Paramount Global, the entertainment behemoth behind Paramount Pictures, CBS, Nickelodeon, and the UK’s Channel 5, has announced a significant workforce reduction of approximately 2,000 employees in the United States.
The move comes as part of the company’s cost-cutting measures in preparation for its impending merger with independent film studio Skydance Media. The job cuts, which account for about 15% of Paramount’s US workforce, were revealed alongside the company’s latest earnings report on Thursday.
The entertainment giant has been grappling with the decline of cable television, which has led to a nearly $6bn write-down in the value of its cable networks. This substantial impairment charge reflects the diminishing audience for cable TV networks such as Nickelodeon, MTV, and Comedy Central, resulting in lower advertising revenue. Interestingly, despite the challenges faced by its traditional cable business, Paramount’s streaming division, which includes the subscription-based Paramount+ and the free, ad-supported PlutoTV, reported its first quarterly profit.
The success of the streaming unit can be attributed to the growth in both subscription and advertising revenue. The upcoming merger with Skydance Media necessitated a reassessment of the value of each of Paramount’s business units to accurately reflect their worth to the combined entity. This revaluation process resulted in the substantial write-down, which ultimately pushed Paramount into an operating loss of $5.3bn for the second quarter.
Had it not been for this one-time charge, the media company would have reported an adjusted operating income of $867m, or 54 cents per share, surpassing Wall Street’s expectations of 12 cents per share, as reported by LSEG. Paramount’s co-CEOs, George Cheeks, Chris McCarthy, and Brian Robbins, expressed confidence in the company’s streaming strategy, stating in a joint statement, “We are on track to reach domestic profitability for Paramount+ in 2025.”
The announcement of Paramount’s job cuts and write-down comes just a day after rival Warner Bros Discovery reported a $9bn write-down on its TV assets, highlighting the challenges faced by traditional media companies as they navigate the rapidly evolving entertainment landscape.
Following the news, Paramount’s stock experienced a 6% increase in extended trading, indicating investor optimism about the company’s future prospects and its ability to adapt to the changing market dynamics.
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