PSKY — Paramount Skydance Corporation Class B Common Stock

Summary of Paramount's Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Q2 revenue reached $6.95 billion to $7.15 billion, reflecting growth of 4% to 7% year-over-year.
• Adjusted EBITDA: Increased by 27% year-on-year to $1.1 billion.
• Free Cash Flow: Guidance raised to at least 10% for FY 2026, previously 5%.
• Paramount+ Subscribers: Grew to approximately 82 million, with 2 million added in the quarter, achieving a record retention rate.
• Studios Performance: Adjusted EBITDA for Studios was $36 million, up from a loss last year, with revenue up 16%.

2. Strategic Updates and Business Highlights

• Content Investments: Paramount has nearly doubled its theatrical slate and greenlit 40 new and returning series for Paramount+. The Studios business is on track to deliver 90 series this year.
• Direct-to-Consumer (DTC) Growth: Paramount+ experienced a 16% revenue increase, driven by both subscriber growth and ARPU improvements.
• Sports Portfolio Expansion: Added UFC and Zuffa Boxing, enhancing the sports offering alongside existing partnerships with UEFA and others.
• Technology Integration: Progressing on the convergence of streaming platforms (Paramount+, Pluto, BET+), aimed for completion by summer, enhancing user experience and monetization.
• Merger with Warner Bros. Discovery: Confident in the transaction's completion, with approvals from 65 jurisdictions. The merger is expected to create a stronger competitor in the streaming space.

3. Forward Guidance and Outlook

• Adjusted EBITDA Guidance: Raised to $3.8 billion to $3.9 billion for FY 2026.
• Q3 Expectations: Revenue growth anticipated to accelerate, with adjusted EBITDA guidance of $875 million to $975 million.
• Subscriber Growth: Expected to remain relatively flat quarter-on-quarter for Paramount+ in Q3, with continued growth in DTC revenue and advertising.

4. Challenges and Points of Concern

• Linear Revenue Declines: TV Media segment saw a 14% decline in advertising revenue, impacted by the absence of NCAA events compared to the previous year.
• Competitive Pressures: While Paramount+ is growing, it still lags behind larger competitors like Netflix and Amazon, indicating a need for continued investment and strategic partnerships.
• Ongoing Litigation: Potential delays in the Warner Bros. Discovery merger due to litigation, with a trial set for March 2027, could pose risks to the transaction timeline.

5. Notable Q&A Insights

• Sports Rights Strategy: Management indicated a strong belief in the value of live sports for engagement and retention, suggesting a willingness to pursue additional sports rights.
• Affiliate Relationships: Positive discussions with affiliate partners regarding linear distribution and bundling with streaming services, indicating a stable relationship moving forward.
• AI Integration: AI is viewed as a tool to enhance storytelling rather than replace it, with expectations of increased efficiency and creativity in content production.
• Cost Savings: Continued focus on cost management with a target of $3 billion in synergies from the merger, with significant savings expected from technology integration and operational efficiencies.

Overall, Paramount demonstrates strong growth in its DTC segment and Studios while navigating challenges in linear revenue and competitive pressures. The company remains optimistic about future growth driven by strategic investments and potential synergies from the Warner Bros. Discovery merger.