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Asked whether Disney’s move away from “undifferentiated” general entertainment programming has any impact on Paramount Global, CEO Bob Bakish said the platform already stands out in the field because of its offerings, which include Paramount films, CBS programming, Nickelodeon shows and franchises.
“Differentiation matters and the general entertainment space may not make sense for everyone. But general entertainment clearly makes sense for us,” Bakish told LightShed Partners analyst Rich Greenfield on the company earnings call Thursday.
The question came after Disney CEO Bob Iger said his company was going to be “fairly aggressive at better curation when it comes to general entertainment” on the company’s Feb. 8 earnings call, as Disney looks to hit $3 billion in future content cost savings.
“Because when you think about it, general entertainment is generally undifferentiated as opposed to our core franchises and our brands, which, because of their differentiation and their quality, have delivered higher returns for us over the years,” Iger told investors.
Those comments also sparked questions about whether Disney would seek to sell Hulu, an option that Iger implied Disney was considering, after saying on CNBC on Feb. 9 that “everything is on the table.” Paramount Global was also asked by Greenfield if it would consider buying Hulu during the call Thursday, but executives did not answer the question.
In response to the question on its general entertainment emphasis, Bakish spoke to Paramount Global’s record quarter user gain, with the company reaching more than 77 million subscribers at the end of 2022, up from 67 million in the prior quarter. The subscriber growth was driven by the NFL, hits such as Yellowstone and Top Gun: Maverick and 1923, CBS entertainment and new franchises such as Tulsa King and Smile, according to Paramount.
However with the growth came increased spending, as Paramount saw its fourth-quarter income swing to a loss from the prior quarter, while outlining 2023 as its peak investment year for streaming, with a forecast of negative free cash flow.
Earlier on the earnings call, Bakish said Paramount would be looking to “efficiently manage” the company’s content spending. Part of that will come from its integration with Showtime, which is expected to bring $700 million of future annual expense savings. However, Bakish said the company will also be focusing on franchises, which bring in higher engagement with lower acquisition costs, while taking “selective swings” on new IP.
“Our multi-platform strategy and franchise focus ensure we can build a differentiated content slate and simultaneously create a compelling content ROI. So again, general entertainment, it totally works for us, in general with streaming, and maybe we’re different because of our asset composition strategy, but we’re leaning into it,” Bakish said.
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