Co-Chief Executive Officer, Paramount Global
$PARA Paramount Global Q4 2024 Earnings Conference Call
02/26/2025 Q&A: 29:44 Paramount Global operates as a media, streaming, and entertainment company worldwide. It operates ...
About Christopher Mccarthy
Christopher McCarthy, co-chief executive officer of Paramount Global, said on the company’s Q4 2024 earnings call that the company added 5.6 million new subscribers in the quarter, the strongest quarter in two years, and 10 million for the full year. He stated that global watch time per user improved 20% in Q4 and that churn improved by over 100 basis points year-over-year. McCarthy noted that total company adjusted operating income returned to growth, up 30% year-over-year to $3.1 billion, and that free cash flow reached $489 million, the highest in four years. He said the company is “making the successful transformation into a streaming‑first company” and expressed confidence that Paramount Plus will achieve domestic profitability in 2025. In earlier interviews, McCarthy described the company’s strategy as focused on creating “mass commercial hits” and franchising its intellectual property to fuel Paramount Plus growth. He said the winner of the streaming wars “is not going to be the one that spends the most money but the one that makes the mass commercial hits” and that the company is “laser focused on making the big hits and turning them into franchises.” He also noted that Paramount Global was leveraging its linear television base, where “over 70% of all TV minutes are spent on linear,” to launch new series and accelerate its streaming service.
Transcript (6 segments)
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Nardia0:00
Good afternoon, my name is Nardia, and I'll be the conference operator today. At this time, I would like to welcome everyone to Paramount Global's Q4 2024 earnings conference call. At this time, all lines have been muted to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. In order to get as many of your questions as possible, we ask that you please limit yourself to one question at this time. I would now like to turn the call over to Jamie Morris, Paramount Global's EVP of Investor Relations. You may now begin your conference call.
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Jamie Morris0:43
Good afternoon everyone, thank you for taking the time to join us for our fourth quarter 2024 earnings call. Joining me for today's discussion are Paramount's co-CEOs Brian Robbins, Chris McCarthy, and George Cheeks, and our CFO Navine Chopra. Please note that in addition to our earnings release, we have trending schedules containing supplemental information available on our website. Before we start, I want to remind you that certain statements made on this call are forward-looking statements that involve risks and uncertainties. These risks and uncertainties are discussed in more detail in our filings with the SEC. Some of today's financial remarks will focus on adjusted results. Reconciliations of these non-GAAP financial measures can be found in our earnings release or in our trending schedules, which contain supplemental information, and in each case can be found in the Investor Relations section of our website. Now I will turn the call over to Brian.
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Brian Robbins1:44
Good afternoon everyone, thanks for joining us for our fourth quarter and full year 2024 earnings call. I'm Brian Robbins, and I'm joined here by my fellow co-CEOs George Cheeks and Chris McCarthy. First, we want to say that our thoughts are with all those who have been impacted by the tragic LA fires. We will continue to support our teams and partners impacted for what we hope will be a rapid recovery process. Now turning to our financials, we are proud of the results we achieved for the full year, which reflect the progress we have made since becoming co-CEOs. 2024 demonstrated meaningful progress against our long-term goals, including significant improvement in DTC profitability, driven by continued top-line growth powered by one of the strongest content slates in the industry, all while strengthening our balance sheet. Now let me turn it over to Chris to provide more details on the year.
