Q2 2025 Paramount Global Earnings Call

Good afternoon. My name is Victoria and I'll be the conference operator. Today at this time, I would like to welcome everyone to Paramount Global's second quarter 2025 earnings conference call. All lines have been muted to prevent any background noise at this time. I would now like to turn the call over to Jamie Morris, Paramount Global's EVP, Investor Relations. You may now begin your conference call. Good afternoon, everyone, and thank you for joining our Q2 2025 earnings call. Before we begin, I would like to remind everyone that in addition to our earnings release, we have trending schedules containing supplemental information available on our website.

In addition, certain statements made on this call are forward-looking statements that involve risks and uncertainties.

these risks and on certainties are discussed in more detail in our filings with the SEC.

Some of today's Financial remarks will focus on adjusted results.

Reconciliations of these non-gaap Financial measures can be found in our earnings released or in our trending schedules, which contains supplemental information. And in each case can be found in the investor relations section of our website.

As we detailed in the 8K file, last week, we expect the Paramount sky. Dance transaction to close on, August 7th 2025.

As a result, this will be our last earnings call with the company in its current configuration.

Today, we will share highlights of the quarter but we will not be taking questions.

On this call, we have Shari Redstone, Non-Executive Chair of our Board of Directors; Chris McCarthy, our Co-CEO, on behalf of his fellow Co-CEO; and Andy Warren, our Interim CFO. Now, let me turn the call over to Shari.

Thank you, Jamie.

Given this is the final earnings call under our current corporate structure. I wanted to take the opportunity to express, my thanks to our shareholders, for their investment in our business.

Into the others across the investment community who have followed us for many years.

I believe I can take it on faith that many on this call understand the enormous importance of this business to my family and to me.

Beginning nearly 40 years ago, my father Sumner Redstone built via common CBS by bringing together a group of the best assets in Media, news and entertainment.

While people often debated whether content or distribution ruled the day, my father's steadfast belief was that content was king.

Even against the backdrop of enormous change, the Core Business philosophy remains the reality for our business and industry.

That is a reality that Sky Dims surely understands.

I am confident that, with their vision for the business and the technology and resources they can bring to bear, they can build on Paramount's legacy and position it for long-term success and value creation.

I am proud that when the transaction closes, we will be turning over our healthy business, with a strong foundation for success.

1 year ago, that was not a foregone.

Focus and dedication of the people of Paramount under the leadership of George cheeks. Chris McCarthy, and Ryan Robbins.

George Chris, and Brian took on a very challenging job.

While continuing to lead in their core areas of responsibility, they work together to develop new content and strategic plans for the company, while also making difficult decisions to streamline the company's cost structure in order to secure the stability and growth potential of the business.

I will forever be grateful for their hard work, dedication and friendship.

While Chris will go into more detail about the company's Financial results on this call. I would be remiss, not to mention a few of the co-ceos accomplishments in those of the wonderful teams across our business.

I will start with streaming because it makes me so proud that while we only launch Paramount plus 4 years ago, we are already a top 4, global svod Service.

And we will be profitable in the US faster than many of our peers.

What is driven this performance?

Others might have more content, but Paramount+ has distinguished itself by delivering big, bold, breakthrough original scripted hits that consistently rank in the streaming service's top 10, plus incredible sports, kids, and unscripted content from across the company.

And as I am, particularly proud programming that informs and educates audiences about the issues. We face

As a society and around the world.

This is also the reason CBS has been the number one broadcast network for 17 years in a row, due to its range of entertainment, sports, and news programming.

And in cable, the company, has delivered the number 1 script series. Number 1 reality series number 1, late night show and number 1 kids show.

As for Paramount Pictures, it has continued to expand its hit franchises: Sonic the Hedgehog, Mission: Impossible, A Quiet Place, SpongeBob, Teenage Mutant Ninja Turtles, and more.

Taken together, this has driven improved bottom line performance in City strength and free cash flow.

In closing, it is truly been a privilege to work with George Chris and Brian over the past year to achieve the goals that have positioned this company. So well for the future,

And while it is never easy to step away, please know that has been an honor for my family and for me to serve as stewards of these assets over the past several decades.

We will always be chairing on Paramount in the talented, people who have made it what it is today.

Thank you.

Thank you, Sherry, and good afternoon, everyone.

When George Bryan and I became co-CEOs, our goal was to transform Paramount into a streaming-first company.

And today, we are substantially better positioned to thrive in the streaming future.

