Home Videos Paramount CEO: Disney-Charter Dispute Was Inevitable

Paramount CEO: Disney-Charter Dispute Was Inevitable

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Following is the unofficial transcript of a CNBC interview with Paramount Global (NASDAQ:PARA) President & CEO Bob Bakish on CNBC’s “Squawk on the Street” (M-F, 9AM-12PM ET) today, Wednesday, September 6 from the GS Communacopia + Technology Conference in San Francisco.

Disney-Charter Dispute Was Inevitable, Says Paramount Global’s Bob Bakish

DAVID FABER: We are live from the Goldman Sachs Communacopia conference here in San Francisco. And joining me now is Paramount Global CEO Bob Bakish. It’s good to see you Bob.

BOB BAKISH: It’s good to see you David.

FABER: Lot of things to talk about with Paramount but I’d also love to get your take on broader issues beginning with this dispute between Disney (NYSE:DIS) and Charter (NASDAQ:CHTR). That is, you know, anybody who wants to watch the US Open in Charter territory right now who actually has it and or Monday Night Football coming up is starting to think, whoa, I got a problem. Give me your take care here. What do you think? I mean, obviously, on the content side, somebody who also owns a lot of cable networks, I have to believe you have a certain view, but what’s this about? And how worried are you?

BAKISH: Yeah, so look, it certainly impacted markets on Friday. And, you know, for us, frankly, it wasn’t a surprise, the exact timing was, but it was inevitable that something like this would happen. And I would point out that because we thought about this, we’ve actually evolved our portfolio, our strategy and our relationships really over the last seven years as we continue to modernize our business and I’d point to a couple of things.

One is we have co-marketing agreements with virtually every MVPD, vMVPD distributor in the U.S. for our streaming services. So they very much have an interest in the broadband side of our business, video distribution, as well as the linear side of the business. So that’s something we’ve done.

Second thing is if you look outside the U.S., we’ve taken that a step further where there are multiple customers, Sky, some others where they actually provide our streaming product Paramount Plus in this case as a tier offering for their sets out box consumers, again, investing them in our streaming service getting access to our product. Add to that, when we when we look at skinny bundles and Charter Spectrum Essentials is an example of a skinny bundle. We are in that too.

FABER: Right well you don’t have, you don’t have a sports focused network.

BAKISH: That is true. We don’t have 100% of sports property. And frankly, I think that’s a plus not a minus so we don’t have that issue. And lastly, if you look at again the streaming partnership, we are now in a place with Paramount Plus with Showtime where we have a true multi-platform product which I really think is the future of this. That product exists on linear, that product exists on streaming obviously.

And if you’re a Showtime if you’re a previous Showtime linear subscriber, we have been placed with, multiple deals in place of multiple MVPDs and vMVPDs including some of the biggest in the country where they will get credentials to log into the app, which is along the lines of what Charter was talking about so again—

FABER: But you said this was inevitable or was inevitable. Why? What about it?

BAKISH: Because we’re dealing with is a transforming media ecosystem. We fundamentally believe in multi-platform, which means we believe in the linear ecosystem and in the streaming ecosystem. And we’re focused on providing our partners solutions for both as consumer behavior continues to migrate. So yes, inevitably you have to modernize these relationships. You have to do things like again, streaming co-marketing partnership—

FABER: So is the market getting this wrong? I mean, your stock price has gotten crushed on this as well in the last, you know, few days because you own cable networks and everybody’s saying if they get, if this thing goes for a while, Charter’s basically saying we don’t care anymore.

BAKISH: This is why I say all companies are not created equal, are not executing equal. If you look at Charter again go back to Tom Rutledge when we did last did our deal with them, he was quoted on his earnings call that said the new what was called Viacom CBS at the time now Paramount that deal that was done is a modernization in the relationship because it’s exactly those things, includes Charter Spectrum Essentials, includes streaming launches in this case for Pluto and Paramount Plus.

So that’s what you got to do. You’ve got to modernize these relationships. We’re doing it, we’re very pleased by the way with the financial expression of Paramount Plus with Showtime on a multi platform basis. And frankly, I think we’re ahead of the curve and yeah, we got dragged down on Friday with the rest of them—

FABER: Dragged down again today another 2%.

BAKISH: Yeah the market didn’t look like it opened that great today.

FABER: No, overall, I won’t, alright fine, we’ll give you that one. The other thing I want to talk about as well before we get to sort of the Paramount Plus and a lot of the important parts of the company is the strike. Well, obviously it’s related to that anyway. What are your expectations here? I mean, it’s September. I don’t need to tell you but, you know, we’re heading, barreling close to October and then perhaps towards the end of the year. Is this thing going to get resolved?

BAKISH: Well, ultimately, it will get resolved but—

FABER: Yeah, I know but – I guess is the question.

BAKISH: And obviously, you know, we’re, it’s extremely unfortunate that we’re in this place as an industry, you know, we would have hoped we could have avert the duality of the strikes we have with the writers and the actors. That obviously didn’t come to pass, the partnership between the creatives and call it the studios is integral to the industry and therefore, we very much would like to get this back on track. But it’s a complicated negotiation. It’s obviously a multifaceted negotiation, many players involved. And, you know, so we’re focused on it. And—

FABER: Bob Iger said to me not that long ago and perhaps comments that he regrets that they weren’t being realistic. Do you agree?

