Paramount Skydance Corporation Class B Common Stock (PSKY) Earnings

Management highlights

### Core Strategic Progress (One Year Post-Skydance Merger) - Delivering on the three core priorities for the new Paramount: investing in premium storytelling, scaling global direct-to-consumer (DTC) business, and driving enterprise-wide efficiency - Nearly doubled the annual theatrical slate, expanded top-tier creative talent partnerships, greenlit 40 new/returning series for Paramount+, and expanded the live sports portfolio to include UFC and Zuffa Boxing, while extending existing partnerships with UEFA alongside existing rights for the NFL, WNBA, PGA Tour, and March Madness ### Streaming Platform Operations - Convergence of the Paramount+, Pluto TV, and BET+ tech stacks remains on track for completion by the end of summer 2026; the Pluto TV web experience launched June 30, 2026 - Unifying previously siloed data will enable improved personalization, content discovery, engagement, ad monetization, and cross-service merchandising, and resolves inherited technical debt to enable faster iteration going forward; select new content investments for Pluto TV are planned for Q4 2026 following the relaunch - Paramount+ reached nearly 82 million global subscribers, posted its best ever quarter for subscriber retention, and delivered double-digit year-over-year total view hour growth, while expanding margins through the first half of 2026 ### Proposed Warner Bros. Discovery (WBD) Combination - The deal has received regulatory clearance from 65 global jurisdictions, including the U.S. federal government, Canada, the EU, and China; all approving regulators have concluded the deal raises no competition concerns - All transaction financing is fully locked and committed; management remains highly confident the deal will close, and is prepared for litigation scheduled for March 2027, while remaining open to an out-of-court resolution ### Efficiency and Cost Synergy Progress - The company is tracking to achieve $2.7 billion in annual run-rate cost synergies from the Skydance-Paramount merger by the end of 2026, with a total target of $3 billion+ in total run-rate savings (up from an initial $2 billion target) ### Artificial Intelligence Strategy - Management views AI as a tool for storytellers, not a replacement for human-created content; the company fiercely defends its copyright and the rights of its creative talent - AI is expected to unlock creative opportunities (enabling lower-cost production of original content that would otherwise be unviable) and drive operational efficiencies, particularly in software development (project delivery speed is up ~50% already) - AI will enable new interactive fan engagement with existing intellectual property to deepen fandom, while the company remains focused on premium handcrafted storytelling, which continues to command market premium ### Studios Rebuilding Progress - Expanded annual theatrical output from 8 films in 2025 to 15 films in 2026, on track to deliver 90 series and 800 television episodes in 2026 - Implemented more data-driven discipline for greenlighting, marketing, and distribution, improving marketing ROI; licensing revenue has also improved following strategic updates to deal terms

Guidance

- Full-year 2026 consolidated revenue guidance is maintained at $30 billion - Full-year 2026 adjusted EBITDA guidance is raised to a range of $3.8 billion to $3.9 billion, driven by faster-than-expected synergy realization and cost management outperformance - Full-year 2026 free cash flow conversion guidance (pre-transformation costs) is raised to at least 10% from the prior 5% target; 10% conversion is not the long-term end target, with multi-year upside expected as content investment ramps stabilize - Q3 2026 guidance expects revenue of $6.95 billion to $7.15 billion, representing 4% to 7% year-over-year growth (an acceleration from prior quarters), with adjusted EBITDA expected between $875 million and $975 million - Paramount+ subscriber counts are expected to be relatively flat quarter-over-quarter in Q3 2026 - Overall company advertising revenue is expected to return to growth in the second half of 2026, with Pluto TV expected to return to growth after its summer relaunch - Studio profitability is expected to remain on a sustained positive growth trajectory through the end of 2026 and into 2027, driven by higher output volume, improved marketing discipline, and strong licensing momentum - DTC revenue growth is expected to accelerate in the second half of 2026, driven by both subscription and advertising gains

