Paramount Global CFO Naveen Chopra on Tuesday rejected the notion that the entertainment conglomerate doesn’t have enough hits and content firepower to succeed in the streaming space.
Asked about some skeptics’ take that the company does not have the necessary intellectual property (IP) in the battle for streaming subscribers, he told the Deutsche Bank Media, Internet and Telecom Conference in Palm Beach, Fla., that the company had added 9.4 million streaming subs in the fourth quarter. That made its Paramount+ the fastest-growing major streamer in the U.S. and was “first and foremost” driven by content.
Chopra then touted the company’s CBS, Nickelodeon, Showtime, Paramount Pictures and other brands, as well as such tentpole content as Yellowstone and the Halo series. He also called the Paramount studio’s lineup “one of the most enviable slates over the next few years of any studio around,” including the upcoming Top Gun: Maverick and new Transformers, Mission: Impossible, Paw Patrol and Sonic the Hedgehog films, among others.
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Overall, “I think there are a lot of companies out there [that] would love to have our portfolio of content and, importantly, well-known IP,” Chopra concluded. That last part was “critical” as it avoids having to constantly launch new content propositions, he emphasized.
Asked about the importance of sports content on Paramount+ in the U.S. and beyond, Chopra called it an “important ingredient” in the U.S., especially for the acquisition of users who can then be turned on to additional programming. Those who join for sports “turn into our highest long-term value subs, especially when we get them into that second piece of content,” he noted.
Outside the U.S., Paramount+ is a broader offering that includes Showtime, he emphasized. “We do think sports has value, but we do look at it on a market-by-market basis,” the Paramount CFO added. For example, the streamer offers sports in Australia and will launch English Premier League soccer in Mexico and other markets.
Paramount executives told a recent investor day that they expect streaming losses to peak in 2023. With Wall Street increasingly focusing on the profitability outlook for Hollywood conglomerates’ streaming services, Paramount Global president and CEO Bob Bakish acknowledged earlier in March that his team will have to continue showing that it can execute the streaming game plan. “I know people are worried about investment levels, [but] look at what we are investing in,” he said. “New series, which we have a good track record on, and repatriating good product that is out there to get it back under our control.”
Asked how quickly profit margins in streaming could become similar to the traditional TV business, Chopra acknowledged that this “obviously doesn’t happen overnight,” but said it would happen within “a reasonable period of time.”
Discussing revenue and advertising revenue trends at Paramount’s TV business, Chopra said that “we have shown that we have the ability to mitigate audience declines with increases” in rates, “particularly as we see COVID issues, supply chain, Ukraine-related issues ultimately resolve themselves” over time.
Just like its peers, the conglomerate has been focusing on growing its streaming business, including subscription service Paramount+ and advertising VOD service Pluto TV. Paramount+ ended 2021 with 32.8 million subscribers, and the company is targeting to hit 100 million by 2024. Management recently told investors that it plans to bolster the nascent service with theatrical films, spinoff series and remakes and rebranded the company as Paramount Global.
The company’s addition of about 26 million streaming subscribers in 2021, mostly at Paramount+, came in better than most people had expected, Chopra argued on Tuesday. And Pluto TV has a long way to go in terms of user and revenue growth. Overall, the CFO expressed confidence in the company’s ability to build a “top-tier streaming business” with a broad-based content portfolio targeting the whole household and a broad business model combining subscription, advertising and hybrid offers.
Chopra also emphasized that the company is constantly looking at how to “program and stunt” content, for example, using an NFL game to get audiences into a scripted show. That can “move audiences from one title to another” to strengthen engagement and lower user churn, he said. Asked if the content spending targets will allow Paramount to roll out enough local content in key regions of the world, the CFO said “absolutely.”
