Paramount Global CFO Naveen Chopra joins Yahoo Finance Live to discuss Paramount+, competition in the streaming space, exceeding earnings expectations, amplifying the company’s marketing through partnerships with Walmart and United Airlines, and the path to profitability.
Video Transcript
JULIE HYMAN: Paramount+ is gaining ground in the streaming landscape. Its show "Yellowstone" ranked as the most popular series of 2022 in YouGov's global film and TV report, and "Top Gun-- Maverick" was no sleeper either, ranked as the highest appetite score for a movie last year.
Joining us now to discuss all things streaming is Paramount's CFO Naveen Chopra along with Yahoo Finance's Brian Sozzi, who I think has seen "Top Gun-- Maverick."
BRIAN SOZZI: Three times.
JULIE HYMAN: Three times.
BRIAN SOZZI: OK.
JULIE HYMAN: I suspected that was the case. Naveen, thank you so much for being here.
NAVEEN CHOPRA: Thanks for having me. It's great to be here.
JULIE HYMAN: You know, you guys have just come out strong out of the gate in terms of this streaming product. How do you think about now the next phase of growth and how you're going to attack it and keep-- well, I don't know if you can keep up the same pace of growth but how you're thinking about the strategy?
NAVEEN CHOPRA: Yeah, well, as you said, I mean, '22 was just an incredible year for us with Paramount+. And, in fact, since we launched Paramount+ back in '21, it's been the fastest-growing major streaming service. And that's been overwhelmingly driven by content, things like "1883," the reboot of "Criminal Minds," movies like "Top Gun-- Maverick," which you mentioned, "Smile," big-time sports-- the NFL, Champions League soccer. And we've got a whole lot more of that coming in '23, both with respect to new seasons of favorite franchises, new original content, an incredible movie slate.
And so we're going to continue to lean into everything we're doing from a content perspective, but we're also looking to continue to evolve the business model. We've been very focused on building scale, both with respect to subscribers and revenue. And now we're focused on the path to profitability, which has always been part of the evolution that we knew we had to execute against. And we're now getting closer to, you know, the inflection point going from investing more to ultimately the path to profitability.
BRIAN SOZZI: Is this year peak investment in the DTC business, and when do you see profits in streaming?
NAVEEN CHOPRA: We have said for quite some time that 2023 will be the year of peak investment in streaming for Paramount. That's a function of the fact we've been ramping up both our content slate as well as expanding distribution on a global basis. And as I said, we've been very pleased with the success there. I think it's fair to say that we've exceeded expectations on almost all of those dimensions. You know, we added over 23 million subscribers in 2020. Our total streaming business now has a revenue run rate of over $5 and 1/2 billion.
So now we are starting to use that scale to drive toward profitability. We haven't put a specific timeline on that, but we do think as we move from '23 into '24, we'll see meaningful improvement in total-company both earnings and cash flow, which is obviously something that we think can be helpful in terms of the way investors look at the company and how they value the business.
BRIAN SOZZI: How much-- you know, in terms of just consumers being receptive on higher prices, so Netflix out there raising prices. Disney+ raising prices. At what point do consumers just say, I'm going to start cutting some of these services?
NAVEEN CHOPRA: We think streaming still offers tremendous value for consumers relative to, for instance, what they were paying five or six years ago for entertainment. The appetite for great content has not changed at all. In fact, that's only continued to grow. And even today if you subscribe to five or six different streaming services, you're still probably paying less than you were not that long ago for the traditional cable bundle.
So we think there's a lot of legs in it. And, in fact, there's a lot of research that shows streaming remains sort of at the very bottom of the list of things that people are willing to consider cutting, even in tough economic times.
JARED BLIKRE: I'd have to agree that the value to consumer is definitely there. It's also become a bit more-- a bit bewildering given all the choices out there. Just wondering what you're considering and seeing in terms of partnerships with other streaming services. The entire landscape has been crowded for a time, but just wondering how you see it evolving and shaking out not only for you but maybe some of your competitors.
NAVEEN CHOPRA: There's no doubt that crowding has been a concern and I think a frustration for consumers. I think there's two things that we've been focused on at Paramount+ to help cut through that. Number one, we're big believers in franchises. You look at the content that we have had a lot of success with on Paramount+. It's a lot of franchise content, whether that's big movies that we bring from theatrical releases or even things like "Yellowstone" where we've created a whole universe around that that has a built-in, very loyal, very passionate audience.
We've also really embraced partnerships of all different shapes and forms. We have partners here in the US, for instance, with Walmart where we're bundled with Walmart+. We've announced a partnership with Delta Airlines that will be launching recently where people will have the ability to see and experience Paramount+ in flight. And we've got a variety of partnerships outside the United States that have been big drivers of growth, and those partners really help amplify our marketing and drive the awareness that, you know, we want consumers to have for Paramount+.
JULIE HYMAN: Of course, as you guys have really focused on this streaming strategy at core, you've tried to get rid of noncore assets. Simon & Schuster I know is something that's in process. BET is something that's been reported upon. What can you tell us about that and where you are in that process?
NAVEEN CHOPRA: Yeah, as you mentioned, we continue to look at opportunities to divest Simon & Schuster. It's a great business, but it's one that is not core to our current mission of focusing on video.
There's been speculation around BET. We don't comment on M&A speculation, and I don't think it would be appropriate for me to do so here. But I will say that in general, we are always looking at different ways to create value for our shareholders. And to the extent that there are ways to do that by buying assets, by selling assets, by restructuring assets, we look at all of those very carefully. We study them, and ultimately to the extent there's an opportunity to create value for shareholders, we'll pursue it.
BRIAN SOZZI: Naveen, you're out in the market now with a new campaign Popular is Paramount. How do you measure a return on that type of investment? Do you expect a subscriber lift?
NAVEEN CHOPRA: Yeah, thank you for asking me about that, Brian. We're really excited about that campaign. You know, Popular is Paramount is really all about helping people understand the scale and power of our content. You know-- you mentioned it. "Top Gun" has obviously been the biggest movie-- domestic movie in 2022. "Yellowstone" number-one show on television. CBS, number-one network now for 15 years running.
But what you may not realize is the fact that, for instance, in the fourth quarter, domestic consumers spent 370 billion minutes consuming just CBS content on our linear and digital platforms. That's the same amount of time that was spent consuming the entire slate of Netflix original content. So we want people to understand the scale and the influence of what we bring to the table because it unlocks a lot of value for our advertisers, our partners, and, of course, our customers.
JULIE HYMAN: Yeah, interesting perspective there because we talk a lot about Netflix.
BRIAN SOZZI: Kevin Costner, is he's staying with "Yellowstone?" You know I had to ask this stuff. I'm a fan.
NAVEEN CHOPRA: Well, everyone's a fan of "Yellowstone." Number-one show on television, as we've mentioned a couple times. You know, Kevin's been an incredible contributor. We appreciate everything he's done for the show, and we hope we can continue it. But if that's not in the cards, we've done a great job expanding the storyline and the broader "Yellowstone" universe, and there are obviously different paths that we can take if we have to.
BRIAN SOZZI: I'm caught up on every episode, guys. Just wanted to let you know that.
JULIE HYMAN: All right, obviously I have to do the same. Naveen, thank you so much. Thanks for coming in.
NAVEEN CHOPRA: Thanks for having me.
JULIE HYMAN: It was good to see you in person.
NAVEEN CHOPRA: You too. Take care.
JULIE HYMAN: Naveen Chopra is the CFO of Paramount and, of course, our Brian Sozzi.