Paramount Global CEO Bob Bakish confirmed the company has held preliminary discussions about possibly winding down Showtime’s stand-alone streaming service and shifting its programming to Paramount+.
Asked about it during an appearance at the Goldman Sachs Communacopia & Tech Conference, Bakish did not hold back. He said the reports on Tuesday (including Deadline’s) stemmed from talks with a distribution partner amid renewal negotiations. Media distribution agreements now encompass streaming alongside linear carriage, making for a complex set of moving parts and fluctuation in fees, all at a sensitive time given the ongoing shrinkage of the traditional bundle.
“It shouldn’t surprise you that as we look to have optionality in the future and benefit from the learnings that will go forward over time, that we might want to have a conversation about, ‘Yeah, maybe we could combine two things and this is what it would look like,’” Bakish said. “Because what we’re constantly focused on is, how do we make more out of our content for consumers and our products more valuable to them, and by extension, more valuable to distributors.”
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Even though he waved off the press reports as a “rumor,” Bakish also did nothing to dispel the notion that the scenario was being actively considered. “Quite frankly, if we weren’t having that conversation, you should fire all of us, because we should have that conversation,” he said. “It’s not like we’ve made a decision that we’re going to do something on such-and-such a date. But I guarantee you that media will continue to evolve. I guarantee you that our product line will continue to evolve and get better. And I guarantee you that we will continue to work with distributors and provide value to them such that they benefit.”
Word of the potential wind-down of Showtime’s 7-year-old streaming service first surfaced on Tuesday, about two weeks after the company had already taken the major step of offering Showtime and Paramount+ within a single app. Both services for now are still offered on a stand-alone basis, but further consolidation could help Paramount+ stand out in an increasingly competitive marketplace and also reduce costs. (Warner Bros Discovery is applying that same logic to the planned merger next year of HBO Max and Discovery+.) Outside of the U.S., Showtime programming already streams on Paramount+ in many territories.
Bakish hit on a few other hot topics during the newsy 40-minute session. He said Top Gun: Maverick, which has become one of the top-grossing films of all time since its May release, will come to Paramount+ by the end of 2022, though he didn’t specify a date. He also pushed back on perceptions that the advertising market is being spoiled by angst over inflation, rising interest rates, supply-chain issues and other issues. Talk of a softening ad market is “overblown,” Bakish said. Citing a likely “bonanza” from political ads and the comeback for categories like pharmaceuticals, he said advertising should remain on course. Given that past recessions have lasted about nine months each, he said, there should be macroeconomic improvement “much sooner than people think” in 2023. “The notion in ’23 of doom and gloom, which some people say, just doesn’t fit with history,” he said.
The exec also asserted Paramount’s position in the streaming sector throughout his time onstage. “We will emerge as a real leader in streaming,” he said. “People dismissed us out of hand a year and a half ago. People aren’t doing that now.” Pluto TV continues to be a force in free, ad-supported TV, he said, and Paramount+ has made significant progress and is adding key territories like Germany, Italy and the UK this year. “Just watch how Paramount+ finishes the year,” Bakish said.
While Wall Street and the broader industry shifted gears several months ago to put more emphasis on profitability rather than subscribers, Paramount has taken that approach all along, Bakish argued. Asked about the ability of the company to raise prices down the line, as Disney and others have done, Bakish said price is “part of the math of streaming.”
As the modern streaming era began a few years ago, Bakish recalled, “The thing people missed initially was, they said, ‘Yeah, but streaming’s not that expensive, where’s pricing going to go?’ The reality is, pricing’s going to move up. We’re at a good value price point. I don’t want to be the price leader, i.e. the most expensive. But just like for years cable advertising tucked in under broadcast advertising, we’ll tuck in other people raising price. Like Disney raised price and Netflix, we will raise price over time and it will all flow to the bottom line.”
Decisions on pricing will take into account key programming launches, he added, and likely will take effect first on the ad-free version of Paramount+ rather than the cheaper, ad-supported one. At another point in the conversation, Bakish said the subscriber base of 43.4 million Paramount+ is “50-50” between its ad-supported and ad-free tiers.
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