Paramount Global wants to score its own international hit à la Netflix’s Squid Game, as the company prepares to expand its flagship streaming service to the UK, South Korea, Germany and other territories in the coming months.
“I always wanted to get international productions aired in places like the US and it never worked, because it was hard to put them on linear networks and to streaming,” Paramount’s chief executive Bob Bakish told the Financial Times. “Netflix demonstrated this . . . you could bring people global product”.
Paramount Plus, which offers hits such as the TV shows SpongeBob SquarePants and Yellowjackets and the Top Gun films, is launching 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 the embattled Paramount group, formerly named ViacomCBS, looks to convince investors that it can succeed without merging with a larger rival in the midst of a costly, high-stakes battle for streaming customers.
In the market for online television and film, Paramount, with a market capitalisation of $15bn, competes with behemoths such as Apple, Amazon and Disney.
“I hear the narrative, but we definitely have what it takes to compete,” said Bakish, pointing to the company’s sprawling international portfolio of television networks, and longstanding partnerships with local incumbents such as Sky in the UK, Reliance in India and CJ ENM in Korea.
The stock prices of Paramount and its rivals in entertainment have dropped in recent months as a recent slowdown at Netflix has spooked investors about the viability of the streaming model.
Naveen Chopra, Paramount’s chief financial officer, dismisses this concern, pointing to the fact that the company was never given the financial leeway that Wall Street had afforded Netflix and Disney. “They had the luxury, quite frankly for several years, of getting to play with free money. And for better or worse, we never had that luxury,” he said.
“We had to build a streaming strategy from day one that was focused on . . . the right balance of investment and growth, and how you do it in a way that you can generate reasonable returns”.
Some analysts have also questioned whether streaming can ever be as profitable as traditional TV, but Bakish insists that it is worth the investment.
“We think streaming is a great opportunity,” he said. “We’re in investment mode and will increase our content investment in 2023, but beyond that we see momentum building and ultimately see streaming having very TV-like margins.”
Amid broader economic concerns and soaring inflation, the old-media businesses that Paramount has stuck to — such as advertising and the cinema — are back in vogue.
While Netflix is just now looking to get into advertising, Paramount has experience through its Pluto streaming service and legacy television channels. Paramount also has a century-old movie studio that brings in revenue from the box office. “People are sort of waking up and saying, oh, actually the things that Paramount’s doing probably do make a lot of sense,” Chopra said.
Paramount executives have had reasons to feel optimistic lately. Top Gun: Maverick, which was delayed for more than two years due to the pandemic, has raked in more than $800mn at the box office, making it the second-highest-grossing film in the studio’s history.
As Netflix has stumbled this year, Paramount’s streaming services have been growing quickly — albeit from a smaller base. In the first quarter its two big streamers, Paramount Plus and Showtime, reached a combined 62mn subscribers, up 73 per cent from a year earlier.
The company expects to reach 75mn subscribers by the end of the year.
And, following a chilly reception from Wall Street to its go-it-alone strategy, Paramount gained a coveted investor in Warren Buffett’s Berkshire Hathaway, which purchased about 69mn shares in the first quarter. The Berkshire disclosure gave the stock a boost in May, but the shares have fallen along with the broader market sell-off and are down 23 per cent this year.
Despite its recent successes, analysts remain unconvinced by Paramount’s strategy. The company, which is controlled by the billionaire Redstone family, is perpetually rumoured to be up for sale, after a wider consolidation in entertainment that brought together Disney and Fox, as well as Warner and Discovery.
Paramount’s board earlier this year met bankers about potential deal options, according to a New York Times report. The meeting was part of a presentation on the state of the industry, and bankers proposed ideas in that context, said a person close to the situation.
When asked by the FT, Bakish brushed off the notion of buying or selling any assets.
In addition to the movie 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’ve got billions of dollars of cash on our books,” said Bakish. “So we like our position”.