Paramount+ to raise prices after Showtime merger, Paramount Global to charge $1.5 billion for Q1 content

Paramount Global’s CFO said the company will take a $1.3 billion to $1.5 billion hit in the current first quarter mostly on content as it restructures its streaming business, absorbing Showtime on Paramount+.

In a post-earnings conference call, Naveen Chopra said the combined service would increase prices: the rebranded Paramount+ with Showtime would go from $9.99 to $11.99 a month. The Paramount+ Essential tier without Showtime will be $4.99 to $5.99 for new and existing subscribers.

This will boost Parr’s significant streaming revenue as it hits peak streaming investments and operating losses in 2023, he said, reiterating plans for the company to move toward streaming profitability and overall positive free cash flow in 2024. The integration of Showtime will be a major contributor. He expected annual cost savings of $700 million.

“One service requires less content to acquire and retain customers than two independent services,” Chopra said. Showtime has high churn. And its audience tends to coalesce around a handful of franchises that represent half of its content refinement spend.

The combo “makes Paramount+ the definitive multi-platform service in the streaming space,” he said, adding that significant cost savings across content, marketing and technology, as well as reduced revenue due to price increases, he thinks consumers will take from the “unified product.” will be more attractive for.”

Showtime Shocker, which combines premium cable network content with streaming and linear with Paramount+, was recently announced and will be effective in the third quarter. This has resulted in leadership changes and significant layoffs.

Paramount shares were lower today as Wall Street analysts grilled executives on financial metrics and strategy, particularly a definitive streaming trajectory for profits, which remain unclear.

Bakish acknowledged that the fourth quarter was weighed down by ongoing streaming spending that was boosted by macro headwinds, namely a struggling ad market for TV media. He sees growth in advertising and expects a rebound in the latter half of the year.

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