Paramount Skydance Q2 2026 Earnings Report

Paramount Skydance EPS Results

• Actual EPS: $0.18
• Consensus EPS: $0.15
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: N/A

Paramount Skydance Revenue Results

• Actual Revenue: $6.91 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Paramount Skydance Announcement Details

• Quarter: Q2 2026
• Date: 8/4/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, August 4, 2026
• Conference Call Time: 5:00PM ET

Paramount Skydance (NASDAQ:PSKY) Media Group (Nasdaq: PSKY) is a media and entertainment company created through the proposed combination of Paramount Global’s filmed entertainment and streaming operations with Skydance Media, a privately held content studio. The combined business will encompass the development, production and distribution of feature films, television programming and digital content, drawing on a library of legacy Paramount Pictures franchises alongside Skydance’s blockbuster tentpoles and animation slate. Paramount Skydance is structured to serve theatrical, broadcast and streaming audiences worldwide.

Skydance Media was founded in 2006 by producer David Ellison and has since produced major Hollywood releases such as entries in the Mission: Impossible and Top Gun series as well as original television and animation projects. Paramount Global’s entertainment division dates back to the early 20th century, featuring Paramount Pictures, Nickelodeon Studios, Comedy Central and a portfolio of international networks. By uniting Skydance’s production capabilities with Paramount’s distribution infrastructure, the new company aims to accelerate content creation and unlock cross-platform monetization opportunities.

Upon closing, Paramount Skydance will operate globally, distributing films and series across North America, Europe, Asia-Pacific and emerging markets through theatrical releases, free-to-air and pay television networks, and direct-to-consumer streaming services. Key strategic priorities include scaling original streaming content, optimizing international distribution pipelines and maximizing the value of intellectual property across multiple media formats. The integration is designed to leverage synergies in content development, marketing and licensing.

Leadership of the combined entity is expected to feature Skydance founder David Ellison as chief executive officer and Paramount Global veteran Bob Bakish as executive chairman. The transaction remains subject to customary regulatory approvals and closing conditions, with completion targeted in 2024. Once finalized, Paramount Skydance will begin trading under the ticker symbol PSKY, positioning itself as a major independent content creation and distribution platform in the evolving global media landscape.

Paramount Skydance Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Paramount+ momentum strengthened: revenue rose 16% year over year, subscribers reached 81.6 million, retention hit a company record, and total viewing hours grew at a double-digit rate. Management expects DTC revenue growth to accelerate in the second half.
• Positive Sentiment: Studios returned to profitability, generating $36 million in adjusted EBITDA on 16% revenue growth, helped by stronger theatrical performance, licensing gains, and more disciplined marketing. Management expects the segment to remain a durable growth and profit driver.
• Positive Sentiment: Paramount raised its 2026 adjusted EBITDA outlook to $3.8 billion-$3.9 billion and increased its free-cash-flow conversion target to at least 10%, while maintaining its $30 billion revenue outlook. The company also expects more than $2.7 billion in run-rate efficiencies by year-end.
• Negative Sentiment: Linear television remains under pressure: TV Media advertising revenue declined 14% year over year, while affiliate revenue continues to fall as cord-cutting persists. Management expects declines to moderate, but the shift away from linear remains a headwind.
• Negative Sentiment: The pending Warner Bros. Discovery transaction could become more costly if delayed, including roughly $8 million-$9 million per month in bridge financing costs and a potential $650 million quarterly ticking fee payable to WBD shareholders after September 30. Paramount remains confident the deal will close, but litigation and timing risks remain.

Presentation

[Operator]

Good afternoon. My name is Krista, and I'll be your conference operator today. I would like to welcome everyone to Paramount's second quarter 2026 earnings conference call. At this time, all lines have been muted to prevent any background noise. After the speaker's remarks, the company will take questions from the analyst community. I would now like to turn the call over to Kevin Creighton, Paramount's EVP of Corporate Finance and Investor Relations. Sir, you may begin your conference call.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

Good afternoon. Thank you for taking the time to join us for the Paramount Q2 2026 earnings call. I'm Kevin Creighton, EVP of Corporate Finance and Investor Relations. Joining me today is our Chairman and Chief Executive Officer, David Ellison, our Chief Financial Officer, Dennis Cinelli, and our Chief Strategy and Operating Officer, Andy Gordon. As a reminder, we'll be making forward-looking statements today that involve risks and uncertainties. Our remarks will also include non-GAAP financial measures. Reconciliations of these measures can be found in our earnings letter or in our trending schedules, which contain supplemental information. These can be found on our Investor Relations website. I'll now turn it over to David for a few brief remarks before we address analyst questions.

[David Ellison, Chairman and CEO at Paramount]

Thanks, Kevin. Good afternoon, everyone. A year ago, we set three priorities for the new Paramount: invest in storytelling, scale our direct-to-consumer business globally, and drive enterprise-wide efficiency. 12 months in, I'm proud to say we are delivering on all three. We nearly doubled our theatrical slate, deepened our roster with top-tier creative talent, greenlit 40 new and returning series for Paramount+, expanded our sports portfolio with the UFC, Zuffa Boxing, while broadening our partnerships with UEFA, adding to an already strong lineup that includes the NFL, WNBA, PGA Tour, March Madness, and more. At the same time, we've made meaningful progress in technology and product development, including with the convergence of our streaming platforms, which is well underway, helping create a better, more seamless experience for users. These investments are translating into stronger performance.

