus on a few areas of note.

Naveen Chopra: Thank you, George, and good afternoon everyone. Our Q2 results demonstrate strong execution, continued evolution of our distribution and monetization strategies, and the ongoing power of our creative engines.

Naveen Chopra: Financially speaking, this translated to 43% growth and adjusted orbit of reflecting significant improvement in our D to C business, which is delivering healthy top-line growth and improved operating margin.

George Cheeks: The next season's Primetime schedule on CBS is one of the strongest I've seen. In addition to 16 returning series, the new shows will include a spin-off of Youngsheldon, the number one comedy on TV, a contemporary reimagining of the classic series Matlock, and a new addition to the NCIS universe.

Naveen Chopra: Additionally, balance sheet leverage improved by one-third of a turn since the end of Q1.

Naveen Chopra: As always, you'll find a comprehensive review of Q2 results in our press release, so today I'm going to focus on a few areas of note.

Naveen Chopra: First, advertising. In Q2, direct-to-consumer advertising grew 16%, benefiting from increased viewing hours across Paramount Plus and Pluto TV, along with higher CPMs.

Naveen Chopra: In TV media, overall domestic advertising trends were negatively impacted by the fact that sports comprised a smaller share of inventory than it has in recent quarters.

Naveen Chopra: This dynamic somewhat masks the fact that year-over-year growth in non-sports domestic advertising improved relative to Q1.

George Cheeks: We really want to underscore our commitment to operating the business with best in-class content at the center. We'll continue to deliver millions of fans around the world. We've got the best creators in the business, and we're incredibly grateful for their contributions.

Naveen Chopra: On a total company basis, advertising declined 6% in the quarter.

Naveen Chopra: Looking ahead, we expect D-to-C advertising growth in Q3 to be similar to Q2. And in linear, we expect advertising trends in the second half of 24 to improve with the return of live sports, new fall programming, and contribution from political spend. Next, let me turn to affiliate and subscription revenue, which grew 1% in Q2. As a reminder, last year's second quarter included a

Naveen Chopra: Thanks so much for joining us today, and with that, I'll turn it over to Navine. Thank you, George, and good afternoon, everyone. Our Q2 results demonstrate strong execution, continued evolution of our distribution and monetization strategies, and the ongoing power of our creative engines. Financially speaking, this translated to 43% growth in adjusted oibida, reflecting significant improvement in our D2C business, which is delivering healthy top-line growth and improved operating margin.

Naveen Chopra: Next, let me turn to affiliate and subscription revenue, which grew 1% in Q2.

Naveen Chopra: Additionally, balance sheet leverage improved by one-third of a turn since the end of Q1.

Naveen Chopra: As always, you'll find a comprehensive review of Q2 results in our press release, so today I'm going to focus on a few areas of note. First, advertising. In Q2, direct-to-consumer advertising grew 16%, benefiting from increased viewing hours across Paramount Plus and Pluto TV, along with higher CPMs. In TV media, overall domestic advertising trends were negatively impacted by the fact that sports comprised a smaller share of inventory than it has in recent quarters.

Naveen Chopra: And in linear, we expect to advertising trends in the second half 24 to improve with the return of live sports, new fall programming, and contribution from political spend.

Naveen Chopra: Next, let me turn to affiliate and subscription revenue, which grew 1% in Q2. As a reminder, last year's second quarter included a showtime pay-per-view event that did not take place this year due to our exit from showtime sports at the end of 2023. This comparison reduced the Q2 growth rate by 250 basis points. D to C subscription revenue grew 12% in the quarter, with Paramount Plus subscription revenue up 50% year-over-year.

Naveen Chopra: Paramount Plus finished the quarter with 68.4 million subscribers, which is 2.8 million lower than the end of Q1. Now two factors impacted subscriber growth this quarter, both of which were built into our expectations for the full year. The biggest factor by far was the planned exit of our hard-bundled partnership with TVING in South Korea, which contributed a sizeable number of subs, but limited revenue in Oibida. Second, domestic sub-growth, though still positive, was hindered by elevated churn from the cohort or subscribers that joined for the Super Bowl in Q1.