BAKISH: There’s a lot of issues on the table. It’s complicated. I think there is, we will ultimately get this sorted and beyond that, again, since it’s a public negotiation, it’s not really worth commenting on.

FABER: What does it mean then for the business though? I mean, short term obviously, it’s got a positive impact in some ways, given expenses but longer term in terms of the library in terms of the robustness of the most important product right now at your company Paramount Plus, what’s the impact?

BAKISH: In the short term as we said on our second quarter earnings call, we’re in pretty good shape. We have mounted an alternate CBS fall schedule, which pulls from international, pulls from streaming, adds additional reality weight and of course, includes sports and thankfully more sports because we’ve added the Big Ten to our lineup so we’re in good shape there. Obviously over time, we will begin to feel more impact and that’s why we’re focused on getting some resolution here, while simultaneously continuing to do what we can to support important constituencies whether they’re consumers, distributors, or advertisers, which is what we’re focused on.

FABER: Is there anything that you’ve heard from the strike, from the conversations that gives you some sense that something will get resolved sooner rather than later?

BAKISH: Look, I think the good news is there’s conversation. You know, there was there was a time where there wasn’t conversation and I’m referring to the writers, not the actors. And so that’s what’s important. People have to get to the table to figure something out. And that’s that would be what would make me optimistic at this point in time, but again, the duration of these things is unknown because there are material issues that people are working to resolve.

FABER: Yeah. Alright, let’s talk a bit about Paramount Plus which we’ve done in many previous interviews was sort of go along the same lines, getting to profitability, this being the key big expense here and then things starting to really moderate. You still feel confident about that?

BAKISH: 100%. We said going back two years ago when we launched Paramount Plus the 2023 would be our peak investment year. We updated that a year ago. We updated that as recently as our second quarter call. So yes, 100% and we look at ‘24 as a year where there will be significant reduction in streaming operating losses and importantly, that will drive a return to total company earnings growth for Paramount Global and that’s obviously a very good thing and look when you look at Paramount Plus, we are scaling the service.

We’re north of 60 million subscribers. We are significantly growing revenue, second quarter we posted 50% streaming revenue growth and that’s on the back of subscriber growth, churn reduction, ARPU growth driven both by price increases and by add ARPU growth, so fundamentally, the top line side is working and on the expense side, we continue to every day take advantage of what we learned honing the content slate and by the way, the integration of Paramount Plus with Showtime is the latest example of that.

FABER: Yeah, I’ve read a lot of the metrics in terms of knowing that you can keep a subscriber if they watch, you know, more than two shows or but there’s still this bigger question which is do you have the scale to actually make this thing really profitable and sustainable for a long period of time and you have so many there are still many doubters, Bob, that that ultimately Paramount Plus can do that.

BAKISH: What I would say to that is everything we’ve said we would do, we have done. When we announced the Pluto acquisition, people said, what’s that? Turned out to be a billion dollar plus business and a huge category. When we launched Paramount Plus, they said too little too late. Turns out to be over 60 million subscribers today, growing very robustly very much a cornerstone service for news, sports. You know, we are tracking on our plan, we will get there. We will continue to prove the doubters wrong.

FABER: Real quickly because I did want to hit the studio briefly. It hasn’t been the greatest run. I mean, the “Mission Impossible,” I watched. I thought it was great, but it didn’t do as well. “Barbie” and “Oppenheimer” seem to swamp it particularly at IMAX. I think you had a “Transformers” and a “Dungeons and Dragons” movies that didn’t do as well as perhaps had been thought. Do you have any issues at Paramount, the studio right now?

BAKISH: Look, we continue to view Paramount Pictures as really a crown jewel asset. The combination of its original production and really irreplaceable library that dates back over 100 years is a tremendous asset for our company. We continue to believe in theatrical exploitation and franchises as an extension. Our “Turtles” movie is our most recent example that that’s we’re very pleased with that.

And I would add second point is films are not just about theatrical, it is about driving total company performance, obviously that’s include streaming, where Paramount Pictures, particularly the pay one product is very effective at driving subscriber engagement and it’s things like consumer products. If you look at “Turtles,” that’s crossed over a billion dollars in retail this year. That’s a nice incremental business tied back to a film—

FABER: Alright, but you’re not concerned about this failure at the box office with some of these names?

BAKISH: We will continue to execute. I am not concerned about Paramount Pictures. I’m not concerned that the franchise strategy is not delivering. You know, some films do well, some films—

FABER: Of course. And finally, oh by the way, speaking of films, Taylor Swift you could have distributed her documentary or something, but you couldn’t do it by 20—by the current—

BAKISH: I don’t know where that came from the ‘25 comment because I’ll just say that’s categorically untrue. I saw that piece on CNBC.

FABER: Alright, you don’t know.

BAKISH: I don’t know about 2025.

FABER: Got it. Bob, thank you.

BAKISH: Great to see you, David. We will continue to swap stories in this evolving consumer landscape. And importantly, you will see, we’ll continue to drive Paramount forward. Very excited about we’re doing in elongating the TV media ecosystem. Very excited about streaming. You will see significant earnings growth in ‘24 and a path to continue to delivering the company.

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