[David Ellison, Chairman and CEO at Paramount]

Paramount+ grew to nearly 82 million subscribers, delivered its best quarter of retention ever, and posted double-digit growth in total view hours, all while expanding margins throughout the first half of the year. Among the quarter's many highlights, our studios business saw continued year-over-year profitability improvement while growing its pipeline. With more than 90 series in production across the group this year. The early turnaround reinforces our confidence in the strategy. We continue to make significant investments in theatrical and premium series to drive future engagement, subscriber growth, and long-term value. Across our broader portfolio, TV Media's profit grew 14%, even as revenue declined amid the broader industry shift away from linear. Enterprise-wide, we're tracking to over $2.7 billion in run rate efficiencies by year's end and still expect a total of $3 billion+ from the Skydance Paramount merger.

[David Ellison, Chairman and CEO at Paramount]

We're also continuing to advance a proposed combination for Warner Bros. Discovery, a deal which builds on the foundations we've established by creating a stronger, well-capitalized, creative-first company with the scale to compete alongside Netflix, Amazon, Apple, and others, benefiting consumers, theatrical exhibition, and creators alike. The clearances we've received from competition authorities and governments represent 65 jurisdictions worldwide, confirm that the facts of the law are on our side, and we remain confident the transaction will be completed. One year in, we're proud of the progress we've made, a testament to the extraordinary talent, hard work, and dedication of our people around the world. Our conviction in our strategy is stronger than ever, and we're energized and optimistic about the opportunities ahead. With that, I'll turn it back over to Kevin for your questions.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

Great. Thanks, David. We'll now go ahead and take questions from the analyst community, and then we'll open it up in the last few minutes for any final questions we're not able to address. Our first question comes from Steve Cahall at Wells Fargo. As a general transaction update, given that Paramount outbid a larger competitor for Warner, I think investors view it as a must-have rather than an opportunistic transaction. Can you give us an update on the path forward and what if the WBD transaction doesn't come to fruition? David, maybe take that first one.

[David Ellison, Chairman and CEO at Paramount]

Kevin, absolutely. Steve, I really appreciate the question. Look, we remain highly confident that this transaction will close, and we're preparing for basically a successful combination once it does. If you take a step back and just look at exactly where we are today, we received approvals from basically 65 regulators representing 65 countries around the world, including the U.S. federal government, Canada, European Union, China, and many more. I think if you look at everybody who has published an opinion on the merger, have all identified the markets the exact same way and have all come to the same conclusion, which is that this deal raises no competition concerns. The facts simply speak for themselves. When you look at the television market share, excluding YouTube, the combined company would represent less than 20% of all television watch time according to Nielsen.

[David Ellison, Chairman and CEO at Paramount]

If you include YouTube, which is the industry standard, it represents 13.4% based on the most recent Nielsen data. When you look at the theatrical box office over the past 12 months, the combined company would represent 18% of the domestic box office. If you do a 24-month look back, it's 22%, competing against larger scale global players like Netflix, Amazon, Apple, as well as other studios such as Sony, Disney, Lionsgate, and A24. We continue to believe very strongly that the combination of these two businesses create a stronger competitor that is good for Hollywood, good for consumers, and good for the creative community.

[David Ellison, Chairman and CEO at Paramount]

As it relates to the ongoing litigation, we're absolutely open to finding a solution out of court, we also really believe that we'll win at trial. We believe that the facts and the law are on our side, the trial date was just set for March of next year. As it relates to the financing, all that is in place. There's nothing at risk, we're confident we'll close the transaction, we're working towards that as fast as we possibly can.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Great. Thanks, David. Our second question, which follows on to that one, is from Laura Martin at Needham, the question is: If the Warner transaction closes later than expected, what is the average burn rate, including ticking fees, commitments, and any other costs for Paramount shareholders?

[Dennis Cinelli, CFO at Paramount]

Sure, let me take that. On the financing, both the equity and bridge is locked and committed throughout the remaining time we need to close the deal. In terms of incremental cost, we have two areas. We do incur costs beyond September 30th. The first is on the bridge, which carries modest fees. That will run $8 million to $9 million a month, plus an additional bridge commitment fee due in June of 2027. In total, this adds up to around $190 million in incremental financing if we don't close until June. The second, the merger agreement does provide an additional ticking fee for WBD shareholders if we close after September 30th. This is only payable when and if we close. It's $0.25 per share per quarter, which is about $650 million per quarter, will be funded at close through additional equity.

[Dennis Cinelli, CFO at Paramount]

In terms of the question on our current liquidity and balance sheet, we ended the quarter at $1.6 billion in cash, $3.2 billion of undrawn revolver capacity. This is sufficient to fund the business, our dividend, transaction-related costs through the extended timeline. Actually, as we noted in the letter, we've seen positive free cash flow performance for the year. We took up our free cash flow guidance to 10% before transformation costs. We feel good about where we stand in terms of liquidity and managing through this extended time period.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Great. Thank you, Dennis. Appreciate it. All right. We will now go ahead and pivot towards the business. Our first question on the streaming business comes from Steve Cahall at Wells Fargo, and it's on DTC growth. The question is: We've seen revenue growth slow at large streaming peers. Where do you think you are in terms of subscriber penetration and pricing for Paramount+? Do you believe that double-digit top-line growth, which is both Netflix's target and Disney's for their DTC service, is sustainable over the medium term? David, maybe you can take that one.

