David Ellison downplayed the need for Paramount to buy Warner Bros. Discovery on a conference call with Wall Street analysts Monday after Paramount released earnings that reflected the uphill climb it faces in turning around its film and TV assets.
When asked about Paramount’s pursuit of Warner Bros. Discovery, Ellison told Wall Street analysts, “It’s important to know that there is nothing we can do without. We are seriously looking at this as a buy and build, and we absolutely have the ability to build to get to where we want to go.” “We believe we can achieve our streaming goals, driving enterprise efficiency and creating value and long-term free cash flow generation throughout the building.”
Ellison also vowed to “remain disciplined” in his approach to pursuing additional assets. In recent weeks, Paramount has submitted two proposals to acquire all of Warner Bros. Discovery, including its linear cable network.
“As it relates to M&A, it all comes down to accelerating those three core principles for us,” Ellison said. “We’re fortunate to have a balance sheet that allows us to be opportunistic when we think M&A accelerates our goals, but we’re also long-term, disciplined owner-managers. We always approach things through the lens of, ‘How can we maximize shareholder value?’ And from an M&A perspective, it’s always, ‘How do we accelerate and improve on our North Star Principles?'”
Ellison hammered home key points about Paramount’s ongoing cleanup of investment, innovation and a new structure. The fine print of Paramount’s earnings report reveals plans for a $500 million restructuring charge in the fourth quarter.
Ellison has emphasized the importance of upgrading Paramount’s technology infrastructure and capabilities from the moment he signed the sale agreement with former owner Shari Redstone in July 2024. On Monday’s conference call, he pressed the need in even more urgent terms amid an arms race with Silicon Valley companies. The son of Oracle co-founder and software billionaire Larry Ellison knows that world well.
“Our goal is to accelerate innovation by making technology our core competency. Our competitors in Silicon Valley are rapidly expanding into media and broader forms of entertainment. If we want to remain competitive in the long term, we need to enhance our technology to do what it takes to establish ourselves as the most technologically capable media company in the industry,” Ellison vowed. “Once again, at Paramount we would like to emphasize that technology is not and will never be a substitute for human creativity. Rather, technology acts as a powerful multiplier, providing creative teams with tools that improve performance, enhance the consumer experience, and enable them to tell better stories more efficiently and effectively.”
Other highlights from the call include:
** Paramount President Jeff Shell reaffirmed that the company has no plans to offload its linear cable channels, at least not in the short term. “We’re not looking to separate cable assets. This company has a history of separating assets, but it hasn’t worked out very well for us. We’re looking at other companies,” Shell said. “So one of the big rationales is that when companies are independent, they can focus on increasing the value of the brands that they have in a more tangible way. We’re going to do that, but we’re going to do it internally so that our shareholders get that value. We think there are some pretty good brands on the cable side,” he said, citing Nickelodeon, MTV and Comedy Central as examples.
** As expected, Paramount has exited its television assets in Latin America, Argentina’s broadcast channel Telefe and Chile’s Chilevision. Mr. Shell frankly stated the reason for this: “There’s plenty to do and invest in without investing in things that aren’t core to reaching global streaming scale.”
** Ellison and Shell also spoke passionately about the importance of the company’s new $7.7 billion rights agreement with the UFC to the future of Paramount+ and CBS. Schell told analysts that the UFC’s annual schedule is particularly a boon for CBS. CBS is focusing its major sports investments around the fall/winter NFL schedule and the spring NCAA Tournament.
“If you’re going to design a sport for us, the UFC is perfect in many ways,” Schell said. “We went through a real sports desert that ended with the Masters (April golf tournament) and started again with the NFL. And we saw a lot of churn over the summer because people turned off (Paramount+) and then turned it back on for the NFL. And this is a year-round sport, which is very unusual for a major sport.”
