10-Q: Paramount Global Swings to Profit in Q2 2025 Amid Streaming Growth and Skydance Merger Progress

Paramount Global reported a significant return to profitability in the second quarter of 2025, driven by strong Paramount+ subscriber growth and higher theatrical revenues, as it continues to advance towards its merger with Skydance Media.

Summary

• Revenues for the three months ended June 30, 2025, increased 1% to $6.849 billion, compared to $6.813 billion in the prior-year period.
• Operating income for the three months ended June 30, 2025, was $399 million, a substantial improvement from an operating loss of $5.318 billion in the comparable prior-year period.
• Net earnings attributable to Paramount for the three months ended June 30, 2025, were $57 million ($0.08 diluted EPS), compared to a net loss of $5.413 billion ($8.12 diluted EPS) in the prior-year period.
• For the six months ended June 30, 2025, revenues decreased 3% to $14.041 billion, from $14.498 billion in 2024, primarily due to the absence of the Super Bowl LVIII broadcast in 2025.
• Operating income for the six months ended June 30, 2025, was $949 million, compared to an operating loss of $5.735 billion in the prior-year period.
• Net earnings attributable to Paramount for the six months ended June 30, 2025, were $209 million ($0.31 diluted EPS), compared to a net loss of $5.967 billion ($9.08 diluted EPS) in the prior-year period.
• Adjusted OIBDA decreased 5% to $824 million for the three months and 18% to $1.512 billion for the six months ended June 30, 2025, primarily due to declines in linear networks.
• Paramount+ global subscribers increased by 9.3 million, or 14%, year-over-year, reaching 77.7 million at June 30, 2025, though they decreased by 1.3 million (2%) from March 31, 2025.
• Theatrical revenues increased by $116 million (84%) for the three months and $111 million (38%) for the six months, driven by the release of 'Mission: Impossible The Final Reckoning' and 'Sonic the Hedgehog 3'.
• Impairment charges of $157 million were recorded in Q2 2025 for FCC licenses, significantly lower than the $6.00 billion in Q2 2024 (goodwill and FCC licenses).
• Restructuring and transaction-related items totaled $181 million in Q2 2025 and $266 million for the six months ended June 30, 2025.
• Cash and cash equivalents increased to $2.739 billion at June 30, 2025, from $2.661 billion at December 31, 2024.
• Total debt was $14.514 billion at June 30, 2025.

Sentiment

Score: 7

Explanation: The company demonstrated a significant turnaround in GAAP profitability compared to the prior year's substantial losses, driven by lower impairment charges and strong performance in its Direct-to-Consumer segment (Paramount+ subscriber growth and improved OIBDA) and theatrical releases. However, challenges persist in the linear advertising and affiliate markets, leading to overall revenue decline for the six-month period and negative Adjusted OIBDA in the Filmed Entertainment segment. The pending Skydance merger introduces both potential benefits and significant integration and legal risks, creating a mixed but generally positive trajectory from a very low base.

Positives

• Net earnings from continuing operations swung from a significant loss of $5.413 billion in Q2 2024 to a profit of $57 million in Q2 2025, and from a $5.967 billion loss to a $209 million profit for the six-month period.
• Operating income improved dramatically from a loss of $5.318 billion in Q2 2024 to a profit of $399 million in Q2 2025, and from a $5.735 billion loss to a $949 million profit for the six-month period.
• Paramount+ global subscribers grew by 9.3 million, or 14%, year-over-year, reaching 77.7 million at June 30, 2025.
• The Direct-to-Consumer (DTC) segment's Adjusted OIBDA significantly improved to a profit of $157 million in Q2 2025 from a profit of $26 million in Q2 2024, and to a profit of $48 million for the six months from a loss of $260 million in 2024.
• Theatrical revenues saw strong growth, increasing 84% in Q2 2025 and 38% for the six months, driven by successful film releases like 'Mission: Impossible The Final Reckoning'.
• Cash and cash equivalents increased to $2.739 billion at June 30, 2025.
• Net cash flow provided by operating activities increased to $339 million for the six months ended June 30, 2025, from $319 million in 2024.
• Impairment charges were significantly lower in 2025 ($157 million) compared to the substantial charges in 2024 ($6.00 billion).

