Paramount ‘Focused on Execution’ of Streaming Plans as Acquisition Talks Swirl; No Price Hike in 2024
Paramount’s top financial executive Naveen Chopra would not comment on M&A talks, except to say the company was always looking to create value for shareholders.
Paramount executives are well aware that merger and acquisition talks around the company have been fairly constant since December. Company CFO Naveen Chopra had the chance to discuss those reports directly at the 2024 Morgan Stanley Technology, Media and Telecom conference, and while he did not exactly offer a denial that the company was up for sale, he was more interested in discussing its plans to achieve domestic streaming profitability for Paramount+ by 2025.
- Chopra would not comment in detail on talks that Paramount might be acquired by another company.
- Customers should expect Paramount+ to increase prices in the future, but likely not in 2024.
- Viewers should expect more streaming titles from Paramount+ to end up on Paramount-owned cable channels in the future.
“Look, the answer is pretty straightforward,” Chopra said about M&A discussions. “From management’s perspective, we are focused on execution. And we believe the continued execution of our plan will unlock value. We’re very conscious of the fact that our job as management is to create value for all of our shareholders.”
The CFO said that the company would be “diligent” about exploring opportunities that would create value for shareholders, but refused to comment in detail about rumors that the company was going to be acquired. M&A talks first kicked up in earnest in December, when Warner Bros. Discovery reportedly engaged Paramount in conversations about a merger. WBD has since pulled out of the discussion, but David Ellison's Skydance Media and Byron Allen of Allen Media Group have both also had preliminary talks with Paramount.
The CFO did indicate that Paramount would still be on the lookout for “creative opportunities to divest,” which would help it trim its expenses. A big round of layoffs hit the company earlier this year as part of its efforts to cut down on costs, reportedly including the entire staff of its kids’ streaming service Noggin, which is due to be sunset in 2024.
During the conference, Chopra discussed additional details about Paramount’s plan to achieve its goal of streaming profitability in the United States by 2025. One of the key metrics in whether or not a company is successful or not is if its average revenue per user (ARPU) is increasing, and an easy way to boost this number is simply by raising prices. While Paramount+ customers can expect their subscription costs to rise at some point in the future, Chopra said that viewers should not expect to see prices increase in 2024.
“When we look at the business going forward, we do anticipate future price increases,” the CFO promised. “[But] ‘24 is not currently having price increases built into it.”
How Will Paramount Boost Streaming Profits Without Price Increases?
Chopra pointed out that when the streamer raised prices in summer of 2023, it did not see a large cancel reaction, but it did see more challenges in getting new customers to sign up. But luring more customers to Paramount+ is another part of the company’s strategy to achieve domestic profitability by next year, and to do so it will use its cable/broadcast channels in concert with its on-demand streaming platform.
Customers can expect more Paramount+ originals to head to broadcast and cable channels going forward. Paramount has already done this several times, placing “1883” on Paramount Network in June of 2023, and airing “Yellowstone” on CBS to fill in gaps in that channel’s programming caused by the WGA and SAG-AFTRA strikes. Chopra indicated that using titles that were once streaming exclusives on linear TV channels encourages people to seek out Paramount+ for similar titles or new episodes.
“When we put the first season of ‘1883’ on the Paramount Network, I think, about 2 years after it premiered on Paramount+, obviously, it did very well on linear,” Chopra said. “But it created a boost on Paramount+. Because you had a bunch of customers who got into the show on linear and then would go to Paramount+ either to explore kind of the broader Taylor Sheridan universe. Or in some cases, they just didn’t want to wait to get — to see the remaining episodes and they’d want the ability to watch it kind of on their timeline.”
From the sound of things, Paramount has no interest in simply throwing up its arms and admitting it can never become a successful company without being acquired. It’s on the lookout for any way to create value for its shareholders that it can find, but it has a roadmap to reaching profitability, and it wants to follow that roadmap to see where it leads before it turns to mergers as a solution — unless it receives an offer it can’t refuse.
Paramount Plus
Paramount+ is a subscription video streaming service that includes on-demand access to 40,000+ TV show episodes from BET, CBS, Comedy Central, MTV, Nickelodeon, Nick Jr. and more. The lineup includes “1883,” “Tulsa King,” “Star Trek: Discovery,” Nickelodeon’s “SpongeBob SquarePants,” and “PAW Patrol.” Subscribers can watch the NFL, college football, The Masters, college basketball, UEFA Champions League, UEFA Europa, Serie A, and NWSL. The service also offers the option to watch your live CBS affiliate. The upgraded ad-free package includes premium movies and shows from Showtime.