Paramount Skydance Corp Q1 FY2025 earnings call

• D2C: Focused on profitable growth, Paramount+ had 79M global subscribers, up 11% YOY, with 1.5M new subs in Q1. Watch time per user up 17% YOY, churn improved 130bps. Content strategy with breakthrough originals driving success.
• TV Media: Leveraged content investments in sports, news, entertainment. Renewed key affiliate deals, CBS delivered strong audiences, TV Media OIBDA $922M, expenses down 4% YOY.
• Film Entertainment: Sonic the Hedgehog 3 was a major theatrical success, Gladiator 2 was number one movie on Paramount+, Mission: Impossible - The Final Reckoning set for May 23 premiere.

Direct to Consumer: In Q1, D2C revenue was $2 billion, up 9% year-over-year. Subscription revenue grew 16%, while D2C advertising revenue declined 9%. D2C OIBIDA improved nearly $180 million. Paramount+ ended the quarter with 79 million global subscribers, up 11% year-over-year, with revenue up 16%. TV Media: Q1 TV media advertising revenue, excluding the Super Bowl, was flat year-over-year. Affiliate revenue declined 8.6%. TV Media OIBDA was $922 million. Film Entertainment: Revenue was $627 million, up 4% year-over-year, and OIBDA was $20 million, compared to a loss of $3 million in the year-ago quarter, primarily driven by the success of Sonic the Hedgehog 3.

• Q2 linear advertising: Sports demand robust but Q2 volume lower than Q1. Digital advertising trends similar to Q1.
• Paramount+: Expected healthy revenue growth driven by ARPU acceleration, aiming for domestic profitability in 2025.
• Q2 subscribers: Decline due to content seasonality and termination of international hard bundle partnership.
• Film: Mission: Impossible - The Final Reckoning to contribute revenue but Q2 OIBDA loss expected.
• Full year: Continue to expect Paramount+ domestic profitability, but macroeconomic uncertainty, especially in advertising, may impact results later.

• Macro environment uncertainty, particularly in advertising, has the potential to impact results later in the year.

Q: Steven Cahall of Wells Fargo asked about Pluto and digital advertising pricing pressure and FCC's reverse comp on affiliate revenue.

A: Chris McCarthy said supply demand dynamics in digital will balance out, and engagement on Paramount+ and Pluto will lead to increased monetization; George Cheeks said CBS's relationship with affiliates is mutually beneficial and they've renewed 60 CBS affiliates.

Q: Robert Fishman of MoffettNathanson asked about licensing library content and sports rights bidding.

A: Brian Robbins said content licensing is a growth business but they use valuable IP to grow owned assets; Chris McCarthy said they have a robust sports portfolio and will be opportunistic with disciplined approach.

Q: Ben Swinburne of Morgan Stanley asked about linear declines and streaming growth drivers.

A: Naveen Chopra said linear decline driven by pay TV subscriber decline and deal renewals, streaming growth by subscriber growth, churn improvement, and ARPU.

Q: Richard Greenfield of LightShed asked about acquiring 101 Studios and Taylor Sheridan's relationship.

A: Chris McCarthy said they value Taylor and 101, have an exclusive with Taylor through 2028, and like the current relationship with Taylor and 101.

Q: Rick Preis of Raymond James asked about streaming combinations.

A: Chris McCarthy said they're happy with Paramount+ momentum and will be opportunistic with bundles, looking for value and acceleration.

Q: Kutgun Maral of Evercore ISI asked about TV media upside and Q2 linear trends.

A: Chris McCarthy said CBS's performance and scatter up double digits are positive; Naveen Chopra said full year guidance fundamentals in place but macro uncertainty impacts revenue.