Paramount Skydance Q2 Earnings Call Highlights
Key Points
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- Streaming momentum improved: Paramount+ revenue rose 16% year over year, adding 2 million reported subscribers to reach 81.6 million globally. Management highlighted stronger retention, engagement and ARPU, while platform integration with Pluto and BET+ is expected to improve monetization.
- Profitability and guidance strengthened: Studios returned to adjusted EBITDA profitability, TV Media profit increased 14%, and full-year adjusted EBITDA guidance rose to $3.8 billion–$3.9 billion. Paramount also expects more than $2.7 billion in annualized efficiency savings by year-end while maintaining its $30 billion revenue outlook.
- Warner Bros. Discovery deal remains central: Management said it remains highly confident the transaction will close, with financing committed and $1.6 billion in cash plus $3.2 billion of undrawn credit capacity. However, delays could add substantial costs, including roughly $190 million in bridge-financing expenses if closing extends to June 2027 and quarterly ticking fees after September 30.
Paramount Skydance (NASDAQ:PSKY) said its second-quarter performance reflected progress in its efforts to expand streaming, rebuild its studios business and reduce costs, while management reaffirmed confidence in the company’s proposed combination with Warner Bros. Discovery.
Chairman and Chief Executive Officer David Ellison said Paramount+ reached nearly 82 million subscribers, delivered its best retention quarter to date and recorded double-digit growth in total view hours. The company also reported improving profitability in its studios operations and 14% profit growth at TV Media despite revenue pressure from the continuing shift away from linear television.
“A year ago, we set three priorities for the new Paramount: invest in storytelling, scale our direct-to-consumer business globally, and drive enterprise-wide efficiency,” Ellison said. “Twelve months in, I’m proud to say we are delivering on all three.”
Streaming Growth and Technology Integration
Chief Financial Officer Dennis Cinelli said Paramount+ revenue increased 16% year over year in the quarter, with roughly one-third of the increase coming from subscriber growth and two-thirds from higher average revenue per user, or ARPU. The service added 2 million reported subscribers during the quarter, reaching 81.6 million globally.
Before exits from “hard bundles,” Paramount+ added 4 million underlying subscribers, nearly double the underlying additions reported in the first quarter, Cinelli said. Management attributed the gains to content including Dutton Ranch, UFC programming and World Cup coverage in select territories.
Ellison said Paramount+ has substantial room to grow relative to larger competitors and reiterated management’s view that double-digit revenue growth is achievable. He pointed to improvements in subscriber growth, engagement, profitability and ARPU, while describing the company’s strategy as combining content investment with product and technology development.
The company said it remains on schedule to converge the technology platforms behind Paramount+, Pluto and BET+ by the end of the summer. Pluto’s web experience has been live since June 30, according to Ellison. Management expects the integration to improve personalization, content recommendations, merchandising, advertising and monetization by unifying data and ad technology that had previously been separated across the services.
Paramount plans to make select content investments in Pluto during the fourth quarter after completing the platform work. Ellison said the company’s long-term goal is to become effectively indifferent from a monetization standpoint as to whether a subscriber selects an advertising-supported or other plan.
Warner Bros. Discovery Transaction and Liquidity
Ellison said Paramount remains “highly confident” its proposed Warner Bros. Discovery transaction will close. He said the deal has received approvals from regulators and governments in 65 jurisdictions, including the U.S. federal government, Canada, the European Union and China.
Management argued that the combined company would remain a smaller competitor than major technology and media platforms. Ellison said the combination would account for less than 20% of television watch time excluding YouTube, based on Nielsen data, and 13.4% including YouTube. He also said the combined company would represent 18% of domestic box office over the past 12 months and 22% over a 24-month period.
On litigation related to the transaction, Ellison said Paramount is open to an out-of-court solution but believes it would prevail at trial. A trial date has been set for March of next year, he said.
Cinelli said the equity and bridge financing for the transaction are committed through the remaining closing period. If the deal does not close until June 2027, incremental bridge financing costs would total about $190 million, including monthly fees of $8 million to $9 million and an additional commitment fee.
If a closing occurs after Sept. 30, Paramount would also owe Warner Bros. Discovery shareholders a ticking fee of $0.25 per share per quarter, or about $650 million per quarter, funded through additional equity at closing, Cinelli said.
Paramount ended the quarter with $1.6 billion in cash and $3.2 billion of undrawn revolving-credit capacity. Cinelli said this liquidity is sufficient to fund operations, the dividend and transaction-related costs through an extended timeline.
Studios, Sports and Advertising
Paramount’s studios segment generated $36 million in adjusted EBITDA in the quarter, compared with a loss a year earlier, while revenue rose 16%. Cinelli said theatrical results exceeded the company’s plan and that Scary Movie delivered a franchise-best opening.
Management said it has increased its film-release slate from eight films a year ago to 15 films planned for 2026. Paramount Television Studios is on track to produce 90 series and 800 television episodes this year, Ellison said.
Cinelli said the company’s more data-driven greenlighting, marketing and distribution efforts have improved the return on marketing spending. Each marketing dollar is generating 11% more box office in 2026 than in 2025, he said. Paramount has eight films scheduled for the second half of 2026, including Paw Patrol: The Dino Movie, Street Fighter and Mr. Irrelevant.
Ellison also said Paramount intends to remain an active buyer of sports rights. He cited UFC programming as a driver of engagement, noting that UFC 250 drew 17 million viewers across the U.S. and Latin America and 45 million viewers globally, according to figures announced by TKO.
Advertising trends were mixed during the quarter. TV Media advertising revenue declined 14% year over year, including an 8-percentage-point impact from the absence of the NCAA Final Four compared with the prior-year period and a 3-percentage-point effect from the sales of Telefe and Univision. Paramount+ advertising, however, delivered double-digit growth, supported by premium demand and live sports.
Chief Strategy Officer and COO Andy Gordon said Paramount had a strong upfront advertising season, with a double-digit percentage increase year over year. Management expects companywide advertising revenue to return to growth in the second half, aided by Paramount+ and an anticipated return to growth at Pluto.
Guidance and Efficiency Target
Paramount raised its full-year adjusted EBITDA outlook to $3.8 billion to $3.9 billion and increased its free-cash-flow conversion outlook to at least 10%, excluding transformation costs. The company maintained its full-year revenue outlook of $30 billion.
For the third quarter, Paramount forecast revenue of $6.95 billion to $7.15 billion, representing year-over-year growth of 4% to 7%, and adjusted EBITDA of $875 million to $975 million. The company expects Paramount+ subscribers to be relatively flat sequentially in the third quarter.
Management said it now expects more than $2.7 billion in annualized efficiency savings by year-end and continues to target more than $3 billion in total savings from the Skydance-Paramount merger. Gordon said technology initiatives, including an Oracle Fusion migration, unified streaming technology stacks and reduced third-party cloud spending, represent about $200 million of savings. Facility management, procurement, professional-services and marketing efficiencies are expected to contribute another $100 million.
About Paramount Skydance (NASDAQ:PSKY)
Paramount Skydance Media Group (Nasdaq: PSKY) is a media and entertainment company created through the proposed combination of Paramount Global’s filmed entertainment and streaming operations with Skydance Media, a privately held content studio. The combined business will encompass the development, production and distribution of feature films, television programming and digital content, drawing on a library of legacy Paramount Pictures franchises alongside Skydance’s blockbuster tentpoles and animation slate.
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