You only have to look to this quarter to see the shift where DC Revenue growth outpaced linear declines.

this was powered by an exceptional performance at Paramount, Plus,

We delivered industry-leading TV hits across both streaming and linear. While at the same time, this quarter breaking a record with the mission and possible franchise

At Paramount. Plus we made a Content strategy choice to go against conventional wisdom of more originals is better.

Our strategy isn't about the volume of Originals; rather, it's about the volume of original hits.

We close 2024, our first year as co-CEOs, and it was a transformative year.

Orbit of grew 30% to 3.1 billion dollars driven by a nearly 1.2 billion dollar Improvement in DDC profitability.

Now, this was powered by Paramount+, plus where our content strategy delivered.

We led with the most top 10 site Originals, behind only the market leader.

which drove increased engagement and improved churn. We added 10 million new subscribers, which solidified our place as a top 4 fund.

And resulting in revenue growth of 33%.

Now, since then we have not slowed down in the first half of 2025. We again, scored with the most top, 10, s flat Originals behind only the market leader.

Paramount+ revenue continued to grow by 19%.

Through my strong subscription, Revenue growth of 22%.

Approved. Another 100 basis points.

Over at CBS, we continued our leadership position as the most watched broadcast network in prime time for the 17th consecutive season.

We have 8 of the top 10 series and 14 of the top 20 series. That's more programs in the top 10 and top 20 than all other networks combined.

And Paramount Pictures continues to drive revenue for the business successfully, monetizing the value of our IP in theaters and downstream.

Over this past year, we added new installments of our valuable Bank of franchises, including Sonic the Hedgehog.

Smile.

Quiet place and Mission Impossible.

We also reshape the organization to be leaner and more Nimble reducing redundancies all with the goal to drive productivity.

Over the past four quarters, we've implemented over $800 million in annual run rate non-content expense savings.

Our progress is reflected in the results for the quarter.

Total company revenue grew 1% year-over-year to $6.8 billion. Most notably, DTC revenue growth outpaced linear declines.

In fact, strong subscription growth at Paramount, plus drove total company affiliate, and subscription Revenue growth, which accelerated to 5% D Toc generated adjusted to orbit of 157 million and Improvement of 6X versus year ago.

To put that in perspective, this year alone, we've improved DTC profitability by $300 million versus the comparable period a year ago.

Now, let's get into some detail at the to see.

Revenue growth accelerated to 15% driven Again by Paramount plus where total revenue grew 23% year-over-year and records were set.

For the third consecutive quarter, watch time per subscriber increased and was up 11% year-over-year.

And turn approved Again by 70 basis points year to year achieving a record low.

These results were powered by a strong content slate of original hits with landmen yellow jackets, the shy and MOB land, our newest top 10 S5 series which ranked as the number 1 series globally and active subscriber households on Paramount plus this quarter.

Looking ahead, we're thrilled to welcome South Park to Paramount plus this month here in the United States.

It has consistently been a top acquisition and engagement driver in international. And we have every confidence. It will do just as well for us here in the US.

We have our biggest hits to come, kicking off with Dexter: Resurrection.

Followed by the first NCIS franchise extension with Tony and Zea.

And continues with the non-stop Taylor Sheridan slate of hits.

Starting with *Tulsa King* in September.

Mayor Kingstown in October.

Followed by Lamman in December and, of course, an all-new Yellowstone franchise extension: The Dutton Ranch.

Now, turning to the TV media, when we talk about transforming into a streaming-first company, nothing says it better than the alignment with CBS and Paramount+.

This season, streaming of CBS series on Paramount+ grew 42% over the last year.

And year to date, CBS content accounts, for nearly half of all viewing on Paramount. Plus

CBS has consistently ranked as the number one broadcast network in prime time. Moreover, CBS is also ranked number one in multi-platform viewership.

Now turning to sports; live sports are more valuable today than ever before across both platforms.

This year's final 4 was the most watched in 8 years.

And cbs's Sports golf coverage in 2025 is up 13% year-over-year.

It's best performance in 7 years.

The power of this combined content is evident across distribution and advertising.

In June, we signed a new deal with DirecTV. That includes a curated selection of Paramount's most popular networks across entertainment, news, and sports in various DirecTV genre packs.

And we're nearing the completion of our upfront, where we see strong advertiser demand for sports and entertainment programming.

Turning the filmed entertainment, this quarter a record was achieved with Mission Impossible, the final Reckoning which was the biggest Global opening and franchise history.

I want a new film hit theaters. We see an immediate lift in the library content on Paramount+.

Release a mission impossible: the final reckoning for the month. The Mission franchise library saw a 60% lift in daily active subscriber households on Paramount+.

Now, this is a good example of how franchises drive revenue across every part of our business.

We are pleased with the results for the quarter, which represent our strong and continued progress in executing as a streaming-first company.

