ALEXANDRA CANAL: I want to talk to you about that, yeah.

BOB BAKISH: --this year, adding the fall to slate with CBS, which we won five of seven days last week-- and we have the top one, two, and three new show-- and then, of course, adding a robust library and ongoing production from our cable networks. It really is a compelling combination. With vis a vis Showtime, we use Showtime in a number of ways. Internationally, it's integrated into Paramount+.

We felt that was the right way. We didn't have a standalone Showtime, if you will, linear service. So the brand wasn't quite as developed. We thought that's a compelling proposition. In the US, you can buy Showtime separately, OTT versus Paramount+. It obviously has a linear service. It has a well developed brand. And we're happy with how it's doing on a standalone basis.

A while ago, we introduced a price bundle, which was, you can have Showtime and Paramount+ together at a modest discount. And we're pleased with that. Last month, we introduced an app with Paramount+ with Showtime inside as an option. So instead of a price bundle, you now have one app. And you get the benefit of the Showtime content, should you choose. We've been very happy with the take rate there.

And I can tell you, I use that version of the Paramount+ app. And it is yet, again, another proof of broader is better. And seeing that it's Showtime, whether it's the originals or some of the movies, in the carousels mixed in with the other Paramount+ stuff really works. So, again, what are we focused on now? We're focused on how do we make a more compelling consumer proposition, and how does that aid in getting distributors even more behind our product.

So we look at optionality. And, you know, I don't know exactly where it's going to go. But I can tell you, our product will continue to get stronger. It'll continue to evolve. And that'll bring down churn, and it will continue to grow the sub base.

ALEXANDRA CANAL: Are you using those bundled offerings that you were just talking about as a sort of test to see what a combination service could bring in the market?

BOB BAKISH: Oh, absolutely. We're getting more data every day on Paramount+ on a standalone, what works under the covers, how does sports content interact with films, et cetera. We're seeing how the bundle performs on a price basis. We can look at variability in pricing. So, yeah, we learn more about streaming every day, and that informs our going forward plan.

ALEXANDRA CANAL: You mentioned pricing. I want to pick up on that. Pricing has gone up for a lot of these streaming competitors. We got the news recently that the Netflix ad tier that's going to be $6.99 in the US. Where is that sweet spot for you, when we think about pricing relative to competitors, but also wanting to make sure that you're not leading to increased churn?

BOB BAKISH: Yeah, sure. So a couple of points on pricing. One is streaming represents an extraordinary value in general for the consumer. Point two is within that, Paramount+ is not the price leader. We are very much a value offering. We tuck in under, say, Netflix, under HBO Max, et cetera.

Point three is, in general-- and you've already seen this start happening-- streaming pricing is going to go up. One of our competitors just announced a 30% price increase. Netflix has raised price multiple times. So the price umbrella on streaming will go up. And we'll tuck in under that, and we will raise price as well. I can't tell you exactly when that will happen, but directionally, it's going to happen for sure.

ALEXANDRA CANAL: So do you say you're watching competitors pretty closely when it comes to their pricing? Is that-- does that factor into your decisions?

BOB BAKISH: We look at a lot of things. We look at the performance of our product with our consumers. We look at what competitors are doing. We obviously look at what's going on outside of streaming. All of that gets factored into our decision-making on our course of action for streaming and the business at large.

ALEXANDRA CANAL: And when we think about content, you were mentioning sports content. Obviously, Paramount+ has a ton of kids' content. But there still seems to be a need for this buildable franchise type of content across the sector. So what do you think will be key for your content strategy moving forward?

BOB BAKISH: Well, you just hit on something, the word "franchise." One of the things that Paramount Global brings to consumers is a deep collection of franchises. And it's certainly core to our strategy in general and with respect to streaming to leverage that. Look at our Paramount film slate. They're more and more tilted towards franchises. Why? Because they have built-in fan bases, and you can evolve the storylines.

Same thing in linear television. For instance, look at CBS this season. "FBI" night crushed it, multiple FBIs. NCIS crushed it at multiple NCIS's. So franchises are key. In the kids' space, "Paw Patrol." We did our first "Paw Patrol" movie last year-- killed it. We're doing another one next year. "SpongeBob"-- we've done derivative product from that, "Kamp Koral," et cetera.

And then of course, "Yellowstone," the biggest show on television, we brought the world "1883" last year. We're bringing it "1923" this year. And actually, we're doing some more stuff with Taylor Sheridan, who's the writer of it, including "Tulsa King" with Sylvester Stallone. Franchises work, and we have an incredible collection of franchises in our company. So yeah, they're part of our streaming play, for sure.

ALEXANDRA CANAL: And besides streaming, you guys have also heavily invested in some unique partnerships, the Walmart+ being one that immediately comes to my mind. So what's the benefit of a partnership with Walmart? And what other types of partnerships are you actively exploring?

