Speaking at the Morgan Stanley Technology, Media & Telecom Conference, Bakish doubled down on many points he made during the marathon Paramount investors day presentation last month. He said his company — with its legacy businesses, franchises, and SVOD service — is fit to become a streaming-era leader (even though it’s currently nowhere close to the top). However, he also used his time to point out something that “was missed in some of the post-investment call narrative.” The moves Paramount is making now not only bolsters its position as a standalone company, Bakish said, it also makes them what he would consider an attractive acquisition target.
“When I look at a company to buy – we’ve done a bunch of smaller deals particularly in Latin America and you can rest assured we look at all the deals – the single most important thing is, ‘If you buy the company, can you use the content?’ The answer typically is no, not for a while,” Bakish said during his Morgan Stanley keynote. “Our investment strategy is increasing optionality because we’re gaining more and more control over high-quality content.” Bakish was referring to deals inked last fall that saw Paramount acquire a majority stake in Fox TeleColombia & Estudios TeleMexico from Disney. But whether Paramount has control over its content is a question that only becomes germane the other way around: if it is the target of acquisition. Paramount doesn’t fully control all of its most valuable properties. Certain Paramount Pictures films still make a detour to EPIX thanks to a pay-one deal that expires in 2024. “South Park” is on HBO Max for three more years; a deal inked last month will bring the long-running animated series to Paramount+ in 2025. Bakish said that “repatriating” valuable content, along with investing in new series, will help fuel subscriber and revenue growth to eventually deliver TV media-like margins. As he noted, it also “increases optionality” — i.e. makes Paramount a desirable buy for shareholders and bigger fish alike.
IndieWire reached out to Paramount Global with a request for comment on this story and a clarification on Bakish’s “optionality” remarks, but did not immediately receive a response. What’s $30 billion or so for the “mountain of entertainment” Paramount+ never stops advertising? While still far behind the likes of Netflix, Disney+, and the combined HBO/HBO Max subscriber numbers, Paramount represents more than a hill of beans for the bean-counters. It’s certainly a lot larger than Apple TV+ and Peacock, and has a much more diverse portfolio. In its fourth-quarter earnings report last month, Paramount revealed that pay-streaming services Paramount+ and Showtime OTT represented a total 56 million paid global subscribers at the end of 2021. That represented 9.4 million more paid subscribers than one quarter earlier and the company’s best quarter of streaming-subscriber growth to date. Revising its earning projections, the company now expects 100 million paid global subscribers by the end of 2024. A year ago, its projections were 65 million-75 million subscribers. All of that growth comes at a price. The former ViacomCBS spent $2.2 billion on streaming movies and shows in 2021, up from $1 billion in 2020. At last month’s investor day, Paramount executives said they now expect streaming content spend to ramp up to $6 billion in 2024, way up from the year’s previous $4 billion goal. After the investor day, Reif Erlich lost some of her bullishness on Paramount and downgraded the stock from a “buy” to “neutral.” The company’s rising costs to acquire streaming subscribers could cripple its cash flow, she argued. Spending is expected to begin to decline from there, executives have said, and Paramount+ may even reach profitability in 2025. How is Paramount planning to afford all of this? Well, ViacomCBS posted a 48 percent increase in fourth-quarter global streaming revenue (to $1.3 billion) and an 84 percent rise in subscription revenue; that’s a start. Paramount executives also have said they expect streaming revenue to reach $9 billion in 2024, a revision of the year’s previous $6 billion projection. Now we’re talking. The only remaining question: Will the acquisition talks follow? Sign Up: Stay on top of the latest breaking film and TV news! Sign up for our Email Newsletters here.