Naveen Chopra: We expect Paramount Plus to return to net subscriber growth in the second half of the year, as we benefit from a more consistent cadence of original content, now that we're beyond the impacts of the strike. We also expect normalized international subscriber growth for the remainder of the year. Paramount Plus global RPU expanded 26% in the quarter, reflecting the impact of the price increase that took effect in Q3 of 2023, as well as a shift in the mix of our international subscriber base to higher RPU markets.

Naveen Chopra: In the TV media segment, affiliate revenue declined 5% year-to-year, largely reflecting ecosystem trends. Recognizing ongoing changes in the pay TV ecosystem. In Q2, we announced an important multi-year distribution agreement with Charter, which seeks to modernize our long-standing relationship. Starting in Q3, Charter will be the first US NVPD to make the ad supported tier of Paramount Plus available to basic cable subscribers with no incremental cost to the consumer. Accordingly, users who activate a Paramount Plus essential subscription to an NVPD bundle will be counted as Paramount Plus subscribers, and the revenue from Charter and future NVPD distribution deals that bundle Paramount Plus.

Naveen Chopra: We'll be shared between our TV media and D to see seconds. We believe this type of bundle is an efficient way to grow Paramount Plus and can yield many of the same benefits we've experienced in the international markets where we've adopted a similar approach. These bundles ensure that Paramount and our distributors are full participants in the transition of viewing from linear to streaming.

Naveen Chopra: Looking ahead to Q3, we expect TV media affiliate revenue growth to decelerate modestly relative to Q2, reflecting the dynamics I just mentioned and the impact of exiting Showtime Sports.

Naveen Chopra: Next, I'll touch on licensing. Our licensing and other revenue declined 35%. As I've noted previously, licensing revenue growth tends to be bumpy due to the timing of deliveries. And that continued to be the case in Q2 as there were fewer deliveries in the period relative to Q2 of 2023. For example, Q2 of last year included delivery of the final season of Jack Ryan. The quarter was also impacted by a lower volume of licensing in the secondary market.

Naveen Chopra: And we expect licensing revenue to return to growth in the second half of the year, particularly with the return of a new false late on CBS in Q4, although we do expect a modest decline in licensing revenue for the full year. In parallel with our efforts to maximize revenue, we're also highly focused on unlocking incremental cost savings. And as you've heard Chris George and Brian describe, we've identified opportunities to streamline the organization that are expected to yield 500 million of annualized cost reductions.

Naveen Chopra: And in connection with these actions, we expect to incur a restructuring charge of approximately 3 to 400 million in Q3, the cash impact of which will occur over the next several quarters.

Naveen Chopra: The last part of our Q2 results I want to address is the goodwill and paramet charge recorded in the quarter. During Q2, we assess the relevant factors that could impact the fair value of our reporting units, including the estimated total company market value indicated by the Skydance transactions and recent indicators in the linear affiliate marketplace.

Naveen Chopra: As a result, we recorded a $6 billion non-cash goodwill impairment charge for a cable networks reporting unit at TV media.

Naveen Chopra: Now, before moving on to questions, I'd like to share some additional information regarding our expectations for the remainder of the year. Our D to C segment was profitable this quarter, our first profitable quarter since paramount plus launched three and a half years ago. And although the segment will generate losses in Q3 and Q4 due to the timing of content expenses, we're on course to achieve paramount plus domestic profitability in 2025. Jeff, and for the full year 2024, the progress in D to C profitability means we continue to expect significant growth in total company, Oibida, and free cash flow will grow relative to 2023.

