Paramount CEO David Ellison reiterated his faith that the $111bn Warner Bros Discovery (WBD) merger will close in a Q2 earnings call of mixed results on Tuesday, shortly after a US federal judge scheduled an antitrust trial for spring 2027.
“We remain highly confident this transaction will close,” Ellison said, adding that the company was open to settling out of court, or going through the trial against 12 US states and Writers Guild of America that will start on March 2, 2027. “We believe we’ll win a trial.”
Given that the scheduling means the transaction cannot close before September 30, executives said the “ticking fee” that Paramount must pay to WBD shareholders will amount to approximately $650m a quarter. That equates to approximately $1.1bn from October 1 to March 2, 2027.
On top of that, the company is on the hook for a regulatory break-up fee of $7bn to WBD should the merger fail to close, and has already paid Netflix a $2.8bn break-up fee.
Ellison did not waste an opportunity to express his commitment to theatrical, reiterating comments in an op-ed published in the New York Times earlier in the day that Paramount had “nearly doubled our theatrical slate from eight films last year to 15 and greenlit 40 new or returning series for Paramount+” and promising 90 television series in 2026.
The CEO discussed the application of AI in Paramount’s storytelling future, painting a future where users can hold conversations with characters from Paramount properties like Star Trek and PAW Patrol. That said, he was “bullish” on stories written by humans and indicated a future of complimentary human- and AI-generated content.
For the second quarter Paramount reported a 1% increase in total revenue to $6.9bn fuelled by studios and streaming growth, with Paramount+ achieving its best quarter for retention and adding approximately two million members to reach 81.6m worldwide.
Operating income for the period ending June 30 amounted to $475m for a 6.9% profit and adjusted EBITDA came to $1.1bn for a 15.9% margin on a 27% year-on-year growth.
Streaming revenue increased by 9% to $2.5bn led by 16% revenue growth at Paramount+, driven by 6% subscriber growth as viewers tuned in to World Cup rights in six Latin American countries, Dutton Ranch, and UFC.
Streaming advertising revenue grew 8% year-on-year and Paramount+ ad revenue grew more than 30% in the quarter. Paramount completed its integration of BET+ into Paramount+, which combined with Showtime declines to “a modest headwind to total DTC growth”. Adjusted EBITDA came to $366m for a 14.8% profit, up 44% year-on-year.
Studios revenue grew 16% to $1.3m, with the Q2 highlight coming from Scary Movie, which earned $104m in North America and most of its $123m international gross within the quarter.
Linear television continued to decline as it does across the industry and the segment saw a 9% year-on-year revenue drop to $3.1bn.
Writing in the NYT piece earlier in the day Ellison argued that the underlying fears around the merger were not so much centred on antitrust concerns as they were on news. “The issue is whether I can be trusted as a steward of Warner’s CNN,” the owner of CBS wrote, adding: “In an age when so much of what fills our screens is machine-generated or engineered to enrage, journalism from real reporters matters more than ever. That is the work I intend to pay for, patiently, for a long time.”
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