[David Ellison, Chairman and CEO at Paramount]

Yeah. No, Kevin, absolutely. Look, the short answer is yes, in terms of the double-digit growth. I think we just demonstrated that with 16% revenue growth year-over-year. But again, to just kind of level set, let's take a step back in terms of where we are as a standalone company. Which is, our business is very much in transition of a majority of our revenue and EBITDA coming from the linear business to transitioning to studios and streaming. We're making really significant progress as we work towards those goals. Everything we're seeing on the streaming side of our business is accelerating throughout the year. We've got great momentum. We're seeing top-line revenue grow. We're seeing improved profitability and ARPU also continue to improve. I think it's worth noting that we're not yet at scale today.

[David Ellison, Chairman and CEO at Paramount]

A lot of the competitors that we're competing with are a significant multiple of our size, which means that we have a tremendous amount of basically runway in terms of how we can continue to grow and scale Paramount+. To do that, we really believe in this theme of art and technology working hand in hand together to really deliver a superior experience for users. If you look at the performance that we obviously had in Q2 with Dutton Ranch, the UFC, as well as the World Cup in the select territories we had it in, all improved incredibly well for us. We have a remarkable technology and product team that are continuing to iterate to deliver the best possible experience to users. From that standpoint, we feel like we're very well positioned to continue to grow and scale the business.

[David Ellison, Chairman and CEO at Paramount]

With that, let me hand it over to Dennis to dive into some of the numbers from the quarter.

[Dennis Cinelli, CFO at Paramount]

Yeah. Thanks, David. It's worth reminding us of our investment philosophy in this business, right? We've talked about our owner/operator's mindset in the streaming business. We are investing in the long term to combine content and technology that will drive growth, and we still have a lot of room to run. We have room to grow subscribers, both domestically and internationally. We have room to deepen engagement. You're seeing this come through in the quarter we had. A couple of the numbers. Revenue up 16% for Paramount+. Roughly a third of that was from subscriber growth, two thirds from our ARPU increase. This is really flowing through some of the pricing actions, but also the continued improvement in our mix of subscribers. Overall, we added 2 million subscribers in the quarter, reaching 81.6 million globally. This was ahead of our expectations.

[Dennis Cinelli, CFO at Paramount]

I think the thing to note here is the strong underlying growth. We added 4 million underlying subs before you exit the hard bundles, and that's nearly double the amount of underlying subs we added in Q1. This was driven, as David talked about, the performance in our content, Dutton Ranch, the biggest series in Paramount+ history, UFC, the World Cup. Really encouraging is the input metrics, right? The best retention quarter in Paramount+ history. We had a double-digit year-over-year growth in total engagement. We really see the business and the platform accelerating from here. As we talked about in prior letters, we expect DTC revenue to accelerate in the back half. This is driven by both subscription and advertising, both at Paramount+ and the re-acceleration of Pluto as we relaunch that platform.

[Dennis Cinelli, CFO at Paramount]

In terms of 2027, it's a bit too early to guide on 2027. I think the thing to note is we will keep investing behind.

[Dennis Cinelli, CFO at Paramount]

This business. We believe the opportunity will be multiples of where we are in terms of engagement, revenue, and profit. We really believe winning here comes down to having the best stories and the best technology to deliver that, and we're going to invest in both.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Great. Thanks, Dennis and David. All right. Our next question comes from Rich Greenfield at LightShed, this one is a sort of overarching question on platforms. The question is, Netflix is ingesting TF1, Peacock is ingesting Star, YouTube Premium and Peacock, and on and on. Do you foresee Paramount+ becoming a platform, or have you consciously decided to remain a standalone service?

[David Ellison, Chairman and CEO at Paramount]

By the way, Rich, thank you so much for the question. I think important to note we're in the middle of a transaction which would not keep us at a standalone service, and one of the core thematics behind the WBD transaction is really getting us to scale in streaming. We'd be over 200 million, basically, gross subscribers at close. I think from a competitive standpoint, it's worth noting that just puts us right around Disney. Still, obviously not at the scale of Amazon or Netflix, so this is still an incredibly pro-competitive transaction. It accelerates our goals of getting to scale in D2C. It also strengthens our content offering between what we can offer between the two services, which we think positions us incredibly well to be able to grow and scale all aspects of our business in the future.

[David Ellison, Chairman and CEO at Paramount]

Let's talk about what we're doing today as we obviously prepare for that transaction, which is we're working on building a world-class experience for Paramount+ . We're building an industry best-in-class product and technology team and incredibly compelling content offerings across films, series, sports, and news. We're on track to basically converge our tech stacks by the end of summer as we've guided towards. We think the combination of that will position us incredibly well to be able to be successful and grow our direct-to-consumer business. As it relates to the platform question, I think the right way to address that is really looking at what is the consumer looking for that is not currently being delivered by the marketplace.

[David Ellison, Chairman and CEO at Paramount]

I think if you look at the trends across the tech businesses over the last, call it 10 years, they've really been in the business of eliminating friction to improve convenience to drive value. That has not been the trend in media. I think a lot of us probably would like the convenience where everything is in one place, which we used to get with the cable bundle. Having the breadth of selection all be centralized, I think is sort of things that users are asking for. I think you'll see us work to want to solve those problems, really for how do we deliver the best possible experience for the consumer. We're very consumer-focused in terms of how we're approaching this.

