Paramount Global

Good morning, my name is Charlie and I'll be the conference operator today. At this time, I'd like to welcome everyone to the Paramount Global Q1 2022 Earnings Conference Call. All lines have been muted to prevent any background noise. After the speaker's remarks, there will be a Q&A session. If you'd like to ask a question during this time, simply press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. In order to get to as many questions as possible, we ask that you please limit yourself to one question. At this time, I would now like to turn the call over to Anthony DiClemente, Paramount Global's EVP, Investor Relations. You may now begin your conference call.

Good morning, everyone. Thank you for taking the time to join us for our first quarter 2022 earnings call. Joining me for today's discussion are Bob Backish, our president and CEO, and Naveen Chopra, our CFO. Please note that in addition to our earnings release, we have trending schedules containing supplemental information available on our website. I want to remind you that certain statements made on this call are forward-looking statements that involve risks and uncertainties. These risks and uncertainties are discussed in more detail in our filings with the SEC. Some of today's financial remarks will focus on adjusted results. Reconciliations of these non-GAAP financial measures can be found in our earnings release or in our trending schedules, which contain supplemental information, and in each case can be found in the investor relations section of our website. And now I will turn the call over to Bob.

Good morning, everyone. I'm excited to update you on our results for the first time since we unveiled the new Paramount brand and the Paramount vision in February. As we said then, the Paramount brand represents the best in media and entertainment, and we pride ourselves on delivering superior content across platforms to fans all around the world. Today's results show we're already executing on that vision. We have strong momentum across our business from our fast growing streaming services and top box office films to our highly rated television programming. And we're on track to deliver against the long term goals we laid out at our recent investor event. I think you will see this as Naveen walks you through the details of our segment financial shortly. But first, I want to talk to you about the key to our success, our differentiated playbook. A playbook anchored in the broad positioning only Paramount holds in the market. A playbook comprised of four self-reinforcing elements. First, our broad collection of exciting, engaging content. Second, our diversified streaming business model, offering free ad supported and paid subscription options. Third, our wide-ranging set of platforms, combining streaming with broadcast, cable, and theatrical. And fourth, our truly global operating footprint. This differentiated playbook is what makes Paramount unique. And it is a playbook which was designed from the start to leverage our specific asset base to create an advantage streaming model. One with a superior financial outlook relative to pure play legacy streamers. As you'll hear today, we drew on these strengths to drive consumption and monetization across our business in Q1. Total content consumption has grown to 14 billion hours on our owned and operated platforms. We're also seeing continued total company revenue growth, excluding the impact of the Super Bowl. And streaming momentum is clearly evident, where Paramount Plus led the way, adding 6.8 million subscribers globally, once again making it one of the fastest growing streaming subscription services in the quarter, and bringing our total D2C sub-base to more than 62 million. We also continue to dominate the free ad-supported streaming TV space, with Pluto TV growing to 67.5 million monthly active users globally. With that, let me break down how our four key differentiators, broad content, diversified streaming business model, wide range of platforms, and global operating footprint, drove growth in Q1 and will continue to drive performance through the rest of the year and beyond. First, as always, is content. Paramount's diversity and quality of content sets us apart from the competition. We've got movies, scripted and unscripted originals, kids and family, news, sports, and events. We've got animation and live action. And we serve audiences of all ages, all over the country, and all around the world. And you can see this breadth in our success this quarter. In the U.S., Paramount is the only film studio to have four films open number one at the box office this year, with Scream, Jackass Forever, The Lost City, and Sonic the Hedgehog 2. And next up, we have the hotly anticipated Top Gun Maverick for Memorial Day weekend. In television, CBS is once again the most watched network. For the 14th consecutive season, This, despite not having the Super Bowl or the Olympics. Our international broadcasters are also strong, as Telefe and Television continue to be number one in their markets, and share for Channel 5 in the UK is up 10%. And Pluto remains the number one free ad-supported streaming TV service in the US by a significant margin. and you now see the incredible Paramount content