Paramount beats estimates as Warner deal nears

Paramount Skydance, the US media company behind CBS and MTV, said first-quarter adjusted EBITDA rose 59% to US$1.16 billion on revenue of US$7.3 billion.

The company is seeking to complete its US$110 billion acquisition of Warner Bros. Discovery.

Paramount kept its full-year forecast at US$30 million in revenue and US$3.8 billion in adjusted EBITDA, above analyst estimates.

It said the deal won Warner Bros. shareholder approval last month but still needs regulatory clearance, including from the FCC.

Direct-to-consumer revenue rose 11% to US$2.4 billion, while Paramount+ ended the quarter with 79.6 million subscribers after adding about 700,000 customers but losing more than 1 million from an expired international agreement.

TV revenue fell 6% to US$3.67 billion, film revenue rose 11% to US$1.28 billion, and the proposed takeover has drawn opposition from Hollywood groups and some lawmakers ahead of a targeted third-quarter close.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

FCC review looms over foreign ownership in the US$24 billion Middle East investment

The Federal Communications Commission (FCC) review matters because U.S. law usually caps foreign ownership at 25% for companies with FCC broadcast licenses unless the agency finds a public interest case. Paramount said indirect foreign ownership would reach about 49.5% after the deal and equity syndication close 1.
Saudi Arabia’s Public Investment Fund, an Abu Dhabi state investment fund, and the Qatar Investment Authority, Qatar’s state investment fund, are supplying close to US$24 billion. Together, they would own about 38.5% of the combined company’s equity, though not its voting shares, after close 2.
The setup has drawn criticism. FCC commissioner Anna Gomez called for a “rigorous” review and raised concerns about press suppression by foreign governments. She added that the Saudi Public Investment Fund is controlled by crown prince Mohammed bin Salman and cited a 2021 U.S. intelligence report on Jamal Khashoggi’s murder, which he has denied ordering 1.
Paramount said the Ellison family and RedBird, the investment firm RedBird Capital, would own all Class A common stock and control 100% of voting shares. Foreign investors would get no governance rights, voting shares, or board seats 2.

Paramount won Warner Bros. Discovery after a months-long bidding fight

The roughly US$111 billion acquisition followed a lengthy contest. Paramount prevailed after Netflix had an earlier US$82.7 billion agreement for Warner Bros. Discovery’s studio and streaming business 3.
Paramount’s all-cash offer covered the whole company. Netflix’s earlier plan would have left Global Linear Networks, Warner Bros. Discovery’s traditional cable TV channel business, in a separate entity 4.
The result kept Warner Bros. Discovery’s studio and streaming assets out of Netflix’s hands. The earlier Netflix proposal had stirred concern among some entertainment industry groups over theatrical film releases 3.
Paramount projected about US$70 billion in annual revenue for the combined company 3.