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    PSKY
    Earnings call· Dec 2025(Q4 FY25)

    Paramount Skydance Q4 FY25 earnings call PSKY

    Feb 25, 2026 Source

    Executive summary

    Paramount Skydance Q4 FY25 — Strong Momentum and Strategic Investments

    The new Paramount leadership team reported a strong Q4 FY25, meeting or exceeding guidance, driven by accelerating streaming growth and successful content investments. While facing headwinds in theatrical revenue and Pluto monetization, the company is focused on long-term value creation through strategic content spend, IP monetization, and technological capability, aiming for investment-grade credit metrics by 2027. Management views AI as a creative tool and plans significant investment to lead industry transformation.

    Highlights

    5

    • The UFC partnership started ahead of expectations, reaching approximately 7 million households across the U.S. and Latin America, marking Paramount+'s largest exclusive live event to date.

    • Paramount+ streaming growth accelerated, up over 17% year-to-date, driven by new content and improved ad monetization.

    • The company greenlit 11 original series and 11 movies in the past six months, scaling its film slate to 16 releases for FY26 and doubling down on core franchises.

    • CBS maintained strong linear performance, securing 8 of the top 10 shows on broadcast, including the #1 show in Tracker.

    • The 'Paramount One' initiative successfully activated the entire ecosystem for the UFC 324 launch, generating billions of impressions and driving engagement.

    Concerns

    5

    • The company is making a deliberate decision to exit uneconomic hard bundles, which represented less than 2% of Paramount+ revenue in 2025, impacting reported subscriber growth.

    • Theatrical revenue is expected to decline in FY26 due to tough comparisons from 2025's 'Mission Impossible' and the studio being in a 'rebuild phase'.

    • Pluto is facing a monetization headwind, with non-Paramount+ revenue down 16%, despite growing engagement.

    • The company expects $800 million in restructuring charges in Q1 FY26, impacting free cash flow.

    • The upcoming NFL broadcast rights renewal discussion presents potential risks, though management expressed confidence in a long-term partnership.

    Guidance & targets

    12
    CategoryTargetConfidence
    Revenue
    $30 billion, up 4% year-on-year
    high materiality
    High
    DTC Growth
    continue to accelerate growth year-on-year
    high materiality
    High
    DTC Subscriber Growth
    underlying healthy subscriber growth accelerate in '26
    medium materiality
    High
    DTC Ad Revenue Growth
    meaningfully recover DTC ad growth in the year
    medium materiality
    High
    DTC Profitability
    improve year-on-year
    high materiality
    High
    TV Media Profitability
    stable on both a profit dollars and a margin basis
    medium materiality
    High
    Studio Profitability
    drive studio profitability up
    medium materiality
    High
    Adjusted EBIT
    $3.8 billion
    high materiality
    High
    Synergies
    $3 billion plus
    high materiality
    High
    Investment-grade credit metrics
    hit those in '27
    high materiality
    High
    Free Cash Flow Conversion
    hitting 5% free cash flow conversion this year
    medium materiality
    High
    Free Cash Flow Conversion
    get back to industry norms and hopefully exceed that
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    DTC
    DTC is expected to be the primary growth driver for the company, with revenue growth accelerating in FY26. Profitability is also expected to improve year-on-year.
    subscriber growth: accelerate in '26ad revenue growth: meaningfully recover in the year
    		—accelerating—improve year-on-year
    TV Media
    Revenue is expected to decline due to industry headwinds in pay TV, but advertising revenue decline is expected to be more moderate. Profitability is projected to remain stable.
    		some declines——stable on both a profit dollars and a margin basis
    Studios
    Theatrical revenue is expected to decline in FY26 due to tough comps, but overall studio profitability is expected to increase due to better cost management and licensing deals. The film slate has been scaled up significantly.
    theatrical revenue: decline in '26film releases FY26: 16 moviessteady state film releases: over 15 movies per year
    		———drive studio profitability up

    Operational metrics

    12
    UFC 324 household reach
    7 million
    Q4 FY25

    Largest exclusive live event on Paramount+ to date.

    Paramount+ growth
    over 17%
    YTD

    Strong growth in streaming service year-to-date.

    Revenue from uneconomic hard bundles
    less than 2%
    2025

    Represented a small portion of Paramount+ revenue, being exited for better ARPU.

    Restructuring charges
    $800 million
    Q1 FY26

    Expected charges impacting free cash flow.

    Content spend increase
    $1.5 billion
    FY26

    Increased content spend to scale film slate, original series, and sports.

    Number of film releases
    16versus the 8 films that we inherited
    FY26

    Scaled film slate for the year.

    Steady state number of film releases
    over 15
    future years

    Targeted steady state for film production.

    Movies greenlit
    11
    past 6 months

    Includes films like A Quiet Place and Sonic, doubling down on franchises.

    Original series greenlit
    11
    past 6 months

    New original series greenlit since the new leadership took over.

    Number of top 10 broadcast shows
    8
    Q4 FY25

    CBS had 8 of the top 10 shows on broadcast, including the #1 show in Tracker.

    AI headcount investment
    10x
    future

    Expected increase in headcount dedicated to AI to become a leader in the industry.

    Global subscribers
    79 million
    Q4 FY25

    Current global subscriber base, indicating opportunity for growth.