engine definitively driving streaming, particularly at Paramount+. This quarter, we saw engagement go up in all content verticals year over year, and movies and specials, scripted original series, and kids and family each more than doubled. Here are just a few of the top performance from Paramount Plus in the quarter, starting with movies. Paramount movies are a powerful driver for Paramount+, Films were the number two content vertical in driving new subscribers, and we saw triple-digit lifts in number of households viewing and hours streamed year over year. Our approach to Paramount film releases directly following their theatrical window brought Scream and Jackass Forever to the service in March, where our 45-day fast-follow model continued to deliver strong metrics, including strong ROI. and I'm excited to see Lost City and Sonic 2 coming to the service in the next few weeks. Worth noting, Sonic 2 is outperforming Sonic 1, and Paramount and Sega are also developing a third Sonic theatrical film and a first-ever original Sonic series for Paramount Plus next year. All of this content will make Paramount Plus the home for this incredibly popular franchise. Live sports also continued to perform for Paramount+. The NFL playoffs grew strongly year on year. And in April, the Masters became the most streamed golf event ever on Paramount+. And for fans of the beautiful game, we are now in UEFA season, which will include Paramount+, and CBS Sports showcasing the highly anticipated UEFA Champions League final featuring the top soccer clubs in Europe at the end of this month. The first quarter was also huge for Paramount Plus scripted originals. The compelling and incredibly popular Yellowstone origin story 1883 from creator-producer Taylor Sheridan was once again a juggernaut. It holds the top spot for acquisition and is the number one streaming original ever for the service in terms of new domestic subscribers and engagement. Our latest Star Trek installment, Star Trek Picard, also thrilled fans in the quarter. and building on the strong performance of Picard and Star Trek Discovery, we're excited to bring the debut of Star Trek Strange New Worlds to audiences this week. The Quarter also saw our best performing Spanish language scripted series yet. In fact, Beyond Voice had the strongest acquisition in streaming performance across all original international titles to debut on Paramount Plus US to date. Filmed in Mexico, The show is a shining example of the power of our global production capabilities. And then there's Halo. This epic adaptation bringing to life the action and adventure of the immensely popular Halo game series is a huge global hit. In fact, it became the most streamed original series premiere in its first weekend of release on Paramount+. And rest assured, there's more coming. including Taylor Sheridan's Tulsa Kings starring Sylvester Stallone and the next season of Mayor of Kingstown. Another season of Seal Team, a Beavis and Butthead movie and series, and a lot more kids and family programming, including season two of our SpongeBob spinoff, Camp Coral. That plus a packed reality slate with hits like season three of the Challenge All-Stars. Our second differentiator, is our broad streaming business model. While many legacy streamers are rethinking their paid-only models, our mix of free ad-supported and paid subscription streaming options has been a hallmark of our strategy from the start, offering viewers the freedom to choose the plan that's right for them and giving us access to the largest global total addressable market while providing the benefit of dual revenue streams. With another strong quarter, Pluto TV continues to be a global leader in free ad-supported TV. The service continues to grow in users, engagement, and revenue. Pluto launched more than 102 new channels internationally in the quarter for a total of now more than 1,000 global channels of great entertainment on the platform. Global TV viewing hours have grown by double digits year over year. It's worth noting that one of the things that makes Pluto TV so special is that rather as seeing it as strictly an alternative to other services, many viewers see it as complementary to linear and paid streaming. In fact, 80% of Pluto's customers also subscribe to paid streaming services. Now, we all know people consume content on a variety of platforms. Some shows are worth the subscription so you can watch them the moment they drop. Some movies are meant to be seen on the big screen. And for big games, you just have to watch it live on broadcast TV or Paramount+. That's why our broad set of platforms is a powerful third differentiator. Our deep expertise and expansive reach across theatrical, broadcast, cable, and streaming gives us multiple advantages the legacy streamers don't have. Strong promotional platforms to market and launch content. and multiple revenue streams to generate return on every dollar of content investment. And remember, they created the massive libraries we have that are now generating significant incremental consumption at incredibly low cost. We see the power of the multiplatform advantage in the performance of our films. Our four number ones, for example, opened in theaters backed by promotion across the entire company. and