Paramount Skydance (PSKY) Q1 FY26 earnings call: guidance and Q&A

Management views the pending acquisition of Warner Bros. Discovery as a powerful accelerant to its strategy, expanding reach and enhancing storytelling capabilities. The transaction is on track for completion by September 2026, with U.S. HSR obligations satisfied and international regulatory approvals advancing, several already secured. The combined entity is expected to create a leading global media and entertainment company, powered by storytelling and technology, with over 200 million DTC subscribers and a presence in over 200 countries.

The company emphasizes a 'quality as the best business plan' philosophy across its film, television, and streaming businesses. Recent highlights include *Scream 7* becoming the highest-grossing film in its franchise's 30-year history, *Landman* becoming the most-watched series in Paramount+ history, and CBS achieving 13 of the top 20 primetime series. The film slate has nearly doubled to 15 films for FY26, and the combined PSKY-WBD entity is already producing 30 films annually, leveraging beloved franchises like Harry Potter, Top Gun, and Yellowstone.

Paramount is actively transforming its operations by unifying platforms, data, and workflows, and embedding advanced technology. Key initiatives include consolidating three streaming services into one unified platform by mid-2026, modernizing consumer-facing technology for dynamic and personalized experiences, and a significant update to Pluto this summer. AI is being leveraged across various functions, including ad tech with the Precision+ platform, and in back-office operations (finance, HR) to drive efficiency and accelerate workflows, with 80% of engineering using code-assisted technology.

Paramount+ revenue grew 17% year-over-year in Q1 FY26, driven by a 14% increase in ARPU from price adjustments and an improved subscriber mix. The platform added 2 million underlying subscribers during the quarter, while strategically exiting over 1 million international hard bundle subscribers with an average ARPU of less than $1, which were deemed uneconomic. Engagement remains strong, with the UFC partnership significantly contributing to viewership and attracting younger subscribers who then engage with other content on the platform.

The company is retooling its advertising business, consolidating national sales organizations under unified leadership and bringing in new talent from leading digital platforms. Significant platform investments are being made in ad tech, including the AI-powered Precision+ product, which is generating positive early market feedback. While overall ad revenue declined 3% in Q1 FY26, the D2C ad business returned to growth, and the company expects the total ad business to return to growth in the second half of 2026.

The 7-year UFC partnership has exceeded early expectations, with over 10 million households watching and more than 100 million hours of UFC content viewed on Paramount+. New UFC subscribers are, on average, 15 years younger than the average Paramount+ viewer and show high engagement with other platform content. Main fight cards on CBS averaged 2.8 million viewers, outperforming comparable NBA games, and advertising demand for UFC content exceeded expectations, contributing meaningfully to Q1 ad revenue.