Naveen Chopra: We continue to operate in a dynamic environment, but it's clear that our focus on execution is producing results. We're not standing still during this interim period before the transaction closes. We remain focused on achieving our goals for 2024, which means investing in key content assets, finding expensive efficiencies, improving profitability, deepening partnerships, and de-leveraging our balance sheet.

Naveen Chopra: We believe this approach will create value for shareholders over the long term.

Felicia Norby: With that operator, please open the line for questions. Thank you.

Michael Morris: The first question comes from Michael Morris from Guggenheim. Your line is open. Please go ahead. Thank you. Good afternoon. I wanted to follow up first on Bryan's comments about operating the business during the period between now and when the Skydance transaction will close. How are you ensuring that these steps that you're taking on things like strategic partnerships that you reference? How are you making sure that those are aligned with the long-term goals after that transaction is completed? Is Skydance involved in these things during the interim period? How do you keep the teams motivated when there's some uncertainty about what the future may hold for the business?

Brian Robbins: That's my first question. Maybe for Navine, on the Goodwill charge, you noted the recent indicators in the linear affiliate marketplace were part of what triggered that. Can you expand on that at all? What were the recent indicators that it had to do with the charter agreement? And given the court cuttings been going on for quite a while, why was now the time that that was triggered beyond just the transaction as you mentioned?

Brian Robbins: Thank you. Sure, Mike. This is Brian. I'll jump in first. As I said in the prepared remarks, Skydance is very supportive of our strategic plan. It's business as usual for us. And we continue to green light projects in the normal course of business. Now, in terms of Skydance involvement, it is what you would expect in any M&A transaction. There are very specific limited things that we will consult with them on. But to the second part of your question, we are just aggressively advancing our strategic plan with our teams.

Brian Robbins: We talked during the prepared remarks about our actions to streamline the organization, our focus on exploring partnerships as we transform Paramount Plus for the future, and beyond going discussions to optimize our asset mix. And we believe our plan will create value for shareholders over the long term. Thanks, Brian.

Naveen Chopra: And so, Mike, let me respond to your question on the Goodwill impairment charge. There's really a couple of things going on there. So first, obviously linear declines are part of the analysis here. But the other part of this is that that really drives the magnitude of the Goodwill impairment charge is the value that's implied by the Skydance transaction. Because the way the accounting works on this is we need to reconcile the value of our individual reporting.

Naveen Chopra: Unit with the enterprise value for the entire company that's implied by the transaction. So it's really the combination of those things. And, you know, what that results in is the, you know, basically six billion dollar non cash, goodwill impairment charge that is specific to our cable network reporting unit. Thanks, Mike operator.

Robert Fishman: Next question, please. The next question. Question comes from Robert Fishman from Mofford, Nathan, and please go ahead. Your line is open. Good afternoon, everyone.

Robert Fishman: Anything more that you all can share on how you're approaching exploring that the licensing of Paramount Plus content, maybe just originals or just broadly speaking, or are you evaluating that licensing in the context of the other JV structures that you're talking to. And then on a separate note, just trying to understand any updated thoughts or how you guys are thinking about using premium sports as part of Paramount Plus. And whether or not the charter deal or future distribution agreements that include Paramount Plus influence those strategies given the importance that NFL and other content is to the exclusive within the pay TV ecosystem.

Robert Fishman: Now, as we look forward, in 2025, we're on path to hit domestic profitability. But we think there's an opportunity to accelerate that, both just in domestic and globally. And so we're looking at a series of opportunities, whether they come in the form of strategic partnerships or joint ventures. And really the benefit here is to get greater scale. It better improve our content offering, reduce our cost and drive long term value, and increase profits both in the short term and the long term.

Robert Fishman: And we're supporting all these opportunities. And we're going to be very opportunistic about that. So that includes a series of partnerships that could potentially involve some licensing things, but will also be licensing content in addition to that.

