Paramount Cuts 1,600 Jobs as Ellison Team Strengthens Hold
Paramount has announced significant changes under the leadership of David Ellison, who recently completed his first 96 days as chairman and CEO. In a recent call with analysts, he revealed a proactive financial outlook for the coming year alongside plans to reduce the workforce by 1,600 positions. This announcement follows the merger of Ellison’s company, Skydance Media, with Paramount in August, a deal worth $8 billion.
Workforce Reduction and Efficiency Goals
Paramount’s decision to cut 1,600 jobs stems from the recent divestiture of its television stations in Chile and Argentina. This move adds to previous layoffs, with 1,000 jobs eliminated last month, primarily in the United States. The company aims to enhance operational efficiency and seeks to reduce its workforce by 15% overall.
- 800 employees were laid off in June, prior to the merger.
- Overall workforce reductions aim for a total of approximately 3.5% across the company.
Financial Commitments and Future Plans
Despite job cuts, Ellison plans to increase Paramount’s content budget by $1.5 billion next year. The goal is to nearly double the film output from eight releases to 15. The renewed focus on programming follows years of under-investment in content.
Additionally, Paramount is committed to bolstering its streaming service, Paramount+. The service will see subscription fee increases, with current plans priced at $7.99 and $12.99 per month. Executives emphasize the importance of transitioning streaming operations toward profitability.
Strategic Partnerships and Industry Moves
As part of a broader strategy, Paramount has been in talks for a potential merger with Warner Bros. Discovery. This proposed union would combine two of Hollywood’s leading film studios and incorporate HBO Max into Paramount’s portfolio. Ellison has highlighted his commitment to building and transforming Paramount, saying there are no ‘must-haves’ for acquisitions, focusing instead on enhancing core company principles.
Financial Performance and Revenue Expectations
In the third quarter, Paramount reported total revenues of $6.7 billion, remaining flat compared to the previous year. However, the company incurred a net loss of $257 million during the quarter. Streaming services, including Paramount+, gained 1.4 million subscribers, raising the total to 79 million. Notably, 1.2 million of these subscriptions are from free trials.
- Quarterly revenue for streaming operations increased by 17%.
- Paramount expects to generate $30 billion in total revenue by 2026.
- Adjusted operating income before depreciation and amortization projected at $3.5 billion for 2026.
In addition to focusing on cost reductions, Ellison’s administration has committed to high-profile content agreements. This includes a $7.7 billion deal for UFC rights and a $1.25 billion investment for ongoing “South Park” creation.
Despite these investments, a notable setback occurred with Taylor Sheridan, the creator associated with the “Yellowstone” franchise, who will be departing Paramount for NBCUniversal.
As the market awaits the impact of these strategic decisions, Paramount’s shares closed at $15.25, a slight increase of 1%, prior to the earnings announcement.