Now, let me turn it over to Andy to provide more detail on the financials.

And good afternoon, everyone.

Been to the second quarter numbers.

Paramount generated total company revenue of $6.8 billion and adjusted operating income of $824 million, reflecting continued year-over-year improvements in our direct-to-consumer segment.

Which will improve to $214 million, including approximately $70 million in payments for restructuring and cost reduction initiatives.

Now, let's discuss operating segment results, starting with Director of Consumer.

Paramount plus finish the quarter with 77.7 million subscribers by year year, increase of 9.3 million subscribers but down 1.3 million Subs versus 1 Q 255.

Can we really reflecting the anticipated expiration of an international distribution agreement? As well as the timing of Paramount plus premieres?

Paramount, plus our crew growth accelerated in the second quarter to a positive 9% increase year-over-year.

In year-over-year, subscriber growth.

Return reduction and RPO improvement. Joe Paramount, plus revenue to increase nearly $330 million versus Q4.

In total, there are 2 consumers, generating revenue of $2.2 billion, growing 15% year-over-year, despite a 4% decline in DTC advertising, which continues to be impacted by increased supply and the digital ad marketplace.

Separately, DTC subscription revenue growth accelerated to a robust 22%, turning to our TV media segment. Media segment linear TV trends continue to pressure advertising and affiliate revenue.

TV media revenue was $4 billion in the second quarter, with operating income of $863 million.

TV media, advertising Revenue was down 4% year-over-year. Its higher cpms were more than offset by viewership declines.

We are nearing completion of our 2026 upfront.

Which will remain overall volume consistent with last year, driven by increased sports and streaming sales.

Streaming accounted for almost 30% of total upfront volume. While demand for sports portfolio was very strong cost of the board and saw double digit growth.

Our TV media affiliate, Revenue declined 7% versus the prior year.

Largely reflecting Market, subscriber trends.

However, in more importantly, the combination of our traditional and streaming businesses. Again yielded net Positive Growth with total company affiliate and subscription revenue of 5% in the second quarter, a positive acceleration. This is the first quarter of this year.

Lastly, in the filmed entertainment segment, we generated second-quarter revenue of $690 million, a 2% year-over-year increase.

There was a loss of $84 million in the quarter, which compares to a loss of $54 million in the same quarter last year.

This year-over-year change in orbit off, primarily reflects lower profit from licensing.

Regarding forward-looking statements, as you can appreciate with the Scotty and transaction closing on August 7th, it would be inappropriate for us to outline full year 2025 financial expectations for Paramount's standalone results.

In summary our first half results demonstrate that. Our Global teams remain focused on operating execution as we prepare for the deal to close.

Now, let's turn the call back over to Chris for closing comments.

As this will be our last earnings call before we close the sky dance. Transaction, allow me to take a moment on behalf of my co-ceo Brian and George to thank the people responsible, for our successful shift into a streaming first company.

To our teams, our partners, the board, and to share it: thank you for your support and efforts.

We talk a lot about hit TV series TV series, and Blockbuster films.

And hard work and efforts from every person in every Department across the entire company.

Against enormous headwinds and challenges, this team continued to be resilient and unwavering in your commitment to execute with excellence and, more importantly, to support each other with compassion.

It's that combination that truly made the difference. You should be very proud of all of your efforts; they've helped to make Paramount substantially stronger today.

We'd also like to thank the Redstone family for their stewardship of the company over the last 40 years.

Some, the Redstone was a Visionary who predicted where the industry was going before anyone else.

And under sher's leadership, Paramount has transitioned, from a disconnected collection of TD assets into a streaming first company with a powerful portfolio of hit content and franchises.

Now, despite the naysayers and against all the odds,

Share you did. What you thought was, right?

you pushed us forward with the mission to combine these companies,

And just look at what we've achieved.

What were the last to launch only 4 years later Paramount plus is a top 4 global esot Service.

Your vision has been realized.

And what made that possible was content being being King.

Hit TV series and blockbuster films, just as your father had predicted.

We thank you, Sherry for your vision, to see where it was all going and your leadership of the company.

And on a personal level, for your friendship to all of us.

And to our board. Thank you for your dedication and guidance throughout a very eventful year. We appreciate each and every 1 of you.

Looking ahead under David Ellison's leadership, the next chapter of Paramount is sure to be another historic one.

We'd like to thank David. And this guidance, Redbird teams of Jeff shell, Amy Gordon and Cindy Holland for their partnership. Throughout this transition, we are excited to see what you do.

And you have a great team here to help you.

With that, thank you for joining us and have a good night.

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.