Chris Mccarthy: So let me toss it over to George to talk about sports. Thanks Chris. So on the sports point, so basically our strategy here and our focus is that broadcast and streaming together, drive an unduplicated audience and really resolve linear and streaming growth. So when we look at our sort of sports portfolio, we're looking at it through both angles because the beauty of this is that we're seeing growth on both sides. For example, last NFL CPS was up 5% year over year. And the streaming audience on Paramount Plus is up more than 50%. So we're seeing growth for our affiliates and we're seeing growth in streaming.

Ben Twinburn: Next question comes from Ben Twinburn from Morgan Stanley. Please go ahead. Your line is open. Thank you. Good afternoon, everybody.

Naveen Chopra: Naveen, can you tell us a little bit about how you're thinking about free cash flow, second half of the year, and kind of where you think leverage might end at your end, because then you can share that with us. And then I think one of the areas that you guys have talked about, kind of re-evaluating or evaluating are your international streaming plans. And I know you mentioned changes in South Korea, but what's the update there?

Naveen Chopra: Thank you. Yeah, so Ben, I'll take the first part of your question on cash flow, and then I'll turn it over to Chris to comment on our thoughts on international streaming. I think that the cash flow answer is actually pretty straightforward. You know, we said at the beginning of the year that our plan was to deliver growth in free cash flow in 24, or alongside significant growth in Oiveira, Justin Oiveira, and I continue to see the year playing out that well, so excuse me, playing out that way. So no real change for our expectations.

Chris Mccarthy: Chris, thanks. I mean, hey Ben, listen, you know, today we have a global footprint with Paramount Plus and Pluto, and moving forward, we expect to have, or we'll plan to have, excuse me, a global footprint. Now, how that footprint looks may change. We're going to be very opportunistic about exploring all of our options here. You know, the overwhelming majority of the economics are going to be driven out of the US market as they are today in the, in the content space.

Chris Mccarthy: And so we want to be take a thoughtful approach about how we look at each market internationally. Now, that can come in the form of strategic partnerships with maybe platforms who already have a great tremendous amount of reach and a platform. In which case, we'll be reducing our cost by not having to have our own platform, or they could come in the form of a joint venture with one or more S5 players.

Chris Mccarthy: In which case, we could get greater scale, increase long-term value and drive greater profits. So we have lots of interest from many different partners in this area, and we're exploring all of that, and we look forward to updating you as we progress.

Chris Mccarthy: Thanks, Ben.

Rich Greenfield: Operator, next question, please. The next question comes from Rich Greenfield from Light Shed Partners. Please go ahead.

Naveen Chopra: Hi. Thanks for taking the questions. I got a couple. First, just from a very high level, I think you've all talked about the 500 million being inclusive of the two billion from Skydance. Skydance is a pretty small company in the scheme of the media world. Can you help us understand what of the two billion couldn't you accomplish without Skydance, meaning could the 500 million be more like a billion and a half on your own, just trying to understand the difference between those two cost-cutting numbers.

Naveen Chopra: And then on the charter agreement that you reference, you're going to obviously now be giving Paramount Plus to, you know, I think about nine to 10 million charter video subscribers. Do you actually shift the allocation, meaning if I think about how you account for this between your various divisions, is there now a reduction in how much affiliate revenue is going to the linear networks with a commensurate allocation of dollars to Paramount Plus.

Naveen Chopra: Unless I'm just trying to understand as you turn this on to those subscribers and then just a housekeeping point. I think you mentioned is it only charter sub that activate that you get that that are counted or does every subscriber get Paramount Plus and is treated as a subscriber on Paramount's books. Thanks so much for taking, in the questions.

Naveen Chopra: Yeah, hi, Richard, Naveen, I'll try to catch on all of those. So starting with your question on cost savings, as you pointed out, we're moving forward on 500 million of cost savings. But I think it's important to understand that that's sort of step one. We are also working on a variety of other cost reduction plans that are part of our long term plan. Those are significant. They're material. They won't all happen necessarily at the same point in time.