Negatives

• Overall revenues for the six months ended June 30, 2025, decreased 3% to $14.041 billion, primarily due to the absence of the Super Bowl broadcast in 2025.
• Advertising revenues decreased 4% in Q2 2025 and 13% for the six months, impacted by declines in the linear advertising market and new entrants to the digital advertising market.
• Linear affiliate and subscription revenues decreased 7% in Q2 2025 and 8% for the six months, reflecting linear subscriber declines.
• TV Media Adjusted OIBDA decreased 15% in Q2 2025 and 28% for the six months, reflecting revenue declines in the linear business.
• Filmed Entertainment Adjusted OIBDA remained negative, decreasing to $(84) million in Q2 2025 from $(54) million in Q2 2024, and to $(64) million for the six months from $(57) million in 2024, primarily due to lower licensing profits.
• Paramount+ global subscribers decreased by 1.3 million (2%) from March 31, 2025, to June 30, 2025, primarily due to the expiration of an international distribution agreement and the timing of premieres.
• Ongoing restructuring charges and transaction-related items totaled $181 million in Q2 2025 and $266 million for the six months ended June 30, 2025.

Risks

• Risks related to the streaming business, including content costs and subscriber retention.
• Adverse impact on advertising revenues due to changes in consumer behavior, advertising market conditions, and deficiencies in audience measurement.
• Risks related to operating in highly competitive and dynamic industries, including cost increases.
• The unpredictable nature of consumer behavior and evolving technologies and distribution models.
• Risks related to decisions to make investments in new businesses, products, services, and technologies, and the evolution of business strategy.
• Potential for loss of carriage or other reduction in, or the impact of negotiations for, the distribution of content.
• Damage to reputation or brands.
• Losses due to asset impairment charges for goodwill, intangible assets, FCC licenses, and content.
• Liabilities related to discontinued operations and former businesses, including approximately 17,790 pending asbestos claims as of June 30, 2025.
• Increasing scrutiny of, and evolving expectations for, sustainability initiatives.
• Evolving business continuity, cybersecurity, privacy, and data protection risks.
• Content infringement.
• Domestic and global political, economic, and regulatory factors affecting businesses generally, including tariffs and other changes in trade policies.
• Inability to hire or retain key employees or secure creative talent.
• Disruptions to operations as a result of labor disputes.
• Challenges realizing synergies and other anticipated benefits expected from the Skydance Transactions, including integrating the Company's and Skydance's businesses successfully.
• Dilution to the earnings per share of New Paramount which may negatively affect the price of New Paramount Class B Common Stock.
• Any negative effects following the completion of the Skydance Transactions on the market price of New Paramount Class B Common Stock.
• The uncertainty of the Company's stockholders with respect to the value of the stock consideration they will receive.
• The risks that holders of Class B Common Stock may not receive all merger consideration in the form they elect due to proration.
• The reduced ownership and economic interest of existing stockholders in New Paramount.
• The cutbacks the PIPE Transaction is subject to in the event that stock elections exceed specified thresholds.
• The risks that the Skydance Transactions may be prevented or delayed or the anticipated benefits could be reduced if certain regulatory approvals are not obtained.
• The conditions to the closing to which the Skydance Transactions are subject.
• Continued incurrence of significant transaction and merger-related costs in connection with the Skydance Transactions.
• Business uncertainties, including the effect of the Skydance Transactions on employees, commercial partners, clients, and customers, and contractual restrictions while the Transactions are pending.
• The Transaction Agreement's limitation on the ability to pursue alternatives to the Skydance Transactions.
• Tax consequences of the Skydance Transactions that may adversely affect holders of Common Stock.
• The imposition of a new U.S. federal excise tax in connection with redemptions.
• Interests of executive officers, directors, and affiliates of Paramount that are different from, or in addition to, the rights of stockholders.
• Risks related to a failure to complete the Skydance Transactions which could negatively impact businesses or financial results and the stock price of Common Stock.
• Lawsuits relating to the Skydance Transactions potentially preventing or delaying the closing and/or resulting in substantial costs.
• The waiver of one or more of the conditions to closing without re-obtaining stockholder approval.
• Difficulties retaining, motivating, and recruiting executives and other key employees before and following the completion of the Skydance Transactions.
• The Skydance Transactions triggering change of control or other provisions in certain agreements which may allow third parties to terminate or alter existing contracts or relationships.
• Stockholders not being entitled to appraisal rights in connection with the Skydance Transactions.
• Changes and uncertainties with respect to taxes in the jurisdictions in which New Paramount will operate.
• Volatility in the prices of Common Stock.
• Potential conflicts of interest arising from the ownership structure with a controlling stockholder (National Amusements, Inc.).
• Litigation related to distribution agreements, specifically with Sony Pictures Television Inc. regarding 'Wheel of Fortune' and 'Jeopardy!'.
• Claims from federal and state environmental regulatory agencies and other entities asserting liability for environmental cleanup costs and related damages from historical operations.
• Personal injury claims including toxic tort and product liability claims (other than asbestos) arising from historical operations and predecessors.

