Paramount reports growth in streaming while the company remains in pursuit of Warner Bros. Discovery

Paramount Pictures Studio: Melrose Gate

Photo credit: Al Seib / Los Angeles Times

Streaming Drives Paramount Skydance's Growth

Paramount Skydance is focusing its future on streaming, with Paramount+ showing strong performance and contributing to improved results in the fourth quarter of fiscal year 2025.

Quarterly Financial Highlights

• Paramount reported $8.1 billion in revenue for the quarter ending December 31, a 2% increase from the same period last year.
• Streaming revenue surged by 10% to reach $2.2 billion.
• The filmed entertainment division saw a 16% rise in revenue, totaling $1.3 billion.

Challenges in TV Media

The television segment faced difficulties, with revenue dropping 5% to $4.7 billion. Traditional broadcast networks continued to lose subscribers, and advertising revenue fell by 10%, partly due to reduced political ad spending and the absence of the Big 10 championship, which was featured in 2024.

Operating Loss and Restructuring Costs

Paramount posted an operating loss of $339 million, which included $546 million in expenses related to restructuring and transactions from last year's merger with Skydance. Diluted losses per share were 52 cents, compared to 33 cents in the previous year.

Leadership Perspective

CEO David Ellison highlighted the company's achievements under his leadership, emphasizing that investments in the film studio, original programming, UFC, and enhancements to Paramount+ and its advertising technology are expected to drive further progress.

"Although it's only been six months, we're pleased with the team's accomplishments so far," Ellison said during Wednesday's earnings call. "We anticipate even faster growth moving forward."

Outlook for 2026

Paramount projects total revenue of $30 billion for 2026, representing a 4% increase over 2025. Streaming is expected to be the main engine of this growth, with additional contributions from the studio division.

Acquisition Bid for Warner Bros. Discovery

Executives declined to comment on Paramount's efforts to acquire Warner Bros. Discovery during the earnings call.

In a letter to shareholders, Paramount expressed confidence in its independent strategy and growth path, but noted that acquiring Warner could accelerate its objectives and deliver greater economic value to shareholders.

Further Details on Paramount's Offer

• Paramount recently raised its bid, offering $31 per share in cash to Warner Bros. Discovery investors, up from $30 previously.
• The company agreed to pay Warner $7 billion if the deal fails regulatory approval, an increase from the earlier $5 billion commitment.
• Paramount confirmed it would cover Warner's $2.8 billion termination fee owed to Netflix if Warner cancels its agreement with the streaming service.
• An additional "ticking fee" of $0.25 per quarter will be paid to shareholders after September 30 until the transaction closes.
• Paramount also committed to covering Warner’s potential $1.5 billion in financing costs related to a planned debt exchange.
• To address concerns about financing, Paramount agreed to provide extra equity funding if needed to meet solvency requirements set by PSKY's lending banks.

Analyst Concerns

Despite these moves, some analysts are questioning the wisdom of pursuing Warner, given Paramount's own struggles in the TV sector. John Conca of Third Bridge noted that the deal could double exposure to declining linear networks and create significant integration challenges.