PARA Q2 Deep Dive: Streaming Progress and Skydance Transition Define Quarter

Multinational media and entertainment corporation Paramount (NASDAQ:PARA) met Wall Street’s revenue expectations in Q2 CY2025, but sales were flat year on year at $6.85 billion. Its non-GAAP profit of $0.46 per share was 24.6% above analysts’ consensus estimates.

Is now the time to buy PARA? Find out in our full research report (it’s free).

StockStory’s Take

Paramount’s second quarter was marked by stability in overall sales and a notable positive market reaction, driven largely by outperformance on non-GAAP profitability metrics. Management attributed the improvement to the company’s streaming-first strategy, highlighting Paramount+ as a primary engine of growth. Co-CEO Chris McCarthy pointed to the success of original content and disciplined cost control, noting, “D2C revenue growth outpaced linear declines,” and emphasizing that subscriber engagement and churn improved alongside new franchise releases. The company’s ability to drive direct-to-consumer profitability helped offset continued challenges in its traditional TV business.

Looking ahead, Paramount’s outlook is shaped by both its pending Skydance transaction and the continued expansion of its streaming business. Management underscored a strategic focus on quality over quantity in original content, with upcoming franchise releases and exclusive streaming rights expected to support engagement and revenue. Chris McCarthy said, “We have our biggest hits to come,” referencing anticipated launches like Dexter Resurrection and new NCIS franchise extensions. However, executives also noted the absence of detailed forward guidance due to the impending change in ownership structure.

Key Insights from Management’s Remarks

Paramount’s management credited the quarter’s performance to streaming growth, franchise strength, and cost reductions, while also preparing for a major corporate transition.

• Streaming business momentum: Management highlighted Paramount+ as the core growth driver, with subscriber gains and increased watch time from new original series such as Landman and MobLand, leading to a 19% year-over-year revenue increase.
• Content strategy focus: The company emphasized a shift from producing a high volume of originals to prioritizing a smaller number of impactful hits, which improved subscriber engagement and reduced churn. This approach was credited with solidifying Paramount+ as a top four global streaming service.
• Franchise monetization: Paramount leveraged major film releases like Mission Impossible: The Final Reckoning, which not only drove box office results but also boosted streaming engagement with legacy content, exemplified by a 60% lift in franchise library viewing after the new film’s release.
• Cost structure improvements: The company delivered over $800 million in annual run rate non-content expense savings over the past year, with interim CFO Andrew Warren citing these efforts as key to margin recovery and improved free cash flow.
• Corporate restructuring and ownership: With the Skydance transaction set to close, executives framed this as a pivotal transition, suggesting that new leadership and resources would help sustain the company’s transformation toward a streaming-first model.

Drivers of Future Performance

Paramount’s future performance will hinge on streaming expansion, franchise execution, and the operational impact of the Skydance acquisition.

• Upcoming franchise releases: Management expects new content such as Dexter Resurrection and NCIS: Tony & Ziva to drive engagement and subscriber growth on Paramount+, aiming to replicate the success seen with recent hits.
• Integration with Skydance: The pending acquisition is expected to bring fresh capital and strategic direction, with management believing this will help accelerate technology upgrades and global expansion of the streaming platform.
• Ongoing linear TV headwinds: Paramount acknowledged continued declines in traditional TV advertising and affiliate revenue, with leadership emphasizing the importance of offsetting these pressures through digital growth and operational efficiencies.

Catalysts in Upcoming Quarters

As we move into the next several quarters, our team will be monitoring (1) the rollout and audience response to major new streaming releases, (2) the pace and execution of integration initiatives following the Skydance transaction, and (3) efforts to maintain cost discipline as legacy television revenue continues to contract. The strategic direction set by new ownership will also be a key area of focus.

Paramount currently trades at $11.04, down from $12.56 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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