The inevitable M&A question came toward the end of Paramount Global‘s hourlong conference call with Wall Street analysts on Wednesday — a session that undoubtedly would have been more contentious for Paramount leaders if they hadn’t started out by serving up sacrifices for the greater good of free cash flow and profit.
Paramount Global CEO Bob Bakish waved off the inquiry from Bank of America Merrill Lynch media analyst Jessica Reif Ehrlich about the tidal wave of media speculation about suitors coming (and going) for the company with a breezy “We’re always looking for ways to create shareholder value.” But it was clear from the earlier commentary and business updates from Bakish and chief financial officer Naveen Chopra that they are charting a course for this year and next to take streamer Paramount+ to the promised land of profitability and keeps the company entact as a standalone entity.
Indeed, Bakish nodded to the endless chatter on the Street and in media about Paramount’s long-term fate. “Regardless of current market sentiment, we’re convinced that the value of our assets today, combined with the execution of our strategy as we move forward represents a significant value creation opportunity, and we are dedicated to unlocking that value,” Bakish said.
The unlocking process will include a $1 billion write-down to be taken in the current quarter. Bakish and Chopra promised Wall Streeters that the company will spend less to make and market movies and TV shows and they will get more bang for those bucks with more aggressive windowing of streaming content across linear assets and vice versa. Moves forced by necessity during the programming drought of last year’s strike months — “Yellowstone” reruns airing on CBS, for one — are helping to guide its future.
Bakish also emphasized that the company will also severely cut back its efforts to produce local-language content in overseas markets. Instead the company will focus on generating hot prospects at home.
“Internationally, it’s become unquestionably clear that Hollywood hits are the biggest draw for our audiences and partners around the world,” Bakish said. “Which means there’s a clear opportunity to lean into our CBS slate, Paramount+ originals and Paramount films while slowing spend on local content and associated marketing.” However, in the search for what the executives called “efficiencies,” Paramount will look to produce more TV programs and films overseas, where the cost of everything from hiring extras to an espresso at Starbucks is lower than in Los Angeles or New York.
“You will see us leaning even further into offshore production for our global franchises, including the upcoming London installment of ‘Billions,’ the new ‘Ray Donovan’ origin story as well as new series like ‘The Department’ from George Clooney,” Bakish said of three series on deck for Paramount+ with Showtime.
Bakish pointed to Paramount Pictures’ success so far this year with modestly budgeted theatrical films “Mean Girls” and “Bob Marley: One Love,” the biopic that has lead the U.S. box office for the past two weekends. “We’re improving ROI by lowering the average cost per title,” Bakish said, noting the film studio’s refined focus on “balancing high-budget tentpoles with more modest cost titles.”
(Pictured: “Bob Marley: One Love”)
More to come
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