Paramount Plus: Everything You Need to Know About Paramount's Subscription Streaming Service

As 2023 wound down, the trade press was abuzz with news that Shari Redstone, heiress to Sumner Redstone’s National Amusements and the Paramount Global media empire, was entertaining various M&A proposals.

Paramount has long been seen as an M&A target destined to be gobbled up, or even broken up, by the larger players in the market. While some potential suitors might see the company’s Paramount Plus streaming platform as well as it’s popular FAST service Pluto TV as the crown jewels, others are eyeing some of the conglomerate’s TV assets, or its production studios and storied library.

The rumors turned out to be true. In April 2024, Paramount entered exclusive M&A talks with longtime Paramount Pictures partner David Ellison and his Skydance Media. As these talks advanced, Paramount's longtime CEO, Bob Bakish, was jettisoned, with the board replacing him with three executives: George Cheeks, Chris McCarthy and Brian Robbins, who now comprise what is called "The Office of the CEO." (Yeah, weird.)

Paramount's wild first week of May was capped by a rival M&A bid coming from Sony and private equity firm Apollo valued at $26 billion.

So how'd we get here?

In early December 2023, news that Skydance Media and RedBird Capital Partners have been kicking the tires on Paramount Global drove the company’s stock up 12%.

Analysts love a good M&A rumor, and they turned out in force in the run-up to Christmas to speculate on what a deal might look like.

Wells Fargo analyst Steven Cahall speculated that Skydance or RedBird might try to sell off Pluto TV, which could fetch $1.7 billion, or the company’s linear networks, worth about $16 billion, in order to focus on the company’s movie and TV studio business.

Then, just before Christmas, Axios broke the news that Warner Bros. Discovery CEO David Zaslav had an extended meeting with Paramount CEO Bob Bakish at Paramount’s New York headquarters to discuss a possible merger.

Warner Bros. Discovery might be looking at Paramount’s streaming assets to buttress its own Max streaming service. And because WBD does not own a broadcast network or television stations, there is some speculation that the deal might be able to pass FCC regulatory reviews, which undoubtedly pose a problem if Comcast NBCUniversal were to enter a bid since Paramount owns broadcast network CBS and some 28 TV stations, both CBS affiliates and independents, through its CBS Stations unit.

On the other hand, both WBD and Paramount are saddled with debt and struggling to keep up with the leaders in the streaming race. Plus, Zaslav’s hands are tied until at least April because of a reverse Morris trust set up to reduce taxes when Discovery acquired WarnerMedia from AT&T in 2022.

Meanwhile, media mogul Byron Allen has made a $3.5 billion offer to buy Paramount Global’s BET division, and BET’s management have been in talks for a management buyout.

Paramount indicated that it was willing to sell a stake in BET in early 2023, drawing interest from Allen, along with Tyler Perry and Sean (Diddy) Combs, but eventually called off the divesture after the bids fell short of the $3 billion the company was reported seeking for the unit at the time.

There’s no doubt others will be circling Paramount in the coming weeks -- sizing up its various components and figuring out how to carve it up. And the future of Paramount Plus very much hangs in the balance.

It’s unclear what other players could eventually emerge, but Variety recently noted that Redstone is hoping for other offers and “hopes to sell the company as a unit and not broken up in pieces.”

It’s not clear if that’s in the cards, but given Paramount Global’s corporate structure, any deal is bound to be a bit complicated.

In addition to the Paramount Pictures film and television studio and the CBS Entertainment Group, the company also owns several cable channels, including BET, VH1, MTV, Nickelodeon, Comedy Central, CMT, Paramount Network and Showtime. Internationally, the company owns Argentina's Telefe, Chile's Chilevisión, India's Colors, the United Kingdom's Channel 5 and Australia's Network 10.

