Business Overview and History
Paramount Global, formerly known as ViacomCBS, has a rich history dating back to the early 20th century. The company's roots can be traced to the founding of CBS in 1927 and the merger of Viacom and CBS in 2019. Over the years, Paramount has amassed an impressive portfolio of content, distribution platforms, and consumer-facing brands, making it a well-diversified and influential media conglomerate.
The company was originally formed in 1986 when Viacom Inc. was separated from its parent company. In 2005, Viacom Inc. was again split into two publicly-traded companies - the new Viacom Inc. and CBS Corporation. The 2019 merger brought these entities back together, combining iconic consumer brands such as CBS, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, and Pluto TV under one umbrella.
Throughout its history, Paramount Global has faced numerous challenges and transitions. In the early 2000s, the company underwent significant restructuring efforts, including major layoffs and asset sales, in response to industry trends and competitive pressures. The 2019 merger of CBS and Viacom was also a major undertaking, as the companies worked to integrate their operations and realize synergies.
Despite these challenges, Paramount Global has remained a prominent player in the media landscape. The company is home to one of the industry's most extensive libraries of television and film content, with franchises such as Star Trek, NCIS, and Transformers. Paramount Global has also successfully built up its streaming capabilities in recent years, with the launch of services like Paramount+ and the growth of Pluto TV.
In 2024, Paramount took a significant step forward in its strategic transformation by announcing a transaction agreement to merge with Skydance Media, a leading independent entertainment company. This $8 billion deal aims to create a stronger, more integrated media powerhouse capable of navigating the constantly evolving streaming landscape.
Financial Performance and Key Metrics
Paramount's financial performance in recent years has been marked by both challenges and successes. In 2024, the company reported total revenues of $29.21 billion, a slight decrease of 1% compared to the previous year. However, the company's direct-to-consumer (DTC) segment, which includes its streaming services, saw a significant improvement, with revenues growing by 13% to $7.63 billion.
The company's adjusted OIBDA (Operating Income Before Depreciation and Amortization), a key metric that excludes one-time charges and other items, increased by 30% to $3.12 billion in 2024. This growth was driven largely by the strong performance of the DTC segment, which reported a $1.2 billion improvement in profitability.
Paramount's streaming platform, Paramount+, has been a central focus of the company's transformation efforts. In 2024, Paramount+ added 10 million new subscribers, reaching a total of 77.5 million global subscribers. The platform's engagement metrics also saw significant improvements, with a 20% year-over-year increase in watch time per user and a more than 100 basis point reduction in churn.
While the company's traditional TV Media segment, which includes its broadcast and cable networks, faced challenges with declining linear viewership and affiliate fees, Paramount has been proactively transitioning its advertising business from linear to digital. In 2024, the company's DTC advertising revenues grew by 18%, highlighting its ability to adapt to industry shifts.
For the fiscal year 2024, Paramount reported a net loss from continuing operations attributable to Paramount of $6.20 billion, or $9.36 per diluted share, compared to a net loss of $1.28 billion, or $2.06 per diluted share, in the prior year. However, adjusted net earnings from continuing operations attributable to Paramount improved by $641 million, or $1.02 per diluted share, primarily due to the higher Adjusted OIBDA and lower interest expense and equity investment losses.
The company's operating cash flow for 2024 was $752 million, with free cash flow reaching $489 million. Paramount's balance sheet showed $2.66 billion in cash and cash equivalents as of December 31, 2024, with a total debt of $14.50 billion and total equity of $16.78 billion. The company also maintained a $3.50 billion revolving credit facility, which remained undrawn at the end of 2024.
In terms of liquidity ratios, Paramount reported a current ratio of 1.30 and a quick ratio of 1.15, indicating a relatively stable short-term financial position. The company's net leverage ratio improved to 3.8x by the end of 2024.
Navigating Regulatory Challenges and the Pending Skydance Merger
Paramount's proposed merger with Skydance Media has faced regulatory scrutiny and legal challenges, with a Delaware judge indicating a willingness to consider allegations that the deal shortchanges public shareholders. The lawsuit, filed by a group of New York City pension funds, claims that Paramount's board breached its fiduciary duties by rejecting a higher $13.5 billion bid from Project Rise Partners.
