Paramount’s Bakish highlights benefits of bundling and broader offerings

Bob Bakish

Paramount’s path to profitability for streaming includes more partnerships and the creation of a broader offering that will give it the flexibility to increase prices, according to CEO Bob Bakish.

Speaking at the Goldman Sachs Communacopia and Technology conference in the US, Bakish said that theintegration of Paramount+ with Showtime in the US, launched on June 27, is “totally performing on plan”.

he said the merging of the two had enabled a price increase “which is something the whole industry is attempting to pursue”, he said.

Bakish said the move had also delivered “very substantial cost savings” for Paramount.  On the content mix, he said that “broad works in the marketplace”.

Paramount aims to increase ARPU significantly from its ability to raise prices as well as through advertising..

“Streaming continues to represent an extraordinary value proposition,” said Bakish, adding that the group’s first price increase “proves that we have pricing power in the marketplace” since this had not resulted in much churn.

“We believe there is a lot of room to run with there,” he said, adding that price was “not the only way” to increase revenue.

On the international front for Paramount+, meanwhile, the company has folded western Europe in with its wider international business which includes Latin America, a move that raises the ARPU of the business, said Bakish.

Partnerships and bundling

While pricing will be an important element in the route to profitability, Bakish highlighted his strong belief in partnerships with distributors and creativity in the way streaming services are bundled.

he said that the company could “lean more” towards partnerships for the distribution of Paramount+, including internationally.

“As we look at expansion beyond the markets we are in I believe partnerships will figure more prominently,” he said.

“We believe in the power of partnerships, which drive acquisition ane retention,” he said. “That is like a virtual restructuring of the industry.”

Referring to the Disney-Charter dispute, Bakish said that one lesson his company had learned was bundling worked, adding that MVPDs and vMVPDs in the US with existing Showtime subscribers would be able to give those subs access to the Paramount+ app as an add-on to create a bigger virtual bundle.

He said that the company had taken the partnership model a stage further outside the US with hard-bundling of Paramount+, which meant slightly lower revenues but zero acquisition costs.

In the US, he highlighted Paramount’s teaming up with Wal Mart as an example of a partnership that would deliver value for both companies.

He also hailed “the more attractively priced, skinnier entertainment bundle” as a way to engage consumers in the pay TV world and take on cord-cutting.

Peak investment

Bakish reiterated that 2023 will be “the year of peak investment” in streaming for Paramount with loss improvement expected next year and overall earnings growth expected.

He said that subscription levels, churn and price were contributing to this alongside cost reductions.

Bakish said Paramount was also making progress on deleveraging the company tapping earnings growth and the disposal of assets such as Simon & Schuster, and would benefit to some extent in this regard from the impact of the writers and actors strikes in Hollywood on cash-flow.

On the advertising side, Bakish said there were signs of recovery and pointed out that Paramount was able to take advantage of its strong sports offering, including its Big Ten rights, to offset the negative impact of the actors and writers strikes.

Also on sports, he said that rights auctions would likely “continue to be frothy” but pointed to the strength of a hybrid offering combining sports and entertainment. He said that Paramount would benefit from being “isolated from further bidding activity” for the time being.