Paramount's Plan: D2C Profitability - Cable 'Restructure'?

It may be no surprise that the new Paramount  -- under the operational control of Skydance Media --  will have a focus on content creation.

Skydance is a longtime movie/TV production company known for big theatrical movies and TV shows including “Top Gun: Maverick,” the "Mission Impossible” franchise, “Reacher” and “Grace and Frankie.”

Given the shifting business trends, as legacy TV-movie companies take content off of their own streamers and selling it elsewhere, Skydance's plan is mostly incline with those moves.

But what about the streamers themselves?

In analyzing the Skydance/Paramount presentation, media analyst for Guggenheim Securities Michael Morris says “specific details on key issues including future structure of the streaming service, management of the portfolio of linear network assets, and expanded use of technology to drive growth,  remain in development.”



One key point from the presentation may be that the company would look to “restructure and elevate linear brands: MTV, Comedy Central, and Nickelodeon.” 

For CBS, the new company will continue to be the big broadcast, linear TV network to “propel New Paramount content.” That means using CBS as a promotional tool and launch pad for new TV content -- on streaming platforms and elsewhere.

Skydance has also talked up "franchise IP" (intellectual property) of scripted TV shows and animation, and offers to boost interactive efforts as well as those around sports content -- PGA Golf, NCAA March Madness, and the NFL.

When it comes to the direct-to-consumer (D2C) business, the focus will be “profitability and partnerships.” 

For many, this means continued efforts not just around bundling but of outright business "partnerships."

From this, we might conclude that would be potential streaming merger deals with a number of services -- perhaps Warner Bros. Discovery’s Max, which has been rumored to be a possible partner with Paramount+ in recent months.

The presentation did not leave TV advertisers out of the picture, but is a call to “optimize ad-tech to improve buy-side transparency and audience reach/measurement.”

From all of this Morris believes that at least when it comes to revenue, he sees “forecasts as reasonable and believe leadership has taken a conservative view towards adjusted OIBDA [Operating Income before depreciation and amortization] outlook for legacy Paramount.”

So does this mean things will remain the same? Hardly. We can expect quick adjustments will be made -- especially with linear cable TV networks, and streaming profitability. 

The hint comes with the word ‘restructure’. Over the last seven days, Paramount Global has been engaged in a possible sale of the BET Group valued at $1.6 billion to $1.7 billion, according to reports.

Are there more billion-dollar deals for cable TV networks to come?

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