Despite these legal hurdles, Paramount remains committed to completing the Skydance transaction, which it expects to close in the first half of 2025. The company believes that the merger will create significant synergies and strengthen its position in the streaming landscape, allowing it to better compete with larger rivals like Netflix and Disney.
Strategic Initiatives and Future Outlook
Paramount's strategic focus has been centered on strengthening its content offerings, expanding its streaming presence, and optimizing its traditional media businesses. The company's robust content pipeline includes highly anticipated titles such as the next installment of the Mission: Impossible franchise, an original live-action comedy from the creators of South Park, and new animated films for its popular Smurfs and SpongeBob SquarePants franchises.
In the streaming arena, Paramount is committed to achieving domestic profitability for Paramount+ in 2025, a significant milestone that demonstrates the platform's growth and the company's ability to manage costs effectively. The company is also exploring opportunities to drive additional value from its content through innovative windowing strategies and evolving distribution models.
While the traditional TV Media segment faces ongoing challenges, Paramount remains focused on proactively managing expenses and leveraging its strong sports and news offerings to maintain its competitiveness. The company's multi-platform approach, which seamlessly integrates its linear and streaming assets, has been a key differentiator in the industry.
Looking ahead to 2025, Paramount expects continued OIBDA growth on an underlying basis, though the first quarter of 2025 will see a year-over-year decline due to the timing of the Super Bowl (which significantly benefited Q1 2024) and increased costs. The company anticipates full year 2025 free cash flow to increase compared to 2024, even with the impact of the Super Bowl and political advertising. Paramount's total company content spend is expected to remain relatively flat in 2025 compared to 2024, as they reach a more normalized level of content investment.
Business Segments
Paramount Global operates through three main business segments: TV Media, Direct-to-Consumer, and Filmed Entertainment.
The TV Media segment, which generated approximately 65% of Paramount's consolidated revenues in 2024, encompasses the company's domestic and international broadcast networks, including the CBS Television Network, owned television stations, and international free-to-air networks such as Network 10, Channel 5, Telefe, and Chilevisión. It also includes domestic premium and basic cable networks like Paramount with Showtime, MTV, Comedy Central, Paramount Network, The Smithsonian Channel, Nickelodeon, BET Media Group, and CBS Sports Network. The segment's revenues primarily come from advertising, affiliate and subscription fees, and content licensing and distribution.
The Direct-to-Consumer segment, accounting for about 26% of consolidated revenues in 2024, includes Paramount's portfolio of domestic and international pay and free streaming services, such as Paramount+, Pluto TV, and BET+. This segment's revenues are mainly derived from advertising and subscription fees.
The Filmed Entertainment segment, contributing approximately 10% of consolidated revenues in 2024, consists of Paramount Pictures, Paramount Players, Paramount Animation, Nickelodeon Studio, Awesomeness, and Miramax. This segment focuses on the production and acquisition of films, series, and short-form content for global release and licensing across various platforms.
Risks and Considerations
Paramount Global, like other media companies, faces a range of risks and challenges that could impact its future performance. These include continued declines in linear viewership, intensifying competition in the streaming space, regulatory uncertainties surrounding the Skydance merger, and potential changes in consumer behavior and preferences.
Additionally, the company's reliance on a limited number of large customers for a significant portion of its revenues could expose it to concentration risk. Paramount must also navigate the evolving landscape of data privacy and regulation, which could introduce additional complexities and compliance costs.
Conclusion
Paramount Global has demonstrated its resilience and adaptability in the face of a rapidly changing media landscape. By leveraging its iconic brands, investing in compelling content, and strategically transitioning its business model towards streaming, the company has positioned itself as a formidable player in the industry.
As Paramount navigates the regulatory hurdles surrounding the Skydance merger and tackles the ongoing challenges in its traditional TV Media segment, the company's focus on innovation, cost optimization, and delivering value to its audiences and shareholders will be crucial. With a robust content pipeline, a growing streaming presence, and a commitment to strategic transformation, Paramount Global appears well-equipped to weather the storms of the streaming era and emerge as a leading force in the media and entertainment industry.