Paramount Global CEO Bob Bakish confirmed during a Morgan Stanley investor conference on Wednesday that the media giant turned down former Showtime leader David Nevins’ offer to buy the network for about $3 billion.
“Yeah, we got an unsolicited offer for Showtime. We looked at it,” Bakish said. “And the reality is, it wasn’t that interesting to us. If you compare that [price] to our internal business plan, the reality is our internal plan is far more value-creating when you take the base earnings and synergies…it just didn’t make sense to divest that asset at anywhere near that price.”
Bakish added that the company is “always looking for ways to unlock value.”
“If we see something accretive based on a strategic thesis, based on a commercial thesis, based on a financial thesis, we’re gonna look at it,” he said.
In February, CFO Naveen Chopra said the integration of Showtime into Paramount+ will officially launch in the third quarter. The combination is expected to result in an impairment charge in the range of $1.3 billion to $1.5 billion in the first quarter and generate approximately $700 million in future annual expense savings.
“It’s a win for consumers, because the product is going to be fundamentally better than Showtime,” Bakish said. “You’re going to get ‘1923’ on it, you’ll get ‘Tulsa King,’ as part of your Showtime subscription. It’s just going to be a bigger, broader product. We fundamentally believe in a broad thesis. So that will work at the consumer level and as part of that, we’re leaning into the Showtime franchises. So you could think about the slate as smaller, which will be less expensive, but also really giving the people what they want — which is more Showtime, maybe more ‘Dexter,’ maybe more ‘Ray Donovan,’ and really leaning into that. And we have some exciting plans there.”
As part of the move, the company is raising its prices for Paramount+ subscriptions. The top tier of Paramount+ will rise to $11.99 per month from $9.99 per month. The cheaper, ad-supported Essentials tier, which will not include Showtime, will increase to $5.99 from $4.99 per month. Consumers who already pay for the Paramount+/Showtime bundle will not be affected by this price increase.
“We do think there is an opportunity to run to raise price and we’re not the first people to raise price. People have raised it before and we’ve looked at what happened both with acquisition and churn when that happens,” he said. “It turns out it doesn’t seem to really affect churn, it can affect acquisition but you can also deal with that with promotional pricing to smooth it. So we are very comfortable raising price on Paramount Plus, the Showtime integration will coincide with that, but again, the base is that it’s an incredible value and there’s room.”
He warned that streaming subscription prices will continue to go up over time across the industry to help get companies get to profitability.
“We will raise price this year and we will raise prices again in the future and you have to build that into your economics because everybody will,” he said.