[David Ellison, Chairman and CEO at Paramount]

That turns into, well, what will really differentiate your service from your competitors, and we continue to believe that the quality of the content, the quality of the storytelling, which again, the combination of WBD and Paramount really speaks to. I also really want to give a tremendous amount of credit to our basically studio teams who consistently punch above their weight. If you look at the series that have obviously been delivered this quarter. From a technology standpoint, we are going to take an iterate test and learn approach in terms of how we roll these things out. We feel good about where we're going and we're going to work really hard to make sure that we are delivering the best possible experience to users as consumer focus is really a big driver for us.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

Great. Thank you, David. Our next question comes from Robert Fishman at MoffettNathanson, this one's regarding sort of a broader bundling strategy. His question is, any updated views on how you weigh investing behind Paramount+ to accelerate its growth versus partnering with other streaming platforms to leverage their distribution, similar to Peacock's deal with YouTube Premium? Can you do both? Maybe Andy will go ahead and give that one to you.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

Yeah. Thanks, Robert. Look, this is really a follow-on to what David just talked about, which is how we basically create the right distribution partnership that really lights up our consumers. When you step back, we look at each partnership independent and separate. Large or small, against literally the same criteria. One, does it expand our reach to new audiences? Two, does it enhance our ability to own the direct relationship with the consumer? Three, do the economics work for us relative to our owned and operated direct franchise? There are other components that we also look like that are more technical. Is it a better customer experience? Can that customer experience be enhanced by what the partner can offer? Are we going to get shared data? Will the partners share their data in a way that helps them and also helps us?

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

Lastly, we also think about on our ad tiers, will that partnership essentially scale our own ad business, and allow us to have the ad signal from that partner that will benefit us as well as them? It's a high bar for us to really consider some of these very large bundles, and it really has to fit in that framework that I just mentioned on all those different criteria. When you think about what we're trying to do and what David mentioned, is we really want to scale our direct-to-consumer businesses. Putting Paramount+ with the assets of Warner Bros., once we close, it's important that we literally put that into a combined, globally scaled standalone service where we have the direct relationship with the customer, the control of the data, and the monetization strategy.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

That's really how we think about it, and that's how we're going to essentially grow the business as we move forward. Look, we have great relationships with the likes of Amazon, Roku, YouTube, and Apple, and we'll continue to work with them on a variety of opportunities and things that are both enhancing for them as well as enhancing for us.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

Right back over to you, Kevin.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right, great. Thanks, Andy. Our next question is on the tech convergence. I think we may have touched on this a bit up in prior questions, from Mike Morris at Guggenheim. Question is: Is the Paramount+ Pluto BET+ convergence still tracking to launch this summer? What will you watch in early data to know it is working? How do you think about bundle design or any changes at launch and where you might see benefit to advertising as well?

[David Ellison, Chairman and CEO at Paramount]

Yep. Mike, I really appreciate the question. The answer is yes, we're on track for everything that we've guided towards in terms of convergence. The web experience for Pluto has actually been live since June 30th. We're on track to basically roll out the O&O completion by the end of the summer, which is what we've been working towards and our expectation. In terms of the early signals that we'll look for, it's really improvements across personalization and recommendation quality, discovery and engagement left, a better ad experience and improved monetization as we unify the ad stacks across both Paramount+ and Pluto, also improve merchandising, which was not previously possible given connectivity between the two services, had really siloed data where they didn't talk to one another. By bringing them together, we're going to get significant benefits.

[David Ellison, Chairman and CEO at Paramount]

I also think it's worth noting that we really view that as getting us to the starting line. There was some tech debt that we inherited when we acquired the company, and this really now puts us in a position to be able to iterate very quickly and also to make incremental investments in Pluto as we get towards the back half of this year. Because as we'll have an improved VOD experience, improved user experience, improved monetization engine, you are going to see us make select content investments into Pluto in fourth quarter of this year. As it relates to the front end, again, with having it be a truly unified stack, we can now iterate much quicker. You should look for us to obviously continue to improve the UI and UX, merchandising, as well as the, basically, ad stack across the two services.

[David Ellison, Chairman and CEO at Paramount]

As it relates to pricing bundle design, the right way to think about convergence is really as a technology integration that is bringing together the code bases and unifying the data that was previously siloed between the three separate services. As it relates to the specific question around the ad tier ARPU, should absolutely expect upside over time. The structural goal that we're working towards is to being effectively indifferent as to which plan the subscriber chooses from a monetization perspective. We are on track and the team has been making incredible progress, and we will achieve the goals that we've set out.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Great. Thank you, David. We'll now pivot a bit to industry trends. Our next question is from Sean Diffley at Morgan Stanley, and it's on AI. Question is: David, how do you envision AI and interactivity across the company? How can you nurture intellectual property and keep it fresh and relevant for younger generations?

[David Ellison, Chairman and CEO at Paramount]

Look, it's a fantastic question. I know we've talked about this a little bit on previous earnings calls. Look, we really do view artificial intelligence as a tool for storytellers, not a replacement for them. We are a content and storytelling company first. I think we demonstrated that with, I'd say, some of the models that infringed on copyright. We were kind of early to step in and fiercely defend our copyrights and also fiercely defend the artists that we create them who we're in the business of serving. That said, we think AI is going to be a big unlock and a positive for our business and for our industry. We think it's going to be a creative unlock in terms of storytelling. Again, all through the lens of being a tool for artists.

[David Ellison, Chairman and CEO at Paramount]

I think if you think back to 1983 when James Cameron made the first "Terminator" film for a little over $4 million, that at that time was an original film with a first-time director. When you think about what that would cost today, it would be hard for that movie to basically get made. I think as you look at how the technology will make things more efficient, I think that will be a big unlock to creativity across the totality of our business, really driven by filmmakers and talent. I also think you're going to see significant efficiencies as AI is deployed across the business. One particular area is that and computer programming. The speed at which you can now iterate and complete projects is on average 50% more efficient in terms of what's possible.