Future Outlook

The Skydance Transactions are expected to close on August 7, 2025, subject to customary closing conditions. The company is currently evaluating the impact of new U.S. tax legislation enacted on July 4, 2025, on its future financial results, including a reassessment of the valuation allowance on its interest limitation carryforward deferred tax asset.

Management Comments

• The comparison reflects growth for Paramount+ and higher theatrical revenues, driven by the second quarter release of Mission: Impossible The Final Reckoning, offset by lower revenues from linear networks and content licensing.
• Adjusted operating income before depreciation and amortization (Adjusted OIBDA) decreased 5%, driven by declines at linear networks, partially offset by improved results for the Direct-to-Consumer segment.
• Revenues decreased 3% to $14.04 billion, principally reflecting a decrease of 4% from the comparison against CBS's broadcast of Super Bowl LVIII in the first quarter of 2024.
• Adjusted OIBDA decreased 18%, driven by lower profits from linear networks, including the comparison to the Super Bowl broadcast in 2024, partially offset by improved results from the Direct-to-Consumer segment.
• We project anticipated cash requirements for our operating, investing and financing needs as well as cash flows expected to be generated and available to meet these needs.
• Our access to capital markets and the cost of any new borrowings are impacted by factors outside our control, including economic and market conditions, as well as by ratings assigned by independent rating agencies. As a result, there can be no assurance that we will be able to access capital markets on terms and conditions that will be favorable to us.

Industry Context

The media industry continues its shift from traditional linear television to streaming services, a trend reflected in Paramount Global's strong Paramount+ subscriber growth and improved Direct-to-Consumer segment performance. Conversely, the company's linear advertising and affiliate revenues are declining, impacted by broader linear market contraction and increased competition from new entrants in the digital advertising space. The company's strategic content changes and workforce restructuring are indicative of ongoing efforts to adapt to these significant industry transformations.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for direct benchmarking against industry standards.
• It notes 'declines in the linear advertising market' and 'new entrants to the digital advertising market' as general industry trends impacting advertising revenues, suggesting performance in these areas is consistent with broader market challenges.
• The growth in streaming subscription fees and Paramount+ subscribers aligns with the overall industry trend of increasing adoption of direct-to-consumer streaming services.

Management Changes

Corporate Governance

Legal Proceedings

• **Litigation Relating to the Skydance Transactions**: Includes the 'Baker Action' (putative class action alleging fiduciary duty breaches, filed July 24, 2024), two '220 Actions' (seeking inspection of books and records to investigate fiduciary duty breaches, filed April 30, 2024, and December 30, 2024), a lawsuit by LiveVideo.AI Corp. (alleging unfair competition and tortious interference, filed August 20, 2024), and the 'NYCERS Action' (putative class action alleging fiduciary duty breaches and challenging the no-shop provision, filed February 4, 2025).
• **Litigation Related to Distribution Agreements**: A civil complaint filed by Sony Pictures Television Inc. against CBS Studios Inc. (October 2024) asserting a breach of contract claim relating to the exclusive right to distribute 'Wheel of Fortune' and 'Jeopardy!', with ongoing cross-complaints and appeals regarding distribution functions.
• **Claims Related to Former Businesses**: Approximately 17,790 pending asbestos claims as of June 30, 2025, related to alleged exposure from Westinghouse products, with total settlement and defense costs (net of insurance and tax) of $34 million in 2024 and $54 million in 2023. Also includes claims for environmental cleanup costs and other personal injury/toxic tort/product liability claims arising from historical operations.

