Now that Paramount Skydance (NASDAQ:PSKY) has completed its long-awaited merger, investors want to know what's next for the company, especially with a soaring stock price after announcing a $7.7 billion deal with TKO Group Holding (NYSE:TKO) for the rights to UFC fights.
Company executives laid out future plans while meeting with the media this week. Here's what investors should expect going forward.
Layoffs Coming
Investors may anticipate layoffs as most merged entities seek to eliminate overlap. Spending $7.7 billion on UFC rights and $1.5 billion on "South Park" rights might also lead Paramount Skydance to want to save money elsewhere.
Paramount President Jeff Shell hinted that layoffs from the company could come all at once instead of cutting jobs each quarter, as reported by Deadline.
"We do not want to be a company that has layoffs every quarter," Shell said. "It's going to be painful. It's always hard, but we don't want to be a company that every quarter is laying people off."
Shell said it's essential to make the cuts necessary, "and then be done with it."
Paramount Skydance CEO David Ellison said layoffs and restructuring could "exceed" an original target of $2 billion.
Movies In Theaters Over Streaming Model
During the media event, Shell also said the media company is 100% committed to a traditional theatrical model for its big movies instead of releasing any big movies on its Paramount+ streaming platform instead.
"That's what makes a movie a movie, and we're all united in that," Shell said, as reported by Deadline.
While movies will play in theaters first, Shell said there could be work to be done on the window between theatrical and streaming, something he previously pushed to shorten when he was CEO of NBCUniversal.
The company's DTC Chair Cindy Holland said "made-for-streaming movies" are not a priority for the company going forward.
Paramount Skydance plans on releasing more movies in theaters annually, going from an average of 11 to 14 a year now to a goal of 15 annually as quickly as possible and a goal of 20 a year in the future.
"One of our biggest priorities is restoring Paramount as the No. 1 studio for filmmakers and talent in the world," Ellison said, as reported by Deadline.
Ellison said it's important to scale the amount of content for the company's movie studios.
Company executives called "Top Gun 3" and a Star Trek movie top priorities moving forward. "Top Gun: Maverick," released in 2022, became Paramount's highest grossing film worldwide with $2.6 billion. Skydance helped co-finance the movie. With the two companies having past success and shared rights, a third film is a priority.
Studio heads Josh Greenstein and Dana Goldberg also said R-rated comedies and family movies will be a priority for the company.
No Cable Network Spinoffs
While Comcast Corporation (NASDAQ:CMCSA) and Warner Bros. Discovery (NASDAQ:WBD) are in the process of spinning off cable assets, Paramount Skydance has no plans to immediately do so after the merger.
"There's no question it's a super challenging business," Paramount's Chair of TV Media division George Cheeks said, as reported by Deadline.
Cheeks said the company's cable channels, which include MTV, Comedy Central, BET and Nickelodeon, are "iconic franchises" and are helping to shift viewers over to streaming.
"There'll be a lot of conversations about what iconic franchises we want to continue, shift maybe to streaming, etc," Cheeks said.
Shell echoed the decision to keep the cable assets for now.
"Our cable portfolio is a little bit different than some of the other companies that are spinning and doing that stuff," Shell said. "We have less of our economics of the company on cable because they decline so much. But the brands are much more defined."
Executives also highlighted "South Park" being a good example of strength of a cable network and streaming.
Streaming Growth in Focus
Paramount's new DTC Chair Holland had years of experience leading Netflix and its original content. While Paramount+ may not get as many original movies going forward, the streaming platform could be the home of content based on iconic franchises.
"We want to entertain all audiences around the world," Holland said, as reported by Deadline. "On Paramount+ today, we have a really good foundation, which is the Taylor Sheridan universe. We also have incredible CBS next-day, live sports, a lot from the cable networks, franchises like Star Trek, so many series."
Holland said the goal will be to make sure there is programming for everybody year round on the platform.
Ellison said that for Paramount+ to achieve more engagement, a key metric, the platform needs more content.
"That means more stories, more series, more films, more sports to make sure that we can deliver those experiences to audiences, to have them spend more time on our hub," Ellison said.
Paramount+ plans to open to third-party suppliers to boost content.
PSKY Price Action: Paramount stock trades at $14.52 on Thursday versus a 52-week trading range of $9.95 to $17.53. Shares are up around 27% during the week.
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