[David Ellison, Chairman and CEO at Paramount]

I think that this technology has really changed that for the foreseeable future. I also think there are some things, as it relates to the Seedance launch and the Sora launch, that I don't think have been talked about enough, which was, what did you see created on those days? You saw people wanting to interact with intellectual property, with characters and universes that they love, that they don't actually have the access to be able to do. Which again speaks to the power of intellectual property and new avenues that can be created to be able to interact with it with fans of the next generation. I think also pretty much across the board, right? We're going to live in a world to where. Look, my daughter's a huge fan of "PAW Patrol," right? We have the movie coming out in just under two weeks.

[David Ellison, Chairman and CEO at Paramount]

We couldn't be more excited about it, but her favorite character is Skye, for anyone who was interested. You're going to live in a world to where if she wants to have a 10-minute conversation with Skye powered by an LLM, she can do that. That will deepen fandom, deepen engagement. That's all possible. If you're a diehard "Star Trek" fan and you want to basically create a five-minute clip on the bridge of the Enterprise, that's going to be possible. Again, I think there's going to be really significant unlocks across the totality of the business that's really generated and propelled by artificial intelligence. With that said, in a world of AI slop and user-generated content, I continue to believe there will be a premium for handcrafted filmmaker, high-quality, artist-driven storytelling. You're seeing that take place in the marketplace right now.

[David Ellison, Chairman and CEO at Paramount]

You're seeing "The Odyssey" break records. You're seeing one of the biggest opening weekends of all time with "Spider-Man." From that standpoint, we are bullish on high-quality content that is handcrafted by storytellers. From that standpoint, we really believe that there are areas where AI will be great for our business. We believe in high-quality, handcrafted storytelling, and you'll see us basically pursue both across the company.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Great. Thank you, David. Now we'll go ahead and turn to Studios. Our question comes from Peter Supino at Wolfe Research. His question is: Could you talk about the progress you've made rebuilding Studios? What have been the most valuable advances, and what remains to be done that's controllable?

[David Ellison, Chairman and CEO at Paramount]

Peter, I really appreciate the question. Look, we're really proud of the work that we've made basically in one year across the Studios business, right? From a measurable standpoint, we've obviously, Q2, we delivered a profitable quarter for our Studios business coming off of a loss. We really do view our Studios business as a long-term growth driver for the business, and we really are just getting started. I think if you look at where we were basically a year ago when we bought the company across Paramount Pictures, there were eight films released that year. Literally a year later, we have 15 films that we're releasing in 2026, which we're incredibly proud of. Across our Television Studios, we're on track to deliver 90 series this year and 800 episodes of television. That is absolutely durable and growing.

[David Ellison, Chairman and CEO at Paramount]

We've also, in credit to Josh and Dana and Josh Goldstine, they've been doing a lot of work to obviously improve the marketing and distribution business, in terms of using more data and analytics to make marketing more efficient. Also to target in a way that is much more effective. I think "Scary Movie's" outperformance is a great reflection of that. Then as you look forward into 2027 and beyond, we really are building our slate in a way that we're really excited about. We have "Children of Blood and Bone" coming from Gina Prince-Bythewood, who's a phenomenal filmmaker. I was fortunate enough to get to produce "The Old Guard" with her. We have the next installment in the "Sonic the Hedgehog" franchise. John Krasinski has obviously returned to "A Quiet Place" with Emily Blunt. We have a new "Teenage Mutant Ninja Turtles" movies coming.

[David Ellison, Chairman and CEO at Paramount]

We have Teyonah Parris' "Get Light." We couldn't be more excited about our "Days of Thunder" sequel with Tom Cruise and Jerry Bruckheimer, as well as what we're doing on "Call of Duty" with Pete Berg and Taylor Sheridan, just to name a few. Another thing you'll see us do is we really do believe in the philosophy of betting on people and betting on talent. That's something you will continue to see us do, and we have an incredible group of artists that we're very fortunate to have call Paramount home. We're thrilled that the Duffer Brothers are now here. They're hard at work on their first feature film that we're really excited about. Matt and Trey Parker have been doing unbelievable work. Jon Chu, Issa Rae, James Mangold, and then of course, basically Taylor Sheridan.

[David Ellison, Chairman and CEO at Paramount]

We just released season three of "Lioness." He's working on the next season of "Landman," as well as writing "Call of Duty," literally as we speak. I think he is a singular artist whose track record more than speaks for itself. So all of those are things that are controllable, that we've been working hard towards, that we're excited about. Also, I would say one of the other things that we've been seeing really big improvements over is from our licensing group. When we got here, we made improvements to our Pay 1 deals that have really been performing well for us. Recent success from Skydance Animation.

[David Ellison, Chairman and CEO at Paramount]

Swapped" just joined the top 10 of Netflix's most-watched original films, will actually be the number two most-watched animated movie behind "K-Pop: Demon Hunters," and really joins "The Adam Project." We're proud that basically the legacy Skydance business now has two of Netflix's top 10. What we're going to continue to do is obviously continue to invest in content, continue to grow our Studios business, and you will only see that accelerate in the future.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

Great. Maybe Dennis, you want to briefly touch on financials of that?