    Deals & partnerships

    3
    Warner Bros. DiscoveryRevised bid for acquisition$31 per share, all cash

    Paramount submitted a revised all-cash bid to acquire Warner Bros. Discovery. Management declined to comment further on the call.

    UFCExclusive content partnership for streaming service

    Partnership with UFC (and Zuffa Boxing) for exclusive combat sports content on Paramount+. Started ahead of expectations, driving significant engagement and ad revenue.

    SkydanceIntegration of Skydance into Paramount's studio segment

    David Ellison, formerly running Skydance, now leads Paramount, with Skydance integrated into the studio segment, contributing to the film slate and profitability.

    Risks & headwinds

    5
    Pay TV Industry HeadwindsFY26

    TV Media revenue 'some declines'

    Mitigation: Expects advertising revenue decline to be more moderate due to better ad sales execution and tailwinds from political spending in 2026.

    Theatrical Revenue Decline (Short-term)FY26

    'theatrical revenue to decline' in '26

    Mitigation: Due to tough comps from 2025 (Mission Impossible) and being in a 'rebuild phase'; expects significant profitability improvement in film slate this year, with box office numbers and profitability accelerating in '27 and beyond as core franchises come online.

    Pluto Monetization HeadwindCurrent, being addressed

    'non-Paramount+ was down 16%' (primarily Pluto monetization)

    Mitigation: Addressing with new leadership, product improvements, and streaming convergence to improve monetization and growth.

    Uneconomic Hard Bundles ExitFY26

    'represented less than 2% of Paramount+ revenue in 2025'

    Mitigation: Underlying healthy subscriber growth expected to accelerate; deliberate decision to improve ARPU and profitability.

    NFL Renewal DiscussionUpcoming

    Not quantified, but 'properly accounted for what we expect to be whatever impact of that negotiation in our kind of internal forecast going forward.'

    Mitigation: Confident in long-term partnership due to strong relationship and historical success; internal forecasts account for potential impact.

    What to watch in Q1 FY26

    5

    DTC Subscriber Growth (ex-hard bundles)

    Next quarter / FY26
    Currentunderlying healthy subscriber growth accelerate in '26
    TargetContinued acceleration of net adds

    Why it matters

    Verifies the success of the strategy to exit uneconomic bundles while maintaining core subscriber momentum.

    But if you take those underlying exits out, we will continue to see net adds grow year-on-year.

    Q&A highlights

    5

    Comment on initial experience with UFC on streaming and the viability of the 'something for everyone every day' strategy.

    The UFC partnership has been a phenomenal start, reaching 7 million households and being the largest exclusive live event on Paramount+. It has driven cross-engagement with other content. Streaming growth is accelerating (17% YTD), and ad revenue is promising. The company will experiment with distribution, including CBS.

    “UFC 324 was really a phenomenal start for us. We reached approximately 7 million households across the U.S. and Latin America and was also the platform's largest exclusive live event to date.”

    asked by Peter Supino · answered by David Ellison

    2 min read5 chapters

    Detailed Narrative

    01

    UFC Partnership Success

    The UFC partnership has exceeded expectations, with UFC 324 reaching approximately 7 million households across the U.S. and Latin America, marking Paramount+'s largest exclusive live event. The company notes strong advertising demand and cross-engagement from UFC fans with other content, validating the strategy of owning combat sports. Experimentation with content distribution, such as partially airing upcoming fights on CBS, is planned to further grow the brand.

    02

    Streaming Momentum and Strategy

    Paramount+ has seen accelerating growth, up over 17% year-to-date, with a focus on driving ongoing engagement through new content and improved ad monetization. The company is making a deliberate decision to exit uneconomic hard bundles, which represented less than 2% of Paramount+ revenue in 2025, to improve ARPU and profitability. Despite a monetization headwind for Pluto, engagement is growing, and significant product improvements and advertising leadership changes are underway to align its performance with peers.

    03

    Studio Rebuild and Franchise Focus

    The studio segment is in a rebuild phase, with theatrical revenue expected to decline in 2026 due to tough comps from 2025's 'Mission Impossible' and the long production cycle of tent-pole films. However, the company has scaled its film slate from 8 to 16 releases for 2026, greenlit 11 new movies, and is doubling down on franchises like 'A Quiet Place' and 'Sonic.' Significant profitability improvements are expected this year, with box office numbers and profitability accelerating in 2027 and beyond as core franchises come online.

    04

    IP Monetization and Paramount One Initiative

    Paramount is focused on leveraging its intellectual property across its ecosystem, citing 'Teenage Mutant Ninja Turtles' as a prime example with multiple films, series, and a record-breaking consumer products partnership. The 'Paramount One' initiative, a marketing platform, successfully activated all linear channels and D2C platforms for the UFC 324 launch, generating billions of impressions and driving engagement. This integrated approach is expected to be applied to other tent-pole franchises to operate as one cohesive company.

    05

    AI as a Creative Tool

    The company views AI as a significant transformative tool for artists, enhancing creativity rather than commoditizing content creation. While defending its IP against unauthorized use by AI models, Paramount sees the value of intellectual property amplified by AI. The company plans to significantly increase its headcount investment in AI to become a leader in shaping this transformation, believing it will be a tailwind for the company.

    AI-generated summary of the company’s earnings call. Not investment advice.