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Paramount announced a merger with its premium TV network Showtime on June 27th to become more profitable.
Paramount Global (NASDAQ: PARA) streaming platform Paramount+ will reportedly merge with its Showtime service in the US next month. On Monday, the mass media and entertainment conglomerate announced the June 27th merger.
The combined resources of both companies would also attract a higher subscription fee for end users. For instance, the ‘Paramount+ with Showtime’ premium tier increases from $9.99 to $11.99. However, consumers could opt for the cheaper Paramount+ option without the Showtime package, which also increases from $4.99 to $5.99. The Paramount-Showtime merger comes after the entertainment conglomerate’s streaming business hit 56 million subscribers in Q4 2022.
The Paramount-Showtime merger sees the discontinuation of the standalone Showtime app, which functioned as a versatile premium TV network. Furthermore, the merger development also sees Paramount Global rebrand the premium Showtime cable network by the end of 2023.
Executives Laud Merger as Game-Changing
On Monday, Paramount Streaming president and chief executive officer Tom Ryan weighed in on the entertainment/streaming merger development, saying:
“This summer, Paramount+ will officially become the streaming home for Showtime, further advancing our lead in being the total household service. By integrating the Showtime premium and critically acclaimed portfolio with the service’s already broad and popular slate, all at a competitive price, we will solidify Paramount+ as a cornerstone in streaming.”
Meanwhile, Chris McCarthy, president and chief executive officer of Showtime/MTV Entertainment Studios & Paramount Media Networks, was just as enthusiastic about the merger. Lauding Showtime’s antecedents as a “big, premium, sophisticated series” soon to be complemented by Paramount’s “broad, blockbuster originals and movies”, McCarthy noted:
“Together, Paramount+ with Showtime will provide our consumers a much more rewarding experience with our vast set of unique originals and a deep library of iconic shows and hit films.”
Paramount Global Chief Executive Officer Bob Bakish previously told staff in January that the combined entertainment offering is a novelty in the streaming space. At the time, the CEO explained that Paramount+ would become the definitive multi-platform brand and the first to integrate streaming and linear content.
Paramount to Reduce Costs with Showtime Merger Following Underwhelming Q1 2023 Performance
Paramount seeks to use the merger to cut down costs on content spending, to hit profitability. Earlier this month, the mass media juggernaut expected peak losses for Paramount+ this year. This underwhelming guidance came after the entertainment company posted weak results for the first quarter of 2023.
On May 4th, Paramount Global missed estimates on earnings and revenue, which also led to a 28% stock slide. For Q1 2023, the company reported a revenue haul of $7.27 billion compared to the $7.42 billion analysts expected. In addition, Paramount also logged earnings per share of 9 cents versus the much higher consensus estimate of 17 cents.
In an accompanying statement, Bakish said that Paramount slashed its dividend from 24 cents a share to 5 cents per share. The CEO explained the move was to further enhance the company’s ability to deliver long-term value for shareholders.