Related Party Transactions

• National Amusements, Inc. (NAI) is the controlling stockholder, owning approximately 77.4% of voting Class A Common Stock and 9.4% of combined Class A and B Common Stock at June 30, 2025.
• NAI and its wholly owned subsidiaries approved the Transaction Agreement via written consent, representing approximately 77.4% of the voting power, negating the need for additional stockholder approval.
• NAI Company Stockholders entered into a voting and support agreement to vote their shares in favor of certain matters related to the Skydance Transactions.
• Revenues from equity method investees, primarily for content licensing, were $101 million for the three months and $170 million for the six months ended June 30, 2025.
• Operating costs related to equity method investees were $35 million for the three months and $59 million for the six months ended June 30, 2025.
• Receivables from related parties totaled $186 million (current) and $87 million (noncurrent) at June 30, 2025.

Stakeholder Impact

• **Shareholders**: Significantly impacted by the pending Skydance merger, which involves a change of control, conversion options for shares (cash or New Paramount Class B stock), and potential dilution. Ongoing litigation related to the merger could affect shareholder value and the deal's completion.
• **Employees**: Affected by strategic changes in global workforce and restructuring initiatives, leading to severance costs. The Skydance merger may also lead to further integration and potential workforce adjustments.
• **Customers (Subscribers)**: Direct-to-Consumer segment growth (Paramount+ subscribers) indicates positive engagement, but content strategy changes (removal of content) could affect customer experience.
• **Customers (Advertisers)**: Facing declines in the linear advertising market and increased competition from digital entrants, impacting advertising revenue.
• **Content Creators/Partners**: Affected by changes in content strategy, abandonment of development projects, and termination of programming agreements. Litigation with Sony Pictures Television Inc. impacts distribution agreements.
• **Creditors**: The company's debt structure and credit facility amendments are relevant. The Skydance transaction involves a significant capital infusion which could impact the company's financial stability and ability to meet obligations.

Next Steps

• The Skydance Transactions are expected to close on August 7, 2025, subject to customary closing conditions.
• The company is evaluating the impact of new U.S. tax legislation enacted on July 4, 2025, on future financial results, including a reassessment of the valuation allowance on its interest limitation carryforward deferred tax asset.
• Ongoing legal proceedings related to the Skydance Transactions, distribution agreements, and former businesses (asbestos, environmental) will continue.
• Further proceedings are ongoing in the appeals court and trial court regarding the litigation with Sony Pictures Television Inc. over distribution agreements.
• The group of purported stockholders seeking lead plaintiff status in the Baker Action will meet and confer to propose a schedule for resolving lead plaintiff applications.
• The 220 Action (April 30, 2024 filing) will proceed with further proceedings on the scope of production following the Delaware Supreme Court's acceptance of interlocutory appeal.
• The restructuring severance liability is expected to be substantially paid by the end of 2026.

Key Dates

Recommendation

Paramount Global's Q2 2025 results show a significant improvement in GAAP profitability compared to the prior year, largely due to the absence of massive impairment charges and strong growth in its Direct-to-Consumer segment (Paramount+ subscribers and improved OIBDA). Theatrical performance also contributed positively. However, the core linear TV business continues to face headwinds with declining advertising and affiliate revenues. The pending Skydance merger, while bringing a substantial capital infusion and strategic alignment, is subject to ongoing legal challenges and integration risks. Given the mixed operational performance, the uncertainty surrounding the merger's final terms and legal outcomes, and the competitive landscape, a 'hold' recommendation is appropriate. Investors should monitor the merger's completion, the company's ability to sustain DTC growth, and the stabilization of linear declines.

Keywords

Media, Streaming, Entertainment, Paramount+, Skydance Media, Merger, Quarterly Report, Financial Results, Direct-to-Consumer, TV Media, Filmed Entertainment, Subscribers, Revenue, Profit, Debt, Litigation, Corporate Governance, Advertising, Theatrical