Paramount Skydance Corp Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Financial Results: 2024 total company adjusted OIBIDA rose 30% to $3.1 billion, free cash flow was $489 million. Paramount+ added 10 million subscribers for the year, with Q4 seeing 5.6 million new subscribers. Engagement up >20%, revenue up 33%. Pluto TV had global watch time up 8% Y/Y and 16% in Q4.
• Content Success: Strong content slate included hits like 'Landman', 'Tulsa King', 'Lioness'. Showtime series 'Dexter: Original Sin' and 'The Agency' were top streamers. Franchises like Sonic the Hedgehog, Yellowstone, and South Park performed well.
• Distribution and Advertising: Renewed deals with Comcast and YouTube TV. D2C ad revenue up 18%. Focus on transitioning from linear to digital advertising, expanding client base to tens of thousands of small and mid-sized businesses.
• 2025 Outlook: Strong content slate for Paramount+ in 2025, including 'Yellowjackets Season 3', 'Yellowstone 1923 Season 2', new series 'MobLand' and 'Happy Face'. Aim to achieve domestic profitability for Paramount+ in 2025.

Segment Performance

• Direct-to-Consumer (D2C): Paramount+ added 5.6 million subscribers in Q4, reaching 77.5 million total. Watch time per user grew >20%, churn down over 100 basis points. D2C revenue grew 8% to $2 billion. Q4 D2C OIBDA improved by over $200 million year-over-year, but full-year D2C loss was $497 million.
• TV Media: Revenue declined 4% in Q4. Affiliate revenue down 6.7%, advertising down 4%. TV Media OIBDA was $949 million.
• Filmed Entertainment: Q4 revenue $1.1 billion. OIBDA loss of $42 million, better than prior year due to timing of Sonic 3 release.

Guidance

• Paramount+ expects to achieve domestic profitability in 2025.
• Full-year free cash flow is expected to grow in 2025, with Q1 free cash flow lower due to cash restructuring payments and the lap of the 2024 Super Bowl.
• Content spend is expected to be relatively flat in 2025, with more content remixing towards streaming.

Risks

• Linear ecosystem trends impacting TV Media affiliate and advertising revenue.
• Seasonality of content slate affecting D2C profitability in certain quarters.
• Dependence on successful content releases and subscriber growth to maintain momentum.

Question and Answer

Q: Thoughts on Paramount+ programming scale and partnerships, content spend A: Chris McCarthy discussed Paramount+'s success with content driving subscriber growth and revenue, noting the company's content spend in 2025 is expected to be relatively flat. Naveen Chopra added on content spend being normalized.

Q: Clarification on D2C profitability in 2025 and free cash flow A: Chris McCarthy confirmed focus on Paramount+ domestic profitability in 2025. Naveen Chopra discussed free cash flow expectations, noting restructuring impact and expected growth in 2025.

Q: DTC viewership vs revenue growth, Super Bowl and political impact A: Naveen Chopra linked D2C viewership growth to future revenue potential, and discussed the benefit from Super Bowl and political advertising in 2024.

Q: Advertising growth, licensing market A: Chris McCarthy talked about D2C advertising growth and linear strength, while Brian Robbins discussed the licensing business and internal content licensing benefits.

Q: Linear positioning, distribution deals, film slate financing A: George Cheeks discussed distribution protections and partnerships, and Brian Robbins provided insights on the film slate financing deal with Domain Capital