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Post-merger cuts could target TV networks at Paramount

Networks like CBS and Comedy Central that nurture hit TV franchises and have lucrative live sports rights are likely safe for the long-term, but the future is hazy for other Paramount-owned channels.

Networks like CBS and Comedy Central that nurture hit TV franchises and have lucrative live sports rights are likely safe for the long-term, but the future is hazy for other Paramount-owned channels.

U.S. Senator Rand Paul (right) speaks with an MTV News reporter during an event in 2015. (Photo by Gage Skidmore)
U.S. Senator Rand Paul (right) speaks with an MTV News reporter during an event in 2015. (Photo by Gage Skidmore)

Executives with Skydance Media say they have identified around $2 billion in potential savings by cutting costs across certain parts of Paramount Global’s business.

The affirmation was made during a conference call with Paramount investors this week, including Skydance Media founder and CEO David Ellison. On the call, Jeff Shell — the former Comcast executive who was named the incoming CEO of the new venture, tentatively called “New Paramount” — strongly indicated Paramount’s broadcast and cable TV networks could face some of the steepest expense reductions because “linear is going to keep declining.”

“We don’t think it’s going to worsen, but we don’t think it’s going to get better either,” Shell said on the call.

On Monday, Skydance and Paramount affirmed plans to merge the two companies after Skydance buys out National Amusements’ majority stake in the business.

Investor presentation materials made public this week offer a glimpse into the direction New Paramount will take after merging with Skydance. Several slides in the presentation play up the value of Paramount’s intellectual property, including hit shows on CBS and franchises like “Top Gun,” “Mission: Impossible,” “Spongebob Squarepants,” and “Yellowstone.”

As part of a three-pronged strategy called “Creative First,” New Paramount executives plan to “re-evaluate core brand attributes of franchises,” then “determine creative approach and optimal storyline sequencing across distribution platforms.”

Executives plan to leverage New Paramount’s intellectual property through an ecosystem that includes feature-length films, television series, interactive media like games, and other categories like merchandising and brand licensing. By doing so, New Paramount hopes to tap into an “interconnected, cross-platform universe that engages consumers in new ways.”

Presentation materials also spotlighted numerous live telecast rights held by CBS Sports and other Paramount-owned broadcasters, including domestic telecast rights to NFL, UEFA Champions League, NCAA March Madness and PGA Tour events.

The materials strongly suggest that Paramount’s sole domestic broadcast network, CBS, is likely safe in the long-term. The network is the main outlet for top-tier CBS Sports programming, and also nurtures franchises like “CSI,” “NCIS” and “Survivor.” It also spells news for cable channels that continue to serve as a destination for programs like Spongebob (Nickelodeon), “South Park” (Comedy Central), “The Daily Show” and “Yellowstone” (Paramount Network). Multiplex movie network Showtime is also likely safe, as the brand was integrated into Paramount’s prized direct-to-consumer streaming service, Paramount Plus, last year.

Less clear is the fate of other networks like MTV, which offers repeats of cheap-to-produce, reality-based shows like “Ridiculousness” and “Catfished: The TV Show” during much of its schedule. VH1, TV Land, CMT, Pop TV and Logo could also face significant cuts, as those linear networks offer few original programs and even fewer hit series.

One place where Paramount may start is by reducing the number of ancillary digital channels that are associated with a brand. MTV, for example, operates several digital cable-only variants — including MTV 2, MTV U, MTV Classic and MTV Live — which are carried by cable, satellite and some streaming cable-like platforms through agreements with Paramount that often require their carriage as a condition of also taking other highly-sought channels like CBS and Comedy Central. Paramount operates a handful of similar digital ancillary channels, including Nick Jr., Nicktoons and CMT Music.

Individually, the ancillary digital channels generate little advertising revenue for Paramount, and the distribution fees collected from cable and satellite subscribers are often a few pennies per channel and per subscriber. Paramount stopped selling advertising inventory against each individual channel several years ago, according to a former employee who was familiar with the company’s strategy and who spoke to The Desk this week on condition of anonymity.  Instead, the inventory is sold as a value add to marketers who are interested in greater reach for their campaigns, the person said.

The strategy isn’t working. Cable networks weighed heavily on Paramount’s overall TV revenue last year, which earned slightly more than $20 billion last year, 8 percent less than what the TV business earned Paramount in 2022. TV advertising revenue declined 12 percent during the same period, according to the company’s year-end earnings report. (That segment of Paramount’s business rebounded during the first three months of 2024, owed in large part to Super Bowl advertising on CBS.)

On Monday, Shell hinted that the cable networks and other assets, “which we think are not strategic to where we’re going,” could be sold off if “we were to get a buyer to pay a price that we thought was compelling.”

To that end, Shell noted that Paramount’s current trio of CEOs — which comprise the top executives at Paramount Pictures, MTV Entertainment and CBS — have engaged in some discussions to sell off parts of the company that are viewed as immaterial to Paramount’s future moving forward. He offered no specifics, but media reports indicate Paramount recently entertained an offer to sell BET Media to a consortium of buyers for as much as $1.7 billion.

“We know current management is also talking about a couple of transactions that, if they get the right price, we’ll be supportive of,” Shell said.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.

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