As chatter of an impending consolidation in the media industry has been raging in recent months, Paramount Global chief financial officer Naveen Chopra says the company is remaining “very open minded” about potential opportunities.
“It’s probably unwise to bet against consolidation in the media industry or really any industry for that matter. Given that, we try to remain very open minded and thoughtful about what those consolidation opportunities may be.” Chopra said during Gabelli Funds’ 15th annual Media & Entertainment Symposium on Thursday. “Whether Paramount is a seller of assets into consolidation or whether we are a consolidator of assets, we’ll have to see. But, as I said, we remain very open minded to those possibilities because they can be very effective ways of maximizing shareholder value.”
One example of the company’s upcoming consolidation opportunities will be the integration of Showtime into Paramount+ on June 27. Existing subscribers will transition into the service over the course of the third and fourth quarter of 2023.
The bundled service will cost $11.99 a month, up from its previous cost of $9.99 a month. Paramount+ will still offer its Essential tier, which will exclude Showtime and be available for only $5.99 a month, a dollar more than it previously was. Showtime’s standalone app will shut down by the end of 2023.
Chopra noted that subscribers of the current Paramount+ with Showtime bundle have spent 20% more time and consume 40% more titles on the service and that churn from the bundle is “significantly lower” than from standalone Paramount+. The combination is expected to generate $700 million of future expense savings.
“From a consumer perspective, it’s a win win because we’re now able to offer consumers a broader set of content that includes not just the movies, the sports, the originals, the kids content that they love on Paramount Plus, but really well known and respected Showtime franchises, whether that’s Billions or Dexter or a new franchise like Yellow Jackets. So we think that’s going to be really additive and will result in more customer engagement.”
In addition to the Showtime integration, Chopra said that Paramount is “pretty deep into the remarketing process” for a potential sale of Simon and Schuster. A deal was initially closed to sell it to Bertelsmann’s Penguin Random House for $2.2 billion, but that was ultimately blocked following a lawsuit from the Department of Justice.
“The business is performing extremely well and while it’s not core to Paramount, it’s a really good business with phenomenal intellectual property and has had very, very strong financial performance,” he said. “So that’s proven to be a very competitive process. We’ve had strong interest from a variety of different buyers, both financial buyers and strategic buyers and determining on who ultimately rises to the top of that process, there’s even a path to closing that deal this year. But whenever that happens, it will also be a factor in helping continue to reduce leverage.”
The company, which previously sold its Black Rock headquarters building in New York City for $760 million and Television City studio in Los Angeles for $750 million, is also considering possible sales of its majority stake in BET and its CBS Broadcast Center on West 57th Street in New York City.
Beyond its potential divestiture opportunities, Chopra touted Paramount’s partnerships with Walmart+, Delta Air Lines, Verizon+ Play and Amazon’s Prime Video Channels.
Paramount is reportedly in talks with Amazon to add its ad-based tier Paramount+ to Prime Video Channels. Users can currently sign up for ad-free Paramount+ through Prime Video Channels. An Amazon spokesperson declined to comment on rumors or speculation, while a Paramount spokesperson did not immediately return TheWrap’s request for comment.
“We do think that much like the days of pay television, bundling can be a very powerful force in improving the economic characteristics of the business and you’ll see us continue to do more of that,” Chopra added.