[Dennis Cinelli, CFO at Paramount]

Yeah. I can run through the Studios results. Studios continued its run of improving adjusted EBITDA year-on-year. Adjusted EBITDA was $36 million in the quarter, up from a loss last year. Revenue was up 16%. A few of the areas that drove the results. As Dave mentioned, theatrical beat our plan. "Scary Movie" really delivered. Franchise best opening. This year-on-year partially is offset by the lapping of "Mission: Impossible." Our film slate profitability improved year-on-year. This was a bit better than our expectation. One of the things that's interesting, I'd like to add a metric to look under the hood in that performance We've implemented a more disciplined data-driven approach to greenlighting, marketing, distribution, so each dollar of marketing spend is doing more for us.

[Dennis Cinelli, CFO at Paramount]

Each dollar of marketing spend is generating 11% more box office in 2026 versus 2025. Across our TV studios, we saw double-digit licensing growth. This was driven by third-party deliveries at Paramount Television Studios, as well as the consolidation of Skydance licensing. In terms of our outlook, we expect studio performance, as we've talked about, to continue to be a growth engine for us. We expect this to be durable. We have eight films that remain in the back half of 2026. This includes "Paw Patrol: The Dino Movie," "Street Fighter," "Mr. Irrelevant" with the NFL.

[Dennis Cinelli, CFO at Paramount]

Between the higher output volume, our improved marketing discipline, our licensing momentum that David talked about, and then the visibility into our slates for 2027, we feel good about studios sustaining its profitable path, and being not just sort of a one-quarter pop, but a growth driver for us as well as a profitability driver. Overall, you'll see studio, the segment, grow profitability 2026 versus 2025.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Great. Thank you. We'll now go ahead and pivot to TV media. We have a couple of questions on that. The first one comes from John Hodulik at UBS, on cord cutting. The question is: cord cutting seems to be slowing, driven by the proliferation of skinny bundles. How is Paramount positioned with the linear ecosystem, and is this dynamic a net positive or a negative for the company? Andy, maybe I'll turn that one over to you.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

Sure. John, thanks for the question. I think I'll take the second part kind of first and just talk about where we're positioned in the ecosystem. I would say, the relationship with our affiliate partners has never been better. The content that we provide through both CBS, our cable channels, and our P+ credentials are very important to their consumer base. Whether it's our CBS prime time lineup, whether it's our sports offering, whether it's some of the great program we have on our cable channels, as well as all the things that we serve on the original side of Paramount+, the affiliate wants to have us in the ecosystem.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

I will say that we've noticed the affiliate revenue declines have slowed somewhat based on the following, which is subscriber declines are slowing in terms of their rate of growth of slowing down, meaning that they're not shrinking as much as quickly. Sort of the rates we're getting are essentially resilient, on a business as usual basis. Having said that, we're very conservative about how we look at the future and how we look at those declines, and we're managing the business very effectively around that. In fact, the team's done a great job in making sure that as revenue declines, actually margins are improving in terms of being more efficient in going after that business, which we find to be incredibly attractive to the overall ecosystem at Paramount.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

I do want to call out that there is a lot of innovation that's happening with our MVPDs as well as our virtual MVPDs. YouTube and Charter are very large relationships of ours. In particular, Charter has really cared about the video product. They've done a very good job in sort of packaging both, as a bundle relative to our cable channel, CBS and our P+ credentials, which are critical, in terms of their relationship with us and what they offer the customer. They have 10 million of those. They also have been very thoughtful on looking at skinny bundles in terms of where the customer may want to just have sports or just have certain general entertainment. We're okay with that, as long as it sort of provides a really good customer experience and it provides the right economics for us overall.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

Kevin, that's really the answer.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Great. Thanks, Andy. Appreciate it. Next question is from Jessica Reif Ehrlich at Bank of America. This one's on advertising in the upfront, generally just question on the overall tone or color regarding the advertising market for Paramount over the past quarter and as we look out. Maybe Andy, you want to take that one as well?

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

Sure. Jessica, great to hear from you. Hope you're in a great place at the moment. Let me start with the question and then I will turn it over to Dennis for the numbers. Look, we could not be more excited. We've had a very strong upfront season, double-digit percentage increase year-over-year. I think we credit it not only to our content offerings and what we're offering to our advertising clients, but that we have a really awesome digital-first management team and a new leadership around what we're doing in advertising. Quite frankly, this has been the strongest upfront season since the CBS-Viacom merger. We couldn't be more thrilled to see where we're ultimately going to go into the end of the year and into next year. I will say that we are very focused on making that digital transition.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

We've started on the sales side with our new leadership team, we're also focused on the product side, where we really are investing in technology that will allow us to monetize more ad impressions across our entire digital portfolio, whether it be in Paramount+ ad tiers, Pluto, and our digital sites across the company. I think you'll see more of that product innovation as we get into the end of the year and into next year. This is a critical component of ultimately where we want to be from an ad perspective. Let me turn it over to Dennis to go through some of the numbers relative to advertising over this quarter.

[Dennis Cinelli, CFO at Paramount]

Great. Thanks, Andy. In terms of advertising results, in the second quarter, organic ad revenue trends were pretty stable, then a little bit better than typically seasonal patterns.

