Revenue Falls Short as Cost Savings Target Increases
Paramount recently reported its third-quarter results, highlighting a revenue shortfall against Wall Street expectations. During the period from July to September, the company generated $6.7 billion in revenue, falling short of the anticipated $7 billion. This marks the first earnings report following the Skydance merger, which was finalized on August 7.
2026 Projections and OIBDA Expectations
While current revenue may be lacking, Paramount’s leadership remains optimistic about future growth. The company has outlined projections for 2026, forecasting a total revenue of $30 billion. This expected increase is anticipated to stem from a significant rise in streaming revenue and overall global profitability. CEO David Ellison indicated that operating income before depreciation and amortization (OIBDA) is expected to reach $3.5 billion on an adjusted basis.
Cost Savings from the Skydance Merger
In light of these financial projections, Paramount has revised its cost-saving targets resulting from the Skydance merger. Initial estimates of $2 billion have been increased to $3 billion. As part of this strategy, the company is undergoing a downsizing process, leading to job cuts for approximately 2,000 employees, which constitutes around 10% of its global workforce.
Challenges in Advertising Revenue
During the third quarter, Paramount’s advertising revenue continued to decline, plummeting by 12% to $1.465 billion. This decrease contributed significantly to an overall net loss of $257 million. Despite these challenges, investors responded positively to the company’s earnings announcement, with shares rising by 3% in after-hours trading.
Future Directions and Strategic Goals
Ellison expressed confidence in the new direction for Paramount following the merger with Skydance. He emphasized the importance of technology and innovative storytelling in shaping the future of entertainment. The letter shared with shareholders outlined four key priorities:
- Making technology a core competency.
- Enhancing industrial efficiency across operations.
- Unifying the organization under cohesive leadership.
- Optimizing the workforce for future needs.
Ongoing Deal-Making and Acquisitions
Despite workforce reductions, Paramount has continued to engage in deal-making. Notable transactions include a $7.7 billion investment for UFC rights and a reported $150 million purchase of Bari Weiss’s The Free Press. Additionally, Paramount has attracted significant talent, recently bringing the Duffer Brothers from Netflix, though losing Yellowstone creator Taylor Sheridan to NBCUniversal.
Paramount has also expressed interest in acquiring Warner Bros. Discovery, with multiple offers expected to be in the vicinity of $60 billion. The potential acquisition or division of WBD highlights the company’s aggressive growth strategy.
In summary, while Paramount’s revenue fell short, their focus on cost savings and future projections indicates a commitment to navigating current challenges and pursuing strategic growth opportunities.