we were able to springboard off the theatrical marketing to drive performance as titles launch on Paramount+. You saw this approach with Scream and Jackass, and you will see it in the coming weeks with Lost City and Sonic 2. In addition, as I mentioned with Sonic, we will also launch spin-offs for Paramount+, to further strengthen franchises and deepen fan bases. And based off the success of Jackass Forever, we're working with the creators to continue the partnership with a new series, bringing even more ridiculous antics straight to Paramount+. We also see the power of the multi-platform advantage in the performance of our top linear TV programs. In addition to being the most-watched network in America, CBS continues to be a strong driver of Paramount streaming services. Many of the cornerstones of our CBS lineup, fan favorites like Ghosts, NCIS, and FBI, are also among the strongest performers in streaming. To date this season, CBS has been the source of 17 of the top 30 titles on Paramount+. And on Pluto TV, CBS content accounts for 10 of the top 30 series in the quarter. This multi-platform advantage also benefits our advertising partners. When advertisers see the massive scale of our linear and streaming offerings, including services like our Paramount+, Essential tier, and our industry-leading Pluto TV fast service, they instantly recognize that we provide access to a highly valuable, diverse audience in a manner and scale that's hard to match. Through IQ, our integrated suite of streaming and creative ad solutions, we give advertisers turnkey access to 80 million full episode monthly unique viewers. This is a powerful offering in the marketplace, and no one can deliver an audience from across a range of platforms in quite the same way, particularly when we package that with linear TV. The fourth and last major differentiator that sets us apart is our international operating scale. We don't just license outside the United States like some companies. Paramount is a truly global operating company with teams on the ground in more than 30 markets and a dozen studios creating original content around the world. This international presence is unquestionably a powerful advantage when it comes to streaming. And we have moved quickly to benefit from it in a number of meaningful ways. Through our international operations, we have strong relationships, which we have quickly deployed to drive streaming distribution. And we have an innovative distribution strategy, which comprises a mix of direct consumer and hard bundles with distribution industry leaders like Sky and Canal Plus in Europe. These hard bundle relationships have compelling characteristics, quickly unlocking material volumes of subscribers at zero acquisition cost and very low churn. And they help maximize reach by complementing our higher ARPU direct channels and subscribers we acquire through other streaming platforms. At the same time, our local broadcasters provide a powerful channel for promotion and content synergies. which is also additive to penetrating the huge and growing total addressable market outside the United States. All of this is feeding streaming market expansion. This month, we are launching a new version of Pluto in the Nordics in a commercial partnership with Nent. We bring a global platform and global content with Nent, a market leading Nordics broadcaster, adding local content and local ad monetization capabilities. We believe this will be a compelling growth model, and we see more like this to come as we work with local broadcasters in markets where we don't have a broadcast presence. That said, our global growth is led, of course, by Paramount+. In 2021, we launched Paramount+, in 25 markets across Latin America, Canada, and Australia. In 2022, we're continuing to expand to more of the biggest markets in the world. Next up is the launch of Paramount Plus in the UK and South Korea in June. And we'll be in more major European markets, including Italy, Germany, France, Switzerland, and Austria in the second half of the year. We will also begin to roll out Sky Showtime, our exciting, capital-efficient joint venture with Comcast. Sky Showtime will bring a rich offering of IP from Paramount and NBC Universal to territories encompassing 90 million homes primarily in Eastern Europe. By the end of the year, our combined SVOD premium services, including Paramount Plus and Sky Showtime, will be available in more than 60 markets with more than 60 partners. In addition, we're announcing today that Paramount Plus will be distributed in India via our joint venture Viacom18's platforms in 2023. Note that Viacom 18 just entered into an agreement related to a significant third-party capital infusion and is poised to become an even more significant streaming player in the market. In closing, by going broad on content, on streaming models, on platforms, and on global reach, we have written and are executing on a differentiated playbook to grow a diversified entertainment company and build a financially attractive business with healthy long-term margins. With that, I'll hand it off to Naveen to talk about the results we're seeing this quarter and the path toward continued growth and even greater heights. Naveen? Thank you, Bob, and good morning, everyone.