[Dennis Cinelli, CFO at Paramount]

Our D2C advertising growth nearly offset continued TV media pressure, as we make that digital transition that Andy talked about. Maybe it's worth a couple of the breakouts. In TV media, Q2 advertising declined 14% year-on-year. This was driven by a couple of headwinds. One is 8 percentage point impact from the NCAA, where last year we had the Final Four, and this year we did not. We also have the 3 percentage point headwind from our sale of Telefe and Univision. This was partially offset by a 2 percentage point political benefit. In Paramount+, we continue to have really encouraging results. We delivered double-digit ad growth. This was driven by our premium demand, including live sports programming, UFC, World Cup, then really encouraging our sell-through continuing to increase year-on-year. On Pluto, this remained a drag. It was consistent with our Q1 results.

[Dennis Cinelli, CFO at Paramount]

Again, we're relaunching that platform here in the summer, we do expect that Pluto to return to growth in the back half of the year. Andy talked about the investments we've been making across the team and the pricing and packaging and our technology stack. What we'll see in the back half is overall ad revenue for the company return to growth. Going back to you.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Great. Thank you. We'll now go ahead and move on to our financial results and guidance. We got a question after we printed today from Steve Cahall at Wells Fargo, and the question is, "You've raised your FY 2026 adjusted EBITDA and free cash flow guides. You tapped your Q2 guidance, but you didn't raise your revenue guidance. Should we imply that synergies are coming through more strongly, or are there additional operating outperformance? And then on the free cash flow side, is $800 million still a good number for 2026 cash restructuring costs?" I guess my step back is just maybe, Dennis, it would be helpful to walk through kind of some of the puts and takes on the quarter and the outlook.

[Dennis Cinelli, CFO at Paramount]

Yeah. Sounds good. We'll talk through the pieces. Overall Q2, and we've talked about a lot of the pieces, was a strong quarter. We feel really good about how the company executed in the quarter, and you saw in the results. Overall revenue and adjusted EBITDA were at or above the high end of our prior guidance ranges. Revenue growth was led by DTC at 9%. Studios was up 16%. Adjusted EBITDA grew 27% year-on-year to $1.1 billion. Profitability was up across all three segments, which was a great quarter for us. Given this outperformance, we are raising our full year adjusted EBITDA outlook. We're putting a range on it from $3.8 billion-$3.9 billion. We are increasing our free cash flow conversion to be at least 10% from previously 5%. This is while keeping our $30 billion of revenue outlook in place.

[Dennis Cinelli, CFO at Paramount]

I'll talk through some of the puts and takes here. On the adjusted EBITDA increase, we are making progress on our transformation. As we noted in the letter, we are taking up our synergies realized through this year to $2.7 billion. You're seeing that flow through in this guidance. We're seeing upside from our cost management efforts, and we're doing this even as we reinvest in the business. We're reinvesting in technology. We've also talked about the programming investments we're making. On revenue is pretty consistent with what we've said previously. Our guidance is we will have accelerating D2C revenue. Studios will continue to grow, and we're managing against the linear declines. This sort of continues our transition of revenue more towards our growth engines, streaming and studios, as well as our profit base. We'll talk through Q3.

[Dennis Cinelli, CFO at Paramount]

You're going to see that revenue step-up in our Q3 guidance. Revenue growth step-up in our Q3 guidance. I'll come back to that. On free cash flow outlook, one of the things that I've been focused on, the teams have focused on, especially since I've been here, just making sure we are implementing a ton of discipline in free cash flow and managing the business accordingly. We're starting to see that come through. We did take up our free cash flow outlook for the year. It's 10%, excluding our transformation costs. This still reflects our elevated content spend tied to programming. Our content investments are still in early ramp, namely our extended film slate as well as our broader originals lineup. Also it carries in some of our. This will moderate.

[Dennis Cinelli, CFO at Paramount]

Given this is an investment year, our investment in content will moderate as we become to our steadier profile. We still see, the thing to call out is 10% free cash flow conversion is not our end goal. As we've talked a lot about, we do see a clear multi-year opportunity over the midterm to deliver sustainable top-line growth and to close the gap in our profit margin and free cash flow conversion to our relevant peer companies. In terms of Q3, just to state the guidance, we expect revenue of $6.95 billion-$7.15 billion. This is growth from 4%-7% year-on-year. This is an acceleration of business as we see our investments pay off. Our adjusted EBITDA is $875 million-$975 million in guidance. This is really driven by the accelerating growth in D2C and studios, as well as moderating declines in TV media.

[Dennis Cinelli, CFO at Paramount]

In terms of Paramount+ subscribers, we do expect subscribers to be relatively flat quarter-on-quarter. In terms of the Q2 revenue growth, we've talked a little bit about this. We will see accelerating growth in D2C. This includes improving both advertising trends as well as subscription strength. We'll see accelerating studios growth, which includes our strong slate in the back half of the year, as well as our delivery on licensing, both first-run licensing as well as our library. A thing to call out is our library revenue is growing double digits. TV media will see less of a decline year-on-year versus Q2, just given we don't have that NCAA comp. On Q3 adjusted EBITDA, as we noted in the last call, our profitability is going to be more heavily weighted to first half. This is driven by the step down year-on-year in D2C in the second half.

[Dennis Cinelli, CFO at Paramount]

It really comes out in Q3, where the timing of content amortization, which is really our sports portfolio as well as some of the new originals hits us more in Q3 and starts to moderate in Q4. However, studios and TV media profitability will continue to improve. Overall, we feel really good about our results in Q2. We feel good about improving our adjusted EBITDA guidance and our free cash flow guidance, and we look forward to continue next Q.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right, great. Thanks, Dennis. Our last question before we go ahead and open it up. Andy, maybe this one's for you on transformation. The question is from Ric Prentiss at Raymond James, and it's: what are the two to three biggest areas left of cost savings across Sky?

