Paramount Skydance Investor Briefing: Q3 2025 Performance and Strategic Outlook

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1.0 Introduction: The Inaugural Quarter of the New Paramount Skydance

This briefing presents the financial results and strategic direction of Paramount Skydance Corporation for the third quarter of 2025. This report marks a significant milestone, detailing the performance of the first 100 days since the merger of Paramount and Skydance created this new entity. Under new leadership, the company has established a clear vision to transform itself into the "global home of world-class storytelling." This document outlines our initial progress against this vision, analyzes our financial results, and details the strategic path forward, all of which are framed by the company's three "North Star" priorities. These priorities form the strategic architecture for the new company and are detailed below.

2.0 Core Strategic Framework: The "North Star" Priorities

The "North Star" priorities represent the strategic foundation upon which Paramount Skydance is being built. These three pillars serve as a unified focus for all investment, innovation, and resource allocation across the enterprise. They are designed to ensure every decision is aligned with the core objectives of driving sustainable, long-term growth and maximizing shareholder value in a rapidly evolving media landscape.

Our strategic framework is defined by the following priorities:

1. Investing in growth businesses anchored by creative engines and exceptional storytelling. We are committed to increasing our creative output with more high-quality films, television series, sports, and news to expand our global audience.
2. Scaling the direct-to-consumer business globally. Our primary focus is on rapidly and efficiently growing subscribers, engagement, revenue, and profitability for our streaming services, led by Paramount+.
3. Driving efficiency enterprise-wide with a focus on long-term free cash flow generation. We are implementing a disciplined approach to cost management and resource allocation to fund growth investments and deliver increasing margins.

These guiding principles provide the lens through which we evaluate our performance and make strategic decisions, starting with the tangible financial results of our inaugural quarter.

3.0 Q3 2025 Financial Performance Analysis

This section provides a detailed analysis of the company's third-quarter financial results. The reporting for this period is complex due to the timing of the merger, which requires presenting results in "Predecessor" (July 1 - August 6) and "Successor" (August 7 - September 30) periods. To provide the clearest possible year-over-year comparison, this analysis focuses on pro forma results, which combine these periods and include Skydance's pre-merger contributions.

The table below summarizes the key pro forma financial results for Q3 2025 compared to the prior-year period. While headline Filmed Entertainment revenue growth was strong, it was driven by the consolidation of Skydance's pre-merger revenue, which masks the underlying weakness of the 2025 Paramount theatrical slate.

Metric	Q3 2025 (Pro Forma)	Q3 2024 (Predecessor)	Year-over-Year Change
Total Revenue	$6.7 billion	$6.7 billion	Flat
DTC Revenue Growth	+17%	-	-
TV Media Revenue Growth	-12%	-	-
Filmed Ent. Revenue Growth	+30%¹	-	-

¹Primarily due to the consolidation of Skydance licensing and other pre-merger revenue.

Profitability metrics, while complex due to the reporting periods, show Adjusted OIBDA of 297 million** for the Predecessor period and **655 million for the Successor period. Similarly, Free Cash Flow was -207 million** in the Predecessor period and **222 million in the Successor period. These figures include payments for restructuring and transformation initiatives undertaken to realign the new organization.

This high-level financial overview sets the stage for a more detailed examination of each of our core business segments.

4.0 Business Segment Deep Dive: Strategy and Performance

To fully appreciate the company's trajectory, it is essential to understand the unique performance and strategic role of each business segment. This section evaluates our three core divisions—Direct-to-Consumer, TV Media, and Filmed Entertainment—highlighting key quarterly results and outlining the forward-looking initiatives designed to drive growth and value across the portfolio.

4.1 Direct-to-Consumer (DTC): The Primary Growth Engine

The DTC segment is our top priority and primary growth engine. In Q3, the segment delivered strong results, with revenue growing 17% year-over-year on a pro forma basis. This was driven by a 24% increase in Paramount+ revenue, which now accounts for over 80% of our DTC business. We added 1.4 million new Paramount+ subscribers during the quarter, bringing our global total to 79.1 million.

