Dear new managers. Same old problem.
Paramount Skydance announced it posted a loss in the third quarter due to the power dynamics that have plagued the company over the past few years, which controls CBS, Paramount+ and Comedy Central. The company’s two biggest sources of revenue, television advertising sales and television distribution fees, continued to decline. Overall external revenue for the same period decreased 3% to approximately $6.1 billion, with TV advertising down 12% and fees from TV distribution down 7%.
This fiscal period marks the first time Paramount has come under the control of new owners, the Ellison family and their hand-picked team. Expectations are set low, with about 1,000 job cuts as the company grapples with the impact of linear TV’s one-time viewers migrating to on-demand video services. Paramount raised its expected post-merger cost savings target from $2 billion to at least $3 billion, saying about two-thirds of that would come from “non-compensation costs.”
At the same time, Paramount is swinging the sword in this space, giving a nod to a strategy that raises expectations among streaming executives who compete with Netflix, Google and Amazon. Paramount has already agreed to pay TKO Group $7.7 billion over seven years for the rights to broadcast UFC matches year-round. It bought the conservative opinion site Free Press for $150 million and made its founder, Bari Weiss, the top editor at CBS News. And under pressure, it made an effort to acquire another legacy media company, Warner Bros. Discovery.
While Wall Street observers are praising Paramount Skydance’s newfound bravery, they also recognize that some of its assets face strong ongoing challenges. “Paramount continues to face declining linear assets and related cash flow,” Robert Fishman, a media industry analyst at MoffettNathanson, said in a July research note. “The key question is whether the pace of linear erosion will allow enough time for the expansion of DTC strategies.”
In a letter to shareholders issued Monday, Paramount pledged to improve its operations, pegging total revenue of $30 billion in 2026 and forecasting growth in streaming profits next year. The company also called for “additional programming investments of over $1.5 billion in 2026.”
New costs will also be incurred. Paramount said it expects to incur “hundreds of millions in transformation costs” in the fourth quarter. The company also requested “approximately $500 million in restructuring charges in the fourth quarter” as part of its efforts to realign its business.
Executives said they are “undertaking a comprehensive strategic review of our assets to ensure continued focus” on the company’s strategy to create more content and improve its digital technology across television and streaming. As part of the review, Paramount said it is selling Argentina’s Television Federal and moving forward with the sale of Chile’s Chilevision, which is expected to be completed by the first quarter of 2026. These sales will result in an additional reduction of approximately 1,600 employees.
