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Paramount CFO Naveen Chopra
Provided by Paramount Global
Paramount Global is focused on “getting the most out of every dollar we invest in content,” Chief Financial Officer Naveen Chopra said at an investor conference on Wednesday.
“We’ve seen a lot of changes in the past few years,” he said, speaking in a webcast session at the Morgan Stanley TMT conference in San Francisco. We think we’re punching above our weight and are incredibly excited for what’s to come. And we want to extract as much value as possible. ”
In the streaming space, this means a more focused approach to original programming and the timing of its release. “It’s all about original content in the right amount and right rhythm, and being able to leverage that to drive consumers to your library and affinity to his programming. “They tend to be more focused,” Chopra said. “We want every customer to believe that at any given time, new original productions that are relevant to them are available on the service called One or Two,” Paramount said in a statement to Streaming. He explained the focus.
The company, led by CEO Bob Bakish, and its controlling shareholder, National Amusements, led by Shari Redstone, have been the subject of much deal speculation on Wall Street. In the face of this, Chopra declined to comment in detail, but shared management’s broader views. “From an executive perspective, we’re focused on execution,” the CFO said, noting that it “creates value,” but that the team may be offered He stressed that he would work “diligently” on alternatives.
At the end of the day, creating value for all shareholders is important to management. “There are multiple ways that we could potentially accomplish that. We think it’s compelling to implement the plan,” Chopra said. “But to the extent there are other options, we will be keen to explore them.”
In its recent fourth-quarter earnings call, Paramount said it expects to achieve “significant company-wide earnings growth” in 2024 and for its streaming service Paramount+ to reach domestic profitability in 2025. I did. This streamer ended his 2023 with 67.5 million subscribers.
“I think subscription growth in 2024 will be lower than in 2023, but importantly, we still expect very healthy revenue growth for Paramount+,” he said. “Of course, revenue is a more important metric than subscriptions,” Chopra recently predicted, with programming costs on Paramount’s streaming platform declining this year.
But the conglomerate continues to fight to replace declining linear TV revenue with streaming and other digital revenue as consumers’ TV viewing habits rapidly change.
Chopra reiterated that he expects Paramount to return to growing free cash flow this year and will keep a close eye on cost-cutting and containment measures after a recent round of layoffs.
He also shared some positive thoughts about the current state of the advertising market. “On the linear side of the business, we are seeing some stabilization,” he said. “The diversification premium in the market is pretty healthy and moving well on the upfront,” he concluded. “Generally, I think sentiment is more positive than it has been.”
He was also asked about the possibility of bundling streaming services, saying that Paramount is calling what Walt Disney and Charter Communications did in their recent carriage agreements “a version of bundling, which we have actually accepted externally. “It’s very similar to hard bundles,” he said. In the US, we bundled our TV services with Paramount+ in several different markets. ” These have been “very successful for us,” he says. “Firstly, this is clearly a means of significantly expanding our subscriber base in a relatively short period of time. The cost of acquiring these subscribers is very low. So from that perspective It’s efficient. These subscribers typically churn at a much lower rate than direct retail subscribers. And we have partners who can help us market and raise awareness of our services, content, etc. There are a lot of tailwinds.”
However, the trade-off is a decline in “wholesale average revenue per user (ARPU),” Paramount’s CFO said. “But based on what we’ve seen outside the U.S., we believe that if we build these things right, they can be very positive for the overall business.”
As for ARPU, Paramount’s streaming ARPU will be supported in the future by subscriber growth, higher ad prices, and further consumer price hikes, but that is not expected in 2024, the CFO said. Speaking at a home conference. Chopra said that six to seven months after the 2023 price increase, subscriber churn has been “more than offset” by higher ARPU.
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