Paramount Global

Good morning or good afternoon all. My name is Adam and I'll be the conference operator today. At this time, I would like to welcome everyone to Paramount Global's Q3 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 the telephone keypad. If you would like to withdraw your question, please press star followed by two. In order to get as many of your questions as possible, we ask that you limit yourself to one per person. 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 third 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. Reconciliation of these non-GAAP financial measures can be found on 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, and thank you for joining us. Today, I'll share some highlights from our third quarter and give you my perspective on the road ahead. Naveen will then take you through the numbers, and then we'll open it up for questions. In the third quarter, Paramount continued to execute on our differentiated strategy to deliver compelling entertainment experiences for the world's consumers while creating value for our partners and shareholders. That strategy is firmly grounded in three key strengths. First, our broad range of popular content. Second, our unmatched array of platforms. And third, our truly global operating reach. I'm happy to report that our robust content engine fired on all cylinders in the quarter, producing a broad range of captivating stories with engaging characters and settings for lovers of content of all kinds. As the only media company with five different platforms, we've delivered this content to an exceptionally large consumer market. Our businesses include the number one broadcast network, CBS, a portfolio of industry-leading cable networks, many of which are number one across their respective demographics, like Nickelodeon and BET. The number one free ad-supported streaming TV service in the U.S., Pluto TV, a rapidly scaling subscription service, Paramount+, and a Hollywood studio with six number one hits this year, Paramount Pictures. And for us, it's not just about the U.S. Our global operating footprint includes the largest number of broadcast homes in the world, content production capabilities across Latin America, the U.K., Europe, the Middle East, Africa, and Asia Pacific, cable network reach in virtually every key market, and deep commercial relationships. And once again, these assets delivered. In the third quarter, we sustained our strength in TV, grew nicely in film, and drove rapid growth in streaming around the world. That said, as I think everyone is aware, this is a complex environment and economic period, and our results for the quarter do reflect some macroeconomic headwinds that are affecting our industry. For us, however, Managing through near-term volatility does not mean radically diverging from the strategy that is producing real momentum and positioning Paramount to win in the long run. As we execute, however, we are also taking aggressive, precise actions to gain additional efficiency across our cable networks, streaming platforms, advertising sales, marketing, and global operations. These will yield cost savings next year as well as long-term strategic benefits. And we're taking advantage of this current market to accelerate these efforts. With that, let's take a closer look at the quarter and our plans ahead. It all starts with our world-class content. With a powerful mix of scripted and unscripted originals, hit movies, news, and live sports, we've got something for everyone in the household. Let's start with the incredible run at Paramount Pictures this year. I can't talk about producing great content without mentioning our theatrical releases. where Paramount Pictures has dominated with six number one films. That string of hits is led, of course, by Top Gun Maverick. It's now the fifth largest domestic release of all time and the only film in history to be number one on Memorial Day weekend and number one on Labor Day weekend in the United States. It was the number one title in the U.S. in digital home entertainment, its first week of release as well. And we know it will continue to draw big audiences once it comes over to Paramount Plus later in the year. And now, our horror thriller Smile, released at the end of September, has hit it big as our sixth number one box office film of the year. Made for just $17 million, it's now on track to gross over $200 million globally. Smile will also be the next example of our 45-day theatrical-to-streaming fast-follow strategy, which gives fans the chance to have a big-screen experience before enjoying at home on Paramount+. and which gives us a very compelling return on investment. Next, we'll move to broadcast and CBS, 2022's number one broadcast network, whose fall season is off to a strong start. On the entertainment side, we have seven of the top 10 shows and more shows in the top 30 than all other broadcast networks combined. This performance is seen in returning favorites, where close to 11 million viewers tuned to the season two premiere of Ghost, for example, and is seen in new shows like Fire Country, the season's number one new show. Fall also means football. And for us, that means the NFL on CBS and on Paramount+. The 2022 season kicked off in September with viewership off to its best start on CBS since 2015 and its best start ever on Paramount+. College football is off to a strong start as well. And in August, we announced Paramount will air Big Ten football games on CBS and on Paramount Plus that will kick off next season. That means the biggest and best in college sports will continue to call Paramount home through the end of the decade. We don't just have American football. We've got European football, too. In August, we extended the rights to air the UEFA Champions League, keeping this marquee property on Paramount Plus and CBS for the next eight years. And I'm thrilled we did. As so far this season, Paramount Plus had dramatic growth in average audience, in streaming minutes, and in total households. So the outlook is strong, and we are excited that some of the best soccer in the world will keep kicking it on Paramount Plus. With more games and an expanded playoff format, the deal creates an even more efficient investment for many years to come. Paramount Plus also saw strong acquisition in the quarter from our slate of original series, like SEAL Team, and from movie releases, including the