At a time of uncertainty in sports media, Paramount chairman/CEO David Ellison said Tuesday that the company should be viewed “as a buyer of sports rights.”
“We’re a big believer in live sports, and I think you should look for us to obviously continue to expand in terms of how we look at the portfolio there,” Ellison said, touting the company’s UFC rights deal — widely thought to be an overpay — as strengthening its confidence in its position.
The comments run in contrast to those of other major media executives. Fox Corporation CEO Lachlan Murdoch said on an earnings call earlier this year that the company could “consider balancing or rebalancing” its sports portfolio should rights for the NFL become more expensive. ESPN chairman Jimmy Pitaro recently mentioned in an interview from the CNBC x Boardroom Game Plan Conference that there would be some “give and take” in its sports rights portfolio amid the NFL looking to renegotiate its deals.
Paramount is already believed to have been at the bargaining table with the NFL, as the league reportedly holds a change-of-control provision in its contract that allows it to opt out of its CBS deal due to Paramount’s acquisition by Ellison’s Skydance last year. Ellison did not address the NFL on Tuesday’s earnings call, but previously alluded to an “ongoing negotiation” with the league.
There has not been an update about the status of potential talks between the two sides as Paramount faces lawsuits over its merger with Warner Bros. Discovery. Paramount last week agreed to delay closing its acquisition of WBD until either June 1, 2027 or five days after a decision is rendered in the ongoing legal proceedings, whichever occurs first. A trial date was set for next March.
The combined company would carry net debt of around $79 billion and attempt to carry out $6 billion in synergies (on top of over $3 billion from the Paramount-Skydance merger). Paramount is ahead of schedule on Skydance-related synergies, disclosing an expectation of more than $2.7 billion (up from $2.5 billion) by the end of the year.
In the near term, Paramount will start to owe WBD shareholders a $0.25/share “ticking fee” calculated daily for every quarter the deal does not close, which equates to about $650 million/quarter. It should be noted that the ticking fee would only be payable if the merger is completed, currently a $31/share deal with an enterprise value of $110 billion.
Paramount would owe WBD a termination fee of $7 billion if the deal does not close due to regulatory concerns. The company already paid Netflix a $2.8 billion termination fee on behalf of Warner Bros. Discovery after its bid was deemed superior.
Paramount, which is on the verge of completing its first fiscal year under new ownership, reported revenue of $6.91 billion (+1% YoY) on net earnings of $41 million. The company accrued adjusted EBITDA of $1.1 billion, up 27% year-over-year, while operating income finished at $475 million, indicative of a 6.9% year-over-year increase.
Revenue attributable to Paramount+ rose by 16% year-over-year to $2.06 billion, and the service added 2 million subscribers to bring its total count to 81.6 million (+6% YoY). The company wrote in its letter to shareholders that the growth surpassed its expectations and was driven by programming such as the “FIFA World Cup in certain Latin American countries, UFC, and our Originals.”
The company also said it registered its lowest churn quarter in the history of the service. Paramount earned a 7.7% share of monthly television viewing this past May, according to data from Nielsen Media Research, placing it fifth among major distributors. Although the TV media segment finished with $3.1 billion in revenue, down 9% YoY, Paramount touted strong ratings for the Masters, UEFA Champions League Final and WNBA. Paramount is also televising UFC events this year for the first time under a seven-year pact reportedly worth a total of $7.7 billion.
