Paramount Skydance Reports Q3 Loss Amid TV Revenue Decline
Paramount Skydance has reported a loss for the third quarter, highlighting ongoing challenges within the media conglomerate. The company, which oversees well-known brands such as CBS and Paramount+, has seen a significant downturn in revenue from its core television operations. The revenue decline is attributed to falling TV advertising sales and distribution fees.
Financial Overview of Q3
In the third quarter, Paramount’s pro forma revenue decreased by 3%, reaching approximately $6.1 billion. Key figures include:
- TV advertising revenue fell by 12%.
- Fees from TV distribution dropped by 7%.
New Management, Same Challenges
This quarter marks the first under the leadership of new owners, the Ellison family, who have set modest expectations moving forward. The workforce stood at around 1,000 employees at the end of October, with more layoffs anticipated due to shifts in viewership from traditional linear TV to on-demand streaming services.
Cost-Saving Strategies
Paramount has raised its post-merger cost-savings target from $2 billion to at least $3 billion. The majority of these savings are projected to result from “non-labor” costs. The company is also investing heavily in its streaming business to compete with industry giants like Netflix and Amazon.
Recent Strategic Moves
In a bid to strengthen its portfolio, Paramount has made several significant commitments:
- A $7.7 billion, seven-year deal with TKO Group to broadcast UFC matches.
- The acquisition of The Free Press for $150 million, appointing founder Bari Weiss as the top editorial executive at CBS News.
- Negotiations to acquire Warner Bros. Discovery, a historically significant media competitor.
Future Projections and Costs
In its recent letter to shareholders, Paramount projected total revenue of $30 billion by 2026, with streaming profits expected to grow within the next year. The company plans to invest over $1.5 billion in programming by 2026.
However, new costs are on the horizon. Paramount anticipates transformation costs in the upcoming quarter that could reach several hundred million dollars, alongside a restructuring charge of approximately $500 million.
Divestitures and Workforce Implications
To streamline operations, Paramount has initiated a review of its assets. This includes the divestiture of Televisión Federal in Argentina and the ongoing process of selling Chilevision in Chile, expected to finalize by the first quarter of 2026. These actions will result in the elimination of about 1,600 additional positions.
Despite its ambitious plans, Paramount Skydance faces a critical challenge: the enduring decline of its linear television assets and associated cash flows. Analysts maintain a cautious outlook on whether the shift towards direct-to-consumer (DTC) strategies can effectively compensate for these losses.