Meanwhile, Shari Redstone’s National Amusements owns a 9.7% equity stake in Paramount Global, but it controls roughly 79% of the group’s voting shares, meaning that easiest and cheapest way to get control of the group is through National Amusements – a theater chain founded by Shari’s grandfather Michael Redstone in 1936.

Streaming struggles

With 63 million subscribers (and growing) at the end of Q3 2023, Paramount Plus is well ahead of Peacock with roughly 30 million paid subscribers, but also well behind the much bigger streamers like Netflix with almost 250 million or Max with 95 million or Disney with 225 million DTC subscribers spread over Disney Plus, Hulu and ESPN Plus.

But it’s been a struggle getting this far. In its 2022 Q4 earnings report released in early 2023, Paramount Global reported that losses on its direct-to-consumer business rose 15% to $575 million all but wiping out Paramount’s profits, which were down 99% from the previous year.

The company stressed that it added 10 million streaming subscribers globally in the quarter, but by that point Wall Street had already grown tiered of watching subscriber numbers swell while losses mount and wanted to see a path to profitability.

In July, the company raised prices, and by Q3, Paramount Global had staunched the bleeding, reporting a third-quarter profit of $295 million, with the media conglomerate expanding its direct-to-consumer revenue by 38% and closing DTC losses for the year by more than 30%.

Paramount Plus gained 2.7 million subscribers in Q3 to reach 63 million. Revenue expanded by 61%, driven partly by the July $1-per-month price increase. Paramount Plus global ARPU expanded 16% year over year.

DTC ad sales also thrived in Q3 on Paramount Plus and FAST platform Pluto TV, up 18% to $430 million. In fact, the company predicted that it would hit streaming profitability in 2024.

On the company’s third-quarter earnings call, CEO Bob Bakish said that the company was also exploring the prospect of selling wholesale “hard bundles” of Paramount Plus on top of legacy linear network carriage deals.

A landmark distribution deal between Disney and Charter Communications in September saw Charter score wholesale pricing of Disney Plus and ESPN Plus in order to bundle it with customers' programming packages. The deal broke the traditional mold for such carriage deals at a point where Charter seemed prepared to walk away from the table if Disney wouldn’t cut it some slack.

Evidently, Bakish is keen to follow in those footsteps. Not only does such bundling reduce customer acquisition cost to next to nothing, Bakish said, it grows customer ranks and reduces subscriber churn.

But MoffettNathanson analyst Robert Fishman was skeptical of the strategy as it pertains to Paramount Plus, questioning whether Paramount Plus offers the same kind of "incremental value" to a standard pay TV package that Disney Plus does.

Integrating Showtime

Announced in January 2023, one of the company’s key initiatives over the past year has been combining it’s Paramount Plus streaming platform with Showtime and rebranding the two as “Paramount Plus with Showtime” in an effort to broaden its streaming offering and compete for scale.

Paramount Global CFO Naveen Chopra reported early in 2023 that combining Paramount Plus with Showtime is expected to save the company $700 million annually.

The Paramount Plus with Showtime streaming bundle officially launched in June for $11.99 per month, replacing the $9.99 per month Paramount Plus premium tier. Meanwhile, the monthly price for the sans-Showtime Paramount Plus Essential plan rose by $1 to $5.99.

The initiative culminated in January 2023 with the rebranding of Showtime’s linear cable channel as Paramount Plus with Showtime. The linear channel combines Showtime titles and select Paramount Plus original series.

Programming

During the prolonged dual strikes of 2023 that left streamers, cable channels and broadcast nets with a dearth of scripted content for the fall season, CBS was able to tap Paramount Plus originals to fill some of its primetime slots, which is also a great way to introduce viewers to the streaming platform -- “If you want more, check out Paramount Plus.”

While it was more of a case of “making the best of a bad situation” rather than a “win-win” scenario, it will be interesting to see if this kind of cross-pollination and cross-promotion becomes the new normal, or if we see a return to more strict exclusivity.