Naveen Chopra: And they go beyond headcount. You know, we've made a most of the 500 million savings that you'll see in a near term as headcount related. But we do think that there are opportunities to significantly reduce cost in other areas as well. And, you know, those plans, I think, have helped inform a number of the ideas that comprise the $2 billion that Skydance has referenced. With respect to your question on the charter deal, sort of in reverse order, the way that this works is, yes, subscribers who activate that benefit, if you will, meaning they associate their charter account with a set of P plus credentials.

Naveen Chopra: Those are sub that we will count as Paramount plus subscribers. And if someone does not activate them, they don't count as a sub. And when they do activate, then we start to allocate a certain amount of the fees that we receive from charter to P plus. What you'll see in our externally reported financials as a result of that is that the revenue from deals like charter where we're providing Paramount plus credentials in a bundle will be split or be shared between the TV media segment and the D to C segment. Thanks, Rich.

John Hodulik: Operator, next question.

John Hodulik: The next question comes from John Hardelick from UBS. Please go ahead. Your line is open. Great. Thanks. Just to follow up to Rich's question.

Naveen Chopra: Anything you can tell us about, and maybe it doesn't matter anymore because you saw blended together, but the linear pricing you got on the charter side on the charter deal. And then I guess from a D to C standpoint, the subscribers have to activate for you guys to get paid. But number one, are you guys going to sort of market the service or what can you do to sort of drive penetration within those charter sub-bathes?

Naveen Chopra: And then do they, is there an engagement or sort of consumption issue as well? Once they activate once, then you sort of get paid going forward. Just any color, I'm just trying to get a sense of what the overall economic to that deal are. Thanks. Yeah, sure, John. It's navigating. Let me try to clarify that a little bit.

Naveen Chopra: I think it may be helpful to remember that the way that we structure our deals with distributors, and I'm not going to get into any specific deal, is with a focus on total company economics. You know, that used to be largely about cable and broadcast and premium linear networks. Now it includes all of those things plus, obviously, Paramount Plus. House. And so independent of how those things may be delineated for contractual purposes, for our financial reporting, we allocate those fees between, as I said earlier, our TV media segment and our D to C segment. So the revenue that we receive is not contingent on whether somebody activates or not. It's all part of the overall economics of our arrangement with the distributor. Thanks, John, operator.

Steven Cahall: Next question. The next question comes from Steven Cahall from Wells Fargo. Please go ahead. Thanks. So Naveen, just a few more on Paramount Plus profitability. Can you talk about the value of content that you expect on Paramount Plus this year from an amortization perspective, especially as you move into the back half the year when it's a little heavier. And with the guidance you have for next year, how much do you think that content value is going to grow in 25?

Steven Cahall: And just the housekeeping went on it, you said you'll be profitable for Paramount Plus in 2025. Is that different from four 25 as in a positive number for the full year? And then also George CBS affiliate, some out there of an indicating that reverse comp fees should really start to moderate or even decline because of the shift of streaming with things like Paramount Plus. How do you think about those station affiliate relationships and what their fair cost is of CBS national programming?

Steven Cahall: I think a lot of TV station margins are a lot higher than the CBS networks margins. So I'm just wondering about what you think is a fair way to share those economics, especially as the companies entering into this cost-cutting and more cash-generative mode that you all talked about.

George Cheeks: Thank you. Yeah, hey Steve, it's Navine, I'll start on the first part and then hand it to George to address the second part. So in terms of content expense on Paramount Plus, a few things to keep in mind. So number one, obviously 2024 is going to look sort of different on a year-over-year basis relative to 23, just given that it was a highly strike impacted year in 23. We're going to have more content in the back half of 24 than we did last year.

