Paramount Global wants to land its own international hit à la Netflix Squid Gameas the company prepares to expand its flagship streaming service to the UK, South Korea, Germany and other territories in the coming months.
“I’ve always wanted international productions to air in places like the US, but it never worked because it was difficult to get them onto linear networks and to stream,” Paramount CEO Bob Bakish told the Financial Times . “Netflix has demonstrated this. . . They could bring a global product to the people.”
Paramount Plus, which features hits like the TV shows Spongebob Squarepants and Yellow jackets and the top gun Movies launches in the UK on Wednesday for £7 a month. Paramount declined to say how many subscribers it expects to reach in the UK.
The expansion comes as embattled Paramount group, formerly ViacomCBS, tries to convince investors it can thrive amid a costly battle for streaming customers without merging with a larger rival.
In the online television and film market, Paramount, with a market capitalization of $15 billion, competes with giants such as Apple, Amazon and Disney.
“I understand the narrative, but we definitely have what it takes to compete,” Bakish said, citing the expansive international portfolio of TV channels and long-standing partnerships with established local providers such as Sky in the UK, Reliance in India and CJ ENM in Korea.
Paramount’s stock prices and those of its entertainment peers have fallen in recent months as a recent slowdown at Netflix has unsettled investors about the viability of the streaming model.
Naveen Chopra, Paramount’s chief financial officer, dismisses those concerns, pointing out that the company was never given the financial flexibility that Wall Street had given Netflix and Disney. “They had the luxury of playing with free money for quite a number of years, to be honest. And for better or worse, we’ve never had that luxury,” he said.
“We had to build a streaming strategy from day one that focused on . . . the right balance between investing and growing and how to do it in a way that allows you to achieve reasonable returns”.
Some analysts have also questioned whether streaming can ever be as profitable as traditional TV, but Bakish insists it’s worth the investment.
“We think streaming is a great opportunity,” he said. “We’re in investment mode and will be increasing our investment in content in 2023, but beyond that we’re seeing momentum building and streaming ultimately having very TV-like margins.”
Amid broader economic concerns and rising inflation, the old media businesses that Paramount has clung to — like advertising and cinema — are back in vogue.
While Netflix is just trying to get into advertising, Paramount has experience with its Pluto streaming service and legacy TV channels. Paramount also has a century-old film studio that brings in box office revenue. “People kind of wake up and say, oh, actually, the things that Paramount is doing probably make a lot of sense,” Chopra said.
Paramount executives have had reason to be optimistic lately. Top Gun: Maverick, Delayed by more than two years due to the pandemic, it has grossed more than $800 million at the box office, making it the second-highest-grossing film in the studio’s history.
Since Netflix stumbled this year, Paramount’s streaming services have grown rapidly — albeit from a smaller base. In the first quarter, the two major streamers Paramount Plus and Showtime together reached 62 million subscribers, up 73 percent year-on-year.
The company expects to reach 75 million subscribers by the end of the year.
And after a chilly reception from Wall Street for its go-it-yourself strategy, Paramount landed a sought-after investor in Warren Buffett’s Berkshire Hathaway, which bought about 69 million shares in the first quarter. Berkshire’s disclosure gave the stock a boost in May, but shares have fallen in tandem with the broader market sell-off, and are down 23 percent this year.
Despite recent successes, analysts remain unconvinced by Paramount’s strategy. The company, controlled by the billionaire Redstone family, is said to be up for sale after a broader entertainment consolidation that brought together Disney and Fox as well as Warner and Discovery.
According to a New York Times report, Paramount’s board of directors met with bankers earlier this year to discuss possible transaction options. The meeting was part of a presentation on the state of the industry and bankers pitched ideas around that, said a person close to the situation.
Asked by the FT, Bakish brushed off the notion of buying or selling assets.
In addition to the film studio, Paramount owns cable channels such as Nickelodeon and MTV, the CBS broadcast channel, and other free-to-air television channels around the world. “Our asset portfolio is very strong. We have billions of dollars in cash on our books,” Bakish said. “So we like our position.”