For example, in October, Paramount Plus bowed a reboot of the popular comedy series Frasier. Five days later, the first two episodes aired on CBS. Similarly, CBS picked up the first two episodes of Taylor Sheridan’s Lawmen: Bass Reeves about a week after its streaming premier in November.

Prolific show-runner and producer Sheridan has emerged as one of Paramount’s star heavy hitters. The producer has delivered such hits as Yellowstone and its prequels 1883 and 1923, which stars Harrison Ford and Helen Mirren.

In March, news broke that Sheridan reportedly commands a cumulative annual production budget of $500 million at Paramount Global as part of his overall deal there.

In November the company revealed that Sheridan is working on two more Yellowstone spinoffs with the working titles 1944 and 2024, the latter of which has been widely rumored to star Matthew McConaughey.

Yellowstone first premiered in 2018 on Paramount’s linear cable network, Paramount Network and in 2020 NBCUniversal’s rival steaming platform, Peacock, snapped up the rights to the series. This leads to the awkward situation where subscribers can gorge themselves on the Paramount Plus spinoffs, 1883 and 1923, but to watch the original Yellowstone series, they’ll have to subscribe to a rival platform.

Sheridan is also behind the Sylvester Stalone-starring mob drama Tulsa King and Mayor of Kingstown starring Jeremy Renner.

And in July, Paramount Plus bowed Sheridan’s Special Ops: Lioness starring Zoe Salda?a and Nicole Kidman. The series, inspired by an actual U.S. military program, stars Salda?a as a CIA agent attempting to balance her personal and professional life.

Another crown jewel for Paramount Plus is the Star Trek franchise, which has spawned a slew of original spinoffs for the streamer, including Star Trek: Discovery, Picard, Lower Decks, Prodigy and Strange New Worlds. The platform also serves as a hub for all of the classic series, including The Original Series, The Next Generation, Deep Space 9, Voyager and Enterprise.

Paramount Plus's sports offerings are based on the live games that air on CBS and CBS Sports Network, as well as a few exclusives, meaning that the streamer is able to offer NFL and college football, major soccer leagues, PGA Tour and college basketball, including the annual NCAA men's March Madness tournament.

Overall, a recent Reelgood audit found that, in its ongoing efforts to rein in costs, the streamer had trimmed its movie catalog back by 64% over the past year to roughly 830 movie titles. Meanwhile, Paramount Plus' TV show catalog was up 3% year over year to 752 series.

In August, Paramount CFO Naveen Chopra said that the company aims to plan the Paramount Plus slate more "efficiently," getting away from what he called a "volume focused game."

Chopra added, “Our programming slate is designed to ensure that each key audience segment has compelling content to enjoy throughout the year. Not too little, but also not too much.”

However, a recent Ampere Analysis study found that Paramount Plus lags well behind frontrunners Disney Plus/Hulu, Netflix and Max in terms of hosting the most popular content.

Availability

Paramount Plus is available on just about every device, including computers, Apple (TV, iPhone and iPad), Android (TV, phone and tablet), Google TV, Chromecast, Fire TV, Roku, Samsung TV, LG TV, Vizio TV, Xfinity and Xumo and Cox Contour, as well as PlayStation and Xbox.

Internationally, the service is available in the U.S., Canada, the U.K., Europe, Latin America and Australia.

In December 2023, Paramount Plus finally rolled out in Japan through a partnership with local cable TV and broadband provider J:COM, as well as Japanese premium cable channel provider Wowow Inc., both of which offer the streaming service to their subscribers at no additional cost.

The move came about 15 months after launching in South Korea, its only other Asian market.

Promotional Offers

Paramount Plus has a long-standing marketing partnership with Walmart giving Walmart Plus subscribers a break on the price.

Last March, the company partnered with Verizon to launch its streaming platform on Verizon’s Plus Play wholesale app market. 

In November, alongside an aggressive three-month Black Friday promo, the streamer also rolled out a special 10% discount for AARP members.