Paramount, Citing Experiment During Strikes, to Cut Costs Per Title For Films, Series

After the Writers Guild and SAG-AFTRA strikes last year, and with every streaming service now laser-focused on profitability, Hollywood has been keeping a close watch on efforts to adjust content spend, either reducing spend overall, or finding ways to change the cost structure.

At Paramount, reducing that programming spend has now become a top corporate priority, according to CEO Bob Bakish and CFO Naveen Chopra, speaking on the company’s earnings call Wednesday.

“As we move into 2024, we’re focused on producing content more efficiently and magnifying the impact of our slate,” Bakish told analysts.

“2023 presented an opportunity to experiment with alternative lower-cost entertainment programming across our linear networks,” Chopra added, referencing the moves made by the company at CBS and its other networks during the strikes. “The performance we saw gives us confidence we can continue to reduce cost going forward while also delivering a consistent volume of high quality content. And that’s enabled by lower production costs, evolving format mix, and optimizing and sharing content across linear and streaming.”

Paramount is pursuing cost savings across film, TV and streaming, with slightly different strategies for each category.

In film, “we’re improving ROI by lowering the average cost per title,” Bakish said. “This is by balancing high budget tentpoles, with more modest-cost titles like Mean Girls and Bob Marley: One Love, improving the financial return on the overall slate. And we’re off to an excellent start on this.”

And in the linear TV and streaming side of the business Bakish told analysts that “we have an increasingly efficient and targeted development process.”

“We prioritize lower cost formats, like unscripted and those shot abroad, while maintaining our strength in franchises,” he added, noting that the NCIS Australia spinoff “was produced in Australia at a much more efficient price point.”

And that will be a continuing trend at the company:

“You will see us leaning even further into offshore production for our global franchises, including the upcoming London installment of Billions; The new Ray Donovan origin story with The Donovans as well as new series like The Department from George Clooney,” Bakish added.

But while some tentpole franchises will be produced abroad, the company will also be pulling back on locally-produced programming.

Chopra told analysts that the company is “leaning into our global slate and identifying markets where we can slow investment in local streaming content and marketing.”

“We’ve learned that Paramount+ subscribers outside the United States spend nearly 90 percent of their time with our global Hollywood hits, meaning we can keep them engaged while right-sizing our investment in content that does not travel around the world,” the exec added.

As for what it means in overall content spend, Chopra noted that 2024 will see higher content spend than 2023, owing to reduced productions during the strikes, however Paramount does not expect to return to pre-strike levels of production, with Chopra adding that the company is only looking at “spending really only about 50 percent of call it the strike savings back.”

Among the changes are shortened seasons on CBS shows this spring, owing to the strikes (though Bakish added that they are expecting a more traditional fall release schedule).

And the company will take a $1 billion writedown on restructuring and content impairment costs in Q1, with about $200 million tied to restructuring (suggesting around $800 million in charges related to content.