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Christopher Mccarthy2:45
Thanks, Brian, and good afternoon everyone. Let's start with the headlines. 2024 was a transformative year and marks a significant turning point for Paramount. Total company adjusted OIBDA returned to growth, up 30% year-over-year to $3.1 billion. We improved net leverage 1.3 turns, and we generated $489 million in free cash flow, up significantly year-over-year and the highest in four years. These results were driven by the success of our DTC segment. At Paramount+, we saw growth in subscribers, record engagement, and impressive growth in revenue. We added 10 million new subscribers for the year, driven by a very strong Q4 with 5.6 million new subscribers, the strongest quarter in sub growth in two years. In Q4, engagement soared. Global watch time per user improved 20%, driving a measurable improvement in churn of over 100 basis points year-over-year. As a result, revenues increased significantly, up 33% for the year. This success was powered by a very strong content slate with a mix of big returning hits and the launch of some new ones. Paramount+ reached a new high, ranking as the number two domestic SVOD for hours watched across all original series, up from number six this time last year. Pluto also had a record year with global watch time up 8% year-over-year and 16% in Q4, showing strong momentum. Taken together, DTC generated significant improvement in profitability of $1.2 billion for the year, which gives us great confidence Paramount+ will achieve full-year domestic profitability for 2025. At the same time, we continue to do what we do best: produce some of the biggest, broadest blockbuster films and hit TV series across every platform. And now I'll toss to George to provide an update on distribution, Nielsen, and ad sales.
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George Cheeks4:53
Thanks, Chris. In 2024, we negotiated a number of deals with our long-standing distribution partners. In Q4, we renewed our deal with Comcast, and just last week we renewed our distribution agreement with YouTube TV. Our track record in 2024 reinforces the value proposition of our content with mass hit series, award-winning news, and a top-tier sports portfolio. In addition, we're very pleased to have closed a multi-year deal with Nielsen. Paramount is committed to addressing TV's cross-platform future for the benefit of all stakeholders, including our brand and agency partners. This is a top priority for us. Now turning to advertising, we continue to proactively transition the business from linear to digital, as demonstrated by healthy growth in DTC ad revenue, which increased 18% in 2024. With one of the largest addressable footprints in the US marketplace, Paramount delivers premium, high-engagement video for advertisers who are increasingly focused on quality and impact when choosing where to spend their ad dollars. Additionally, we're growing the demand side of the equation. Over the past couple of years, we've expanded our client base to tens of thousands of small and midsize businesses that are now advertising with Paramount every quarter. We're also investing in data technology as well as identity frameworks, which expand our attribution capabilities. These product enhancements will set us up to compete more effectively over time for a larger share of social media budgets.
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Brian Robbins6:34
Thanks, George. In Q4, Paramount Pictures had a very active release slate with Smile 2, Gladiator 2, Sonic the Hedgehog 3, and September 5. In total, the studio grossed nearly $900 million at the global box office in Q4, with a lot of momentum as we continue with our 2025 slate across the business — film, television, and streaming. We continue to focus on franchise growth and management, capitalizing on Paramount's rich library and IP. We saw our strategy of capitalizing on our franchises pay off most recently with Sonic the Hedgehog 3, which continues to deliver, approaching nearly $500 million at the worldwide box office. This makes Sonic 3 the highest-grossing film in the franchise and on its way to be one of the 10 most profitable Paramount Pictures releases of the last decade. Across its three installments, the Sonic the Hedgehog series has now exceeded $1.2 billion at the global box office. As part of this franchise strategy, our spin-off series Knuckles on Paramount+ drummed up fan excitement and expanded our audience on streaming. The series debuted last spring; it's the number one Paramount+ original kids and family series ever in terms of both active subscribers and hours. This is just one example of how we're implementing our multi-platform franchise model, and we are executing our vision across theatricals, series, and streaming with franchises like Yellowstone, NCIS, their spin-offs and prequels, and PAW Patrol, just to name a few. Our approach to franchise management is a long-term view, cultivating active fan bases and building audiences over time, and one that continues to pay dividends. We're excited for a dynamic and robust '25 slate that includes the highly anticipated Mission: Impossible – The Final Reckoning, an original live-action comedy coming from the creators of South Park, and Kendrick Lamar's Edgar Wright-directed The Running Man starring Glen Powell, and for families, an animated Smurf film with Rihanna voicing Smurfette and an all-new SpongeBob SquarePants film to close out the year.