George Cheeks: Also remember that there is seasonality in our content expense. So one of the reasons that Paramount Plus was profitable, excuse me, the D to C segment was profitable in Q2 was because it was a lighter quarter in terms of content in particular. We don't have as much sports expense in the quarter as we do in the back half of the year. And that frankly is one of the reasons why the main goal we're focused on and this relates to the other part of your question is driving domestic profitability for Paramount Plus in 2025, which is intended to be a full-year goal.

George Cheeks: And I think that is obviously the more important measure of profitability is making sure that the business is profitable, not just in a particular quarter, but on a full-year basis. George, sure. So Steve, we're keenly aware of the changing industries dynamics and the challenges that our affiliates are facing. Now our role as the network in this partnership is to provide best-in-class content with maximum reach. And this means we've got to continue to invest in producing hit shows, our news programming, and investing in sports rights.

George Cheeks: Now in terms of the fair value, the fair value is really determined by the strength of our content, offering. And the good news here is that CBS is delivering on all fronts. I mean, we're number one in pride, number one in daytime, number one in late night. We have incredible sports portfolio led by the NFL, but including college football, NCAA, and golf. So again, our job is to make sure that we're providing best-in-class content for our affiliates to justify the content speeds that we charge up. Thanks, Steve.

Felicia Norby: Operator, we have time for one last question.

Bryan Kraft: Of course, the last question comes from Bryan Kraft from Deutsche Bank. Please go ahead. Thank you.

Bryan Kraft: I had to, if I could, just first, how is the company approaching licensing Paramount's content, the third party is relative to the prior regime. And related, I know Naveen talked about the outlook for the rest of this year for licensing, and I realize there are a lot of moving pieces with strikes, but the question is whether you think after 2024 licensing will still be a growth driver for the company. And then the second one is just was wondering if you talked a bit about the importance of sports.

Bryan Kraft: Would you be interested in, or will you pursue additional sports rights that might be coming up for renewal over the next couple of years so you don't currently have in this interim period before the merger closes, or is that something that would be revisited kind of post-merger? Thank you. Sure, Bryan. This is Bryan. I'll take the first part of the question. You know, for us, licensing is not either or. It's actually more.

Bryan Kraft: It's about driving more revenue, more reach, and more relevance for our content. But first and foremost, I think we're focused on maximizing the first-round value of our content on our own den-operated platforms and channels, whether that's through advertising, affiliate, or subscription revenues. And then of course, windowing is key, and it always has been key. And we will still continue to license our content to third-party platforms. And fortunately for us, our content is in demand.

Bryan Kraft: It's in demand from consumers, and it's in demand from other platforms. And we believe that not only do we drive more revenue by licensing to third-party platforms, but it also increases the demand of that content on our own platforms by opening it up to new eyeballs on other people's platforms, and then driving back to our own. So we will continue to license. We're very focused on creating the greatest opportunity while continuing to control our IP.

Bryan Kraft: And there's always going to be timing dynamics that are reflected in performance, but given the power of our content and IP, long-term licensing is a compelling business for us.

George Cheeks: And this is George and on this undersports question, Brian. So first of all, I would say we still really, really good about our current sports portfolio. We've got our core marquee franchises, but that being said, we'll always be opportunistic. In fact, we recently closed two soccer deals with EFL and Syria. So we will always be open in the market, but we're going to always take this discipline approach and make sure that our goal is to ensure that we're giving the right Streaming.

George Cheeks: Thanks, George. And now this is Chris. I'm going to close it out. And I'll be half my fellow co-searchos. We'd like to thank you for joining us for our call today. As you can see from our results, we're off to a very strong start in the first half of the year, executing well against our strategic plans. We continue to deliver some of the biggest, broadest-hit TV series and blockbuster films with a high-hit ratio.

George Cheeks: And our performance, this quarter reflects the power of that content and the actions that we've taken to strengthen the company. Now, looking ahead, we're clear-eyed about the additional work that needs to happen and we are confident we will deliver. We look forward to updating on our progress. Thank you everyone for joining us and have a

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