BOB BAKISH: So we've been in business with Walmart for a long time. We sell consumer products with them. We distribute home entertainment with them. I know Doug McMillon, the CEO, well. And there was a point, I guess it was last year, where they started thinking about the evolution of Walmart+ and having a video service. And we were naturally interested in expanding that partnership.

And it really is a partnership. We're not investing in Walmart+ per se, but we are the video offering in it. So if you're a Walmart+ customer-- consumer, and you decide to opt in to a video service, you get Paramount+. And we think it's a great model. It's early days. It launched in September. But we're already through what we thought would be our year end forecast number.

And that-- it is a tremendously powerful retail. They have 140, 150 million people going through their stores in the US every week. And then they got about a million for employees. All of them can opt in to Paramount+. So we're thrilled with the partnership, and it's off to a great start.

ALEXANDRA CANAL: And let's talk box office. You mentioned your successful film slate several times. In this environment, how do you determine which film can go direct to the theater or which film you might want to go direct to streaming on Paramount+?

BOB BAKISH: Well, we had a different point of view on films and streaming going back to COVID and going back to Paramount+. When COVID hit, a lot of people said you should put all your films on streaming, or at least, [INAUDIBLE] streaming. We said no. We believe in the theatrical window. And we believe in it both to give the audience the chance to have that big screen experience and participate-- as participate in those economics, and then we can move to streaming.

So we adopted what's known as a theatrical and 45-day fast follow to streaming strategy. That's our default strategy. And because it was in COVID, that resulted in us holding certain films. As a result, "Top Gun, Maverick," we moved that date five times because we said, this is a big screen movie, and it should be in the theaters. And I'm glad we did because that turned out to be a good call.

I think the theatrical with 45-day fast follow, which, by the way, on "Top Gun," we're going a little bit longer than that. By the nature of the film, 20 weeks later, it's still in theaters today, and it was the only film in history to be number one on Memorial Day and number one on Labor Day. So having a longer theatrical run makes sense. But in general, we like that strategy. I think that's the sweet spot of ROI, particularly with respect to films. And that is very much our going forward strategy with Paramount.

ALEXANDRA CANAL: Yes, with "Top Gun," you guys demonstrated your ability to pivot. I want to talk about the Wall Street sentiment of it all. There seems to be a lot of doom and gloom right now. You're a bit more optimistic. But when we take a look at Paramount stock price, it's down more than 40% year to date. You have some downgrades on the Street. How do you convince analysts and investors that these macroeconomic headwinds, the decline of cable television, the uncertainty surrounding streaming margins, are not concerning to your fundamentals?

BOB BAKISH: Look, I don't think there's a lot of people walking around that's happy with the state of the markets. I mean, they're up today, but in general, it's been a rough half year with respect to equity valuations, and certainly, our company stock. Worth noting on a relative basis, relative to some other media companies, we've actually done better, i.e., less worse. But nonetheless, there are concerns on the Street. There's concerns-- relative topics.

My view is, you have to decide what you believe in and play through. As I said, in theatrical, people said release it direct to streaming. We sai no, we want to do theatrical and then streaming. When we did Pluto in '20-- we closed in early '19. We showed up and talked it up. People were like, what's that? That's a joke. By the way, it had 12 million MIUs and $70 million revenue. Three years later, it had 70 million MIUs and over a billion dollars in revenue. And now everybody is like, whoa, this fast category is really cool.

But if you listened to the Street and you listened to others, you would never have done it. So you have to decide what you believe. The two concerns in the Street right now are advertising and streaming profitability. Advertising is a great business. And we have a fundamentally strong position in it. Our combination of linear reach, particularly with a broadcast network, plus the number one fast service in the country in Pluto TV, gives us a great reach expression for advertisers.

Add to that, it's all wrapped around great creative content that people love to be associated with-- NFL, "Survivor," "FBI," "Paw Patrol," what have you. Add to that advanced ad capabilities and an ability to do all that business on a turnkey basis. It's a fundamentally compelling proposition. And we will demonstrate it again.

Second question people are worried about is streaming profitability. We've always had a plan to build a robust streaming business, but a profitable streaming business. Our business is only a year and a half old. It takes a little while. And we always said peak investment year is 2023. It still is. But we are building a business that we see as, over time, having TV media-like margins. And we are tracking according to our plan.

So are there concerns on the Street that have negatively impacted valuations? Yes. Do we have to play through and deliver and continue to have the momentum we're showing? Yes. And ultimately, that represents a great value opportunity for people.

ALEXANDRA CANAL: All right. Well, you heard it here. Thank you so much, Bob, for covering all those topics with us. Bob Bakish, Paramount CEO.

BOB BAKISH: Thank you.