Paramount CEO Downplays Impact of 3-Headed Sports Skinny Bundle
The head of Paramount Global today suggested that the parent company of CBS isn’t much bothered by its rivals’ plans to launch a sports-dedicated skinny bundle, telling analysts that the coming Disney/Fox Corp./Warner Bros. Discovery service leaves much to be desired.
Speaking during the Q&A section of the company’s fourth-quarter earnings call, Paramount president and CEO Bob Bakish gave the yet-to-be-named venture the virtual side-eye.
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“Look, there’s still a lot we don’t know about this service—things like price, packaging, consumer appetite,” Bakish said, when asked if news of the streaming triumvirate would inspire CBS to look to establish a similar dynamic with the likes of NBCUniversal. “To the consumer point, for a true sports fan, this product has only a subset of sports. It’s missing half the NFL, a lot of college, has virtually no soccer or golf, you know, etc.
“It’s hard to believe that’s ideal, especially at the price points that have been speculated,” Bakish added. Analysts believe the new sports platform will cost anywhere between $40 and $50 per month, which is well over the basic Paramount+ subscription fee ($5.99/month).
Bakish went on to say that Paramount serves “true sports fans” through its partnerships with cable, satellite and telco-TV operators, as well as with the virtual MVPDs. “That provides the full complement of sports, really year-round.” Bakish also noted that the company was a big believer in its integrated sports-and-entertainment strategy, the dynamics of which are reflected in the Paramount+ usage stats. The CEO said that 90% of consumer engagement on the streaming platform is with non-sports content.
“Bottom line, we very much like where we are with respect to sports execution and see the Paramount strategy creating substantial value therein,” Bakish said.
Paramount reported mixed results for the quarter, as adjusted earnings per share ($0.04) beat Wall Street’s expectations ($0.00), while revenue fell some $250 million short of a consensus target of $7.89 billion. A 15% drop in TV ad revenue coincided with CBS’ strongest NFL performance since 1998, as the primetime entertainment market continues to reel from the impact of the twin Hollywood strikes and tough comps with the year-ago numbers, which were boosted by political spend.
On the direct-to-consumer side of the ledger, the company reported 67.5 million Paramount+ subs at quarter’s end, with revenue up 69%. Operating losses came in at $490 million, on revenue of $1.86 billion, as Paramount+ rallied from its Q4 2022 loss of $575 million on revenue of $1.39 billion. Bakish said the DTC segment would be profitable by 2025.
As for the current ad environment, Bakish said his sales team is seeing signs of stabilization. “Sports clearly remains a bright spot: NFL, Super Bowl and I’m thrilled that we have the NCAA [men’s college basketball tournament] and UEFA and the Masters as we continue into 2024,” Bakish said.
Worth noting: While March Madness is undoubtedly a highlight of CBS’ sports calendar, with the broadcaster and its cable partners TNT, TBS and truTV booking more than $1 billion in ad revenue a year ago, no one’s been able to figure out how to make a fortune on the mostly commercial-free experience that is soccer. Moreover, the limited ad breaks in the Masters are designed to merely offset production costs.
Bakish said the scatter market has been given a boost by way of “healthy growth” among the consumer-packaging, fast-food and retail categories.
The CEO went on to assure investors that Paramount has “many levers to pull” as it negotiates its carriage deal with Charter, which expires in April. Charter closed out 2023 with 13.5 million residential video subscribers, making it the country’s second-largest pay-TV operator behind Comcast (14.1 million).
At the close of the aftermarket call, Bakish sidestepped a question about a possible sale of Paramount’s assets. On Tuesday, CNBC reported that WBD had halted its pursuit of a merger with Paramount, although Skydance Media is said to be still kicking the tires on an M&A deal.
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