New managers. Same old problems.
Paramount Skydance said it posted a loss in the third quarter crimped by dynamics that have plagued the company that controls CBS, Paramount+ and Comedy Central for the last few years. Two of its biggest sources of revenue — TV ad sales and TV distribution fees — continued to erode. Overall pro forma revenue during the period fell 3%, to about $6.1 billion, while TV advertising fell 12% and fees from TV distribution dipped 7%
Paramount issued commentary Monday on its third fiscal quarter, but this is the first financial period under the management of new owners, the Ellison family and their hand-picked team. Expectations have been set low, with about 1,000 employees at the end of October and additional job cuts to be expected as the conglomerate grapples with the effects of one-time viewers of linear TV moving to on-demand video services. Paramount increased its expected post-merger cost-savings target from $2 billion to at least $3 billion, of which it said approximately two-thirds is attributed to “non-labor” costs.
At the same time, Paramount has rattled its sabre in the sector, nodding to a strategy of building up a streaming business executives hope will compete with Netflix, Google and Amazon. Already, Paramount has agreed to pay out $7.7 billion over seven years to TKO Group for rights to show UFC matches throughout the year; acquired the conservative-leaning opinion site The Free Press for $150 million and set its founder, Bari Weiss, as the top editorial executive at CBS News; and made efforts to acquire another old-school media company under pressure, Warner Bros. Discovery.
Wall Street observers admire Paramount Skydance’s new gumption, but also recognize some of its assets face strong, ongoing challenges. “Paramount still faces the decline of its linear assets and related cash flows,” said Robert Fishman, a media-industry analyst at MoffettNathanson, in a July research note. “The key question is whether the pace of linear erosion can slow enough to give its DTC strategy time to scale.”
In a letter to shareholders issued Monday, Paramount vowed to improve operations, calling for total revenue of $30 billion in 2026, and predicting growth in streaming profits in the next year. The company also called for “incremental programming investments in 2026 in excess of $1.5 billion.”
There will also be new costs. Paramount said it expected “transformation costs of several hundred million in Q4. The company also called for a “restructuring charge of approximately $500 million in Q4” as part of its efforts to recalibrate its operations.
Executives articulated a strategy that would result in the creation of more content across TV and streaming, and improving its digital technology and said it was “conducting a comprehensive strategic
review of our assets to ensure continued focus.” As part of the review, Paramount said it had divested Televisión Federal in Argentina, and is in the process of divesting Chilevision in Chile, which should be complete in the first quarter of 2026. These divestitures will cut the workforce by about 1,600 additional employees.
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