Segment performance

1. Direct-to-Consumer (DTC, Paramount+): Revenue grew 16% year-over-year. Added 2.0 million net subscribers in Q2 to reach 81.6 million global subscribers, with 4.0 million underlying subscriber additions before hard bundle exits (nearly double Q1's level. Adjusted profitability margins expanded in the first half of 2026, with double-digit year-over-year growth in total view hours and record-high subscriber retention. Around one-third of DTC revenue growth came from subscriber gains, while two-thirds came from ARPU increases from pricing actions and improved subscriber mix. Paramount+ delivered double-digit advertising growth driven by premium live content and rising sell-through rates. 2. Studios: Revenue grew 16% year-over-year. Adjusted EBITDA was $36 million in Q2, a swing to profit from a year-ago loss. Full-year 2026 profitability is expected to grow versus 2025. Theatrical performance beat internal plans, with marketing efficiency improving (each dollar of marketing spend generated 11% more box office than prior periods). Television studios saw double-digit licensing growth from third-party content deliveries and consolidated Skydance licensing. The segment currently has over 90 series in production across the group for 2026, with a growing 2027 theatrical pipeline. 3. TV Media: Profit grew 14% year-over-year even as revenue declined amid ongoing linear industry declines. Q2 advertising revenue fell 14% year-over-year, with 8 percentage points of the decline from lapping the 2025 NCAA Final Four, 3 percentage points from the sale of international assets (Telefe/Chilivision), partially offset by a 2 percentage point benefit from political advertising. Affiliate revenue declines have slowed as overall linear subscriber decline rates moderate, with stable affiliate rate resilience. Overall, margins improved as the business cut costs to offset lower revenue. Total company: Consolidated adjusted EBITDA grew 27% year-over-year to $1.1 billion in Q2, with profitability up across all three segments.

Risks & headwinds

- The proposed WBD combination faces ongoing litigation that will not go to trial until March 2027, creating extended deal timeline risk - A delayed closing increases incremental costs: $8 to $9 million per month in bridge financing fees, plus a 25 cent per share per quarter ticking fee for WBD shareholders (totaling ~$650 million per quarter) that is payable only at closing; total incremental financing costs would reach ~$190 million if closing is delayed until June 2027 - The company continues to face secular linear TV revenue and subscriber declines from ongoing cord cutting, even as decline rates have slowed recently - Pluto TV revenue has remained a drag on overall ad results, pending its post-convergence relaunch in summer 2026 - The company is in an investment phase for DTC and studios, with elevated content spend weighing on current free cash flow that will only moderate over time

Analyst Q&A

• Q: Can you update the status of the WBD transaction, and what happens if it does not close? /

  A: Management remains highly confident the transaction will close, having already received regulatory approval from 65 jurisdictions that all found no competition concerns. Combined market share would be less than 20% of TV watch time (13.4% including YouTube) and 18-22% of domestic box office, making the combined entity a stronger competitor to large global streaming and studio players. All financing is fully committed. While open to an out-of-court solution to ongoing litigation, management expects to win at trial scheduled for March 2027.

• Q: If the WBD transaction closes late, what additional incremental costs will Paramount incur, and is liquidity sufficient? /

  A: Incremental costs after September 30 are modest bridge financing fees of $8-9 million per month, plus a $190 million total bridge commitment fee due June 2027 if closing is delayed that long. A 25 cent per share per quarter ticking fee (~$650 million per quarter) for WBD shareholders is payable only at closing, funded via additional equity. Paramount ended Q2 with $1.6 billion in cash and $3.2 billion in undrawn revolver capacity, which is sufficient to fund operations and transaction costs through an extended timeline, and full-year free cash flow guidance has already been raised 10% pre-transformation costs.

• Q: Is double-digit DTC revenue growth sustainable for Paramount+ over the medium term, given slowing growth at peer services? /

  A: Yes, double-digit growth is sustainable. Q2 delivered 16% year-over-year revenue growth, with strong accelerating momentum: 4 million underlying subscriber additions (nearly double Q1), record retention, and double-digit engagement growth. Paramount+ is still not at scale relative to larger competitors, leaving significant domestic and international growth runway for both subscribers and ARPU. Strong content performance (e.g. *Yellowstone* spin-offs, UFC, 2026 World Cup) has driven accelerating gains, and management will continue investing to grow the business long-term.

• Q: Is the convergence of Paramount+, Pluto TV, and BET+ still on track for summer 2026, and what early metrics will you track to measure success? /

  A: Convergence remains on schedule, with the Pluto TV web experience already live as of June 30, 2026, and full completion of the integration planned by the end of summer. Key early metrics to watch include improved content personalization/recommendation quality, better user discovery and engagement, improved ad experiences and higher unified ad monetization, and better cross-service content merchandising enabled by unifying previously siloed data. The integration resolves inherited technical debt, allowing faster product iteration going forward, and select new Pluto TV content investments are planned for Q4 2026.