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

Before I get to that, let me just remind everybody that we started prior to closing last year, we thought we'd save $2 billion by merging Skydance and Paramount together. During our first quarter earnings call after we closed, we raised that to $3 billion+, basically based on understanding what we could do by reorganizing the businesses. That was a 50% increase over what we thought we could do prior to closing. When you think about what we did in reorganizing, we put cable and broadcast into the same group and used the management team running CBS, essentially reduced redundancies, centralized shared services, and instituted best practices.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

We did the same thing in studios, where we put the film studios of both Skydance and Paramount together with all the television studios of Skydance and Paramount, with the exception of CBS, into one business unit. We got the same type of efficiencies there. We've also improved the ROI on the content spend for every dollar of production that we've put into motion since we've closed. Some of the big step functions that we've noticed over this year that's gotten us to an incremental $200 million in run rate by the end of the year and into next year, really are technology and what we're spending in technology relative to our running the company on the ERP side. Our migration to Oracle Fusion will essentially be complete by the end of next year. That will save us a ton of money.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

In addition from that, on the product side, David already talked about integrating Paramount+, BET+, and Pluto into the same tech stacks. We look at the combination of all that together and also economizing on our third-party spend with cloud providers. That's roughly a $200 million savings overall in our program. Then there's another $100 million across consolidating facilities management, other procurement efficiencies such as professional services and marketing, all of which will sort of be part of this year, but also flow into next year as we get into that $3 billion+ synergy target. Thanks, Kevin.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right, great. Thanks, Andy. We'll now go ahead and transition to taking any final questions live. Before we do, just a quick note before we open up the line. Given the pending transaction, we won't be taking any questions on the deal today beyond what we've already discussed. Please keep any final questions focused on the business or the industry, but not on the transaction. With that, Krista, can we go ahead and open up the line for final questions?

[Operator]

Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, again press star one. We kindly ask that you limit yourself to one question. Thank you. Your first question comes from Robert Fishman with MoffettNathanson. Please go ahead.

[Robert Fishman, Analyst at MoffettNathanson]

Hi, good afternoon. You guys called out in the letter how Premium Live Sports is improving the engagement, strengthening retention, and increasing the value to your service. Does that push you to add even more sports rights in the years ahead? Clearly, there's some bigger ones coming in the next few years, including the success of World Cup. Then if you can touch on maybe how you think about the broader portfolio when you do include Warner Bros., whether that's a rebalancing or prioritizing of the different rights that you do have in the portfolio. Thank you.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

Yeah, we'll take the first part. As I mentioned, we're not going to address anything on the transaction side. David, do you want to touch on the first piece maybe?

[David Ellison, Chairman and CEO at Paramount]

Yeah. No, absolutely. We're a big believer in live sports, and I think you should look for us to obviously continue to expand in terms of how we look at the portfolio there. Look, I'd say our confidence, based on the UFC's performance on Paramount+, has only really reaffirmed, basically, that position. I think if you go all the way back to where we started with UFC 324, that delivered the largest live exclusive event in the history of Paramount+. We then beat that record with basically UFC 250, which did 17 million viewers across the U.S. and LATAM, and as TKO announced on their earnings call, 45 million globally, which I think really speaks to the power of that sport.

[David Ellison, Chairman and CEO at Paramount]

In July with the McGregor fight, we obviously, again, set a new high water mark for Paramount+ in terms of peak concurrent streams. From that standpoint, I think you should definitely look at us as a buyer of sports rights. That obviously is a category we believe in a great deal, and I look forward to when we can answer the WBD question later on. I would just sort of add to what David said, which is the Champions League has been something we've had in the U.S., and we've been able to secure that both in the U.K. and Germany and other territories that have come up that we'll announce shortly that are also very attractive to us, too.

[Robert Fishman, Analyst at MoffettNathanson]

Great.

[Operator]

Your next question comes from the line of David Joyce with Seaport Research Partners. Please go ahead.

[David Joyce, Analyst at Seaport Research Partners]

Thank you. I was wondering what sort of discussions you've had or have coming up with your affiliate partners, your distributors on the linear side over the next 12 to 18 months. What sort of proportion of your portfolio does that include? Are you able to roll out the combination with your streaming services as a bundle with any more distributors from here? Thanks.

[Andy Gordon, Chief Strategy Officer and COO at Paramount]

Great. Let me address that, David, if that's okay. Let me start with the last part, which is most of our distributors want our streaming credentials. It's critical to our offering generally. We continue to do that in the right way, and some perform better than others on their platforms. That is something that is clearly important to our affiliate relationships. I would say that between now and the next 18 months, generally all will come up for renewal, they're sequential. Every time we do this, they're usually 18 to two years out, and we're just continuing to progress with them. Those discussions have been going very well this year so far.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Thanks, Andy.

[Operator]

Thank you. I will now turn the conference back over to Kevin for closing comments.

[Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount]

All right. Thanks, Krista, appreciate it. Thank you all for joining us today. If you have any follow-on questions, please feel free to reach out to me or Logan on the Investor Relations team. Thanks.

[Operator]

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.

Participants

Analysts

• Kevin Creighton, EVP of Corporate Finance and Investor Relations at Paramount
• David Ellison, Chairman and CEO at Paramount
• Dennis Cinelli, CFO at Paramount
• Andy Gordon, Chief Strategy Officer and COO at Paramount
• Robert Fishman, Analyst at MoffettNathanson
• David Joyce, Analyst at Seaport Research Partners