psychological horror film Orphan First Kill and the triumphant return of our favorite losers in Beavis and Butthead Do the Universe. This powerful array of popular content is the fuel that continued to drive growth in subscriptions across our streaming platforms in the third quarter. Total global direct-to-consumer subscribers rose to nearly 67 million in the third quarter. And the key driver here was once again Paramount+. which attracted 4.6 million new subscribers, reaching 46 million total subscribers for our flagship streaming service. In fact, year to date, Paramount Plus has led the industry in U.S. signups and gross subscriber additions, according to Antenna's September 2022 report. Year-over-year revenue from Paramount Plus grew 95%. Importantly, these third quarter numbers only begin to reflect the impact of the exciting, first-of-its-kind partnership with Walmart. As you probably know, we have a decades-long relationship with Walmart in merchandise and consumer goods. So when the world's largest retailer was looking to enhance its Walmart Plus package with a streaming offering, we are thrilled they saw a natural fit with Paramount Plus. Starting in September, Walmart Plus members could begin opting into a Paramount Plus essential streaming plan at no extra cost. Early results have been very encouraging. Paramount Plus has great potential to accelerate Walmart Plus growth and retention, and we expect the partnership to grow as the marketing program ramps up, including an in-store presence for the more than 100 million retail customers who pass through Walmart in the U.S. every week. Innovative partnerships like this are an important element of our pursuit of the largest total addressable market, and it's a strategy we've taken global. In the third quarter, we joined forces with powerful partners to debut new streaming offerings in several international markets. We celebrated the Italian launch of Paramount Plus in September in partnership with Sky Italia. And later this year, we'll introduce Paramount Plus in Germany, Austria, and Switzerland with Sky Deutschland, and in France with Canal Plus. And we continue to strike these kinds of innovative partnerships. In the UK, we are pleased to announce a new multi-year, multi-faceted distribution agreement with Virgin Media. Under that agreement, Paramount Plus will debut on Virgin TV in 2023, and Pluto TV will be more widely distributed on Virgin TV 360 and Stream Service. In the third quarter, we also launched Sky Showtime, our joint venture with Comcast, in Denmark, Finland, Norway, and Sweden. For us, this partnership represents a capital-efficient way to go after smaller markets. For the viewers, it means access to the best entertainment from the entire Paramount family, as well as from NBC and Universal Studios. Pluto TV, already the top free ad-supported streaming TV service in the U.S., also continues to go global. In September, we announced that Pluto TV will launch in Canada on December 1st. Here, too, we have joined forces with another long-standing partner, Chorus Entertainment, who bring local content Canadian audiences love and a powerful local ad sales channel to drive monetization. Of course, we are all aware of the ongoing macroeconomic pressures that continue to affect our industry and the ad market in particular. As we navigate this period, Paramount will continue to rely on the fiscally disciplined approach that has been our advantage in good times and bad. We have always been mindful of cost management as a company, and we are now taking additional steps to improve efficiency across our organization. For example, we recently announced our intention to reorganize Showtime Networks, Showtime OTT, and Paramount Television Studios into other parts of the company. This will further align our studios, network, and streaming operations, in ways that enable significant cost reductions and advance our strategic agenda. We're also doing work with respect to international operations, marketing, and ad sales. And speaking of ad sales, we know that advertisers see us as a cornerstone marketing solutions provider in the US. They want to be where the top hits are, and even more so in complex economic times. And our combination of the number one broadcast network, a rapidly growing streaming service, and the number one free ad-supported streaming TV service offer a reach and frequently proposition that no one else can match. In the end, what matters most to our advertisers is the same thing that matters most to our viewers, the product on the screen. That's why we couldn't be more excited about the sensational content coming to Paramount Plus and our other platforms in Q4. Of course, there's the much-anticipated return of the biggest hit on television, Paramount Network's Yellowstone. And through coordinated cross-platform marketing, we will capitalize on the excitement around the premiere of the fifth season to help boost the launches of two new Taylor Sheridan creations on Paramount+. None other than Helen Mirren and Harrison Ford will lead 1923, the next installment of the thrilling origin story of the Yellowstone saga. And Sylvester Stallone is premiering in Tulsa Kings. about a mafia capo building a crew far, really far, from his old mob family. We're also excited to premiere the revival of the popular FBI drama Criminal Minds this quarter, exclusively on Paramount+. With the help of several members of the beloved original cast, we are looking forward to activating the franchise's large existing fan base, which we see paying big dividends for Paramount+. As I mentioned earlier, our big theatrical hits Smile and Top Gun Maverick will come to Paramount Plus in the fourth quarter. And everywhere Maverick goes, it just crushes. So we think that'll be a big draw on Paramount Plus as well. All in all, we expect all these new titles and highly anticipated events will entice more and more subscribers to Paramount Plus in the coming months. In closing, by delivering extraordinary experiences for our consumers, we will continue to demonstrate the long-term value of our broad multi-platform models. At the heart of it, that's the real proposition behind our strategy. And with the momentum we're seeing in the year and the quarter, it's clearly working. With that, I'll turn it over to Naveen to walk you through a more detailed look at our third quarter results. And I look forward to continuing the conversation in our Q&A.