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Paramount Skydance PSKY is set to invest $1.5 billion on theatrical and direct-to-consumer platforms as announced on its third-quarter 2025 earnings Monday. PSKY shares are up 7.5% at the time of writing this article. The investments are designed to expand the pipeline of premium films, television, sports, news and gaming content for global audiences.
PSKY's third-quarter 2025 results are its first full quarter under new ownership following the merger completion on Aug. 7, 2025. Excluding transformation costs and transaction-related expenses, PSKY reported adjusted earnings of 12 cents per share in the successor period (Aug. 7 – Sept. 30) and an adjusted loss of 24 cents per share in the predecessor period (July 1 – Aug. 6). The company reported earnings of 49 cents in the third quarter of 2024.
The year-over-year decline in EPS primarily reflected revenue pressures in TV Media and Filmed Entertainment segments, partially offset by strong Direct-to-Consumer growth. The Zacks Consensus Estimate for third-quarter EPS was pegged at 45 cents per share.
Paramount Skydance Corporation price-consensus-eps-surprise-chart | Paramount Skydance Corporation Quote
PSKY posted combined revenues of $6.7 billion across the predecessor and successor period, representing flat performance compared to $6.73 billion in 2024. The consensus mark for revenues was pegged at $6.94 billion.
Operating income totaled $244 million in the successor period and $80 million in the predecessor period, compared to $337 million in the third quarter of 2024. The year-over-year decline reflected revenue headwinds in the TV Media segment and underperformance in Filmed Entertainment, partially offset by strong Direct-to-Consumer growth.
Adjusted OIBDA reached $655 million (15.9% margin) in the successor period and $297 million (11.5% margin) in the predecessor period, compared to $858 million (12.7% margin) in 2024. The combined adjusted OIBDA of $952 million represented 11% year-over-year growth despite revenue pressures, demonstrating operational efficiency gains.
Advertising revenues totaled $1.94 billion on a pro forma basis in the reported quarter, down 11% year-over-year from $2.17 billion, driven by secular headwinds in linear advertising and political spending timing comparisons.
Affiliate and subscription revenue reached $3.43 billion, up 7% from $3.22 billion, primarily driven by strong Direct-to-Consumer subscription growth offsetting linear affiliate declines.
Theatrical revenue increased modestly to $112 million from $108 million, while licensing and other revenue declined 15% to $1.23 billion from $1.44 billion, reflecting content delivery timing and strategic portfolio changes.
The Direct-to-Consumer segment delivered exceptional performance with pro forma revenue of $2.17 billion, representing robust 17% year-over-year growth from $1.86 billion in 2024. Paramount+ specifically drove the segment's performance with 24% revenue growth year-over-year. The platform added 1.4 million subscribers during the quarter, ending with 79.1 million total subscribers, representing 14% year-over-year growth from 71.9 million in 2024.
Segment profitability improved dramatically, with a combined adjusted OIBDA of $340 million representing a margin expansion of approximately 730 basis points year-over-year from the 2.6% margin in 2024. This improvement reflected continued revenue momentum, operational efficiencies and benefits from content asset write-downs under purchase accounting following the merger.
The TV Media segment continued facing industry headwinds with pro forma revenues of $3.80 billion, down 12% from $4.3 billion in 2024. Advertising revenue declined 12% year over year to $1.47 billion, with an 8% headwind from political spending timing and prior year revenue recognition adjustments. Affiliate revenue decreased 7% year over year to $1.74 billion, consistent with industry-wide pay TV subscriber volume declines.
Despite revenue pressures, the segment demonstrated strong cost discipline with a combined adjusted OIBDA of $822 million, representing a margin expansion of approximately 70 basis points year over year, despite a 12% revenue decline. CBS continued delivering strong viewership performance, maintaining its position as the most-watched broadcast network for the 17th consecutive year.
The Filmed Entertainment segment reported pro forma revenue of $768 million in the third quarter of 2025, down 4% from $799 million in the year-ago quarter. The segment reported a combined adjusted OIBDA loss of $49 million compared to a profit of $3 million in the third quarter of 2024, reflecting underperformance of the 2025 theatrical slate.
As of Sept. 30, 2025, cash and cash equivalents totaled $3.26 billion, up from $2.74 billion as of June 30 from year-end 2024. Total debt as of Sept. 30 was $13.63 billion. Free cash flow totaled $15 million combined for the third quarter of 2025.
For the fourth quarter 2025, PSKY expects total revenue between $8.10-$8.30 billion, indicating 1%-4% year-over-year growth, and adjusted OIBDA between $500-$600 million, suggesting a 6.7% margin at the midpoint.
The company expects 2025 total revenues approaching $29 billion and adjusted OIBDA of approximately $3 billion, indicating a 10% margin.
For 2026, Paramount Skydance projects total revenues of $30 billion, representing approximately 4% year-over-year growth, and adjusted OIBDA of $3.5 billion, representing an 11.7% margin and approximately 17% growth year-over-year.
PSKY projects a free cash flow of approximately $1.5 billion before roughly $800 million of non-recurring transformation costs. The company expects to achieve investment-grade debt metrics by the end of 2027.
Currently, PSKY carries a Zacks Rank #4 (Sell).
Carnival CCL, Amer Sports AS and Alto Ingredients ALTO are some other top-ranked stocks that investors can consider in the Zacks Consumer Discretionary sector.
Carnival, Amer Sports and Alto Ingredients sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carnival’s 2025 earnings is pegged at $2.15 per share, revised upward by 3 cents over the past 30 days and suggests a year-over-year increase of 51.41%.
The Zacks Consensus Estimate for Amer Sport’s 2025 earnings is pegged at 84 cents per share, unchanged over the past 30 days and suggests a year-over-year increase of 78.72%.
The Zacks Consensus Estimate for Alto Ingredients' 2025 loss is pegged at 10 cents per share, improving 72.9% over the past 30 days and suggests a year-over-year increase of 78.72%.
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This article originally published on Zacks Investment Research (zacks.com).
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