Our strategy is focused on aggressively scaling this business through key investments and initiatives:

• Content Investment: We secured a landmark seven-year exclusive media rights deal with the UFC, a "once-in-a-decade opportunity" that provides year-round marquee events to drive engagement. This is complemented by major deals with top creative talent, including the creators of South Park—the top acquisition driver on Paramount+ in Q3—the Duffer Brothers (Stranger Things), and a new agreement with Zuffa Boxing.
• Programming Strategy: We are shifting to a more balanced, year-round programming strategy. By spreading out tentpole releases, we aim to drive higher, more consistent engagement and reduce the subscriber churn that has historically been concentrated around the traditional sports season.
• Monetization and Growth: We are executing a concerted strategy to drive ARPU growth and enhance subscriber profitability. This includes planned price increases for Paramount+ in the US, Canada, and Australia in early 2026, coupled with a strategic shift away from "low-margin subscriptions" and certain "hard bundles" to prioritize quality growth over quantity.
• Technology Overhaul: We are undertaking critical upgrades to our streaming platforms. A key initiative is the plan to implement a "unified technology stack" for Paramount+ and Pluto TV by mid-2026, which will significantly enhance platform performance, improve the user experience, and drive cost efficiencies.

4.2 TV Media: Maximizing a Flagship Asset Amidst Structural Headwinds

Our TV Media segment performance reflects both the enduring strength of the CBS brand and the structural challenges facing the broader linear ecosystem. Overall segment revenue declined 12% year-over-year, driven by decreases in advertising (-12%) and affiliate revenue (-7%). The advertising decline was exacerbated by an eight percentage point headwind from the absence of political ad spending compared to the prior-year period.

Despite these headwinds, CBS remains a "flagship asset" and a powerful driver of profitability. Its content continues to perform exceptionally well, with "The NFL on CBS" recording its best October viewership in a decade and its best season-to-date viewership since 1998. This highlights the brand's immense value in our portfolio.

Regarding our cable network portfolio, which includes iconic brands like Nickelodeon, MTV, BET, and Comedy Central, our strategy is not to divest but to transform. As President Jeff Shell stated on the earnings call, "we are not going to spin off cable assets." Instead, our focus is on adapting these powerful brands for a digital future, ensuring they support and contribute to our overall global streaming strategy.

4.3 Filmed Entertainment: A Turnaround and Reinvestment Strategy

Management has acknowledged that the "2025 film slate has underperformed," with most titles expected to "miss their lifetime profit targets," creating a clear mandate to reinvigorate the studio. The revitalization plan is not merely about increasing output but about applying a proven creative and operational philosophy from Skydance, where "quality is the best business plan," to reinvigorate Paramount's slate.

Our strategic goal is to grow theatrical output to "at least 15 films annually beginning in 2026." This ramp-up is supported by new creative partnerships with top-tier talent like director James Mangold and a landmark collaboration with Activision to develop a feature film based on the Call of Duty franchise. These moves signal a renewed commitment to making Paramount Pictures a consistent producer of high-quality, commercially successful films that will resonate with global audiences.

This comprehensive analysis of our business segments provides the context for our forward-looking financial targets.

5.0 Financial Outlook and Medium-Term Targets

This section outlines Paramount Skydance's official financial guidance and long-term objectives. These targets reflect management's confidence in the company's transformation plan, which carefully balances significant reinvestment in our growth engines with a disciplined focus on enterprise-wide efficiency and expanding profitability.

Our near-term financial projections are as follows:

Guidance Period	Key Projections
Q4 2025 Forecast	Total Revenue: $8.1B - $8.3B<br>Adjusted OIBDA: $500M - $600M
FY 2026 Forecast	Total Revenue: $30 Billion<br>Adjusted OIBDA: $3.5 Billion

These forecasts are underpinned by a clear set of medium-term financial goals:

• Transition the company to sustainable topline growth driven by leadership in the DTC segment.
• Deliver increasing margins and growing Free Cash Flow conversion.
• Manage the balance sheet to quickly regain investment-grade debt metrics by the end of 2027.

To achieve these goals, we have increased our run-rate efficiency target from $2 billion to "at least $3 billion," with over $1.4 billion in savings to be executed by year-end 2025. This upsized efficiency target is not merely a cost-cutting exercise; it is the primary funding mechanism for the company's strategic reinvestments, including over $1.5 billion in incremental programming spend designed to fuel the DTC and Filmed Entertainment growth engines.

Our capital allocation priorities are clear and disciplined:

1. Invest organically for long-term profitable growth in our business.
2. Consider M&A where it accelerates our path towards achieving our North Star and other financial goals.
3. Manage our balance sheet to regain and then maintain investment grade credit metrics.
4. Return excess cash to shareholders beyond our current dividend once we reach investment-grade credit metrics.

These financial targets and capital priorities form the quantitative backbone of our investment thesis.

6.0 Conclusion: The Investment Thesis for the New Paramount Skydance

This inaugural quarter reveals a clear thesis: Management is executing a disciplined, multi-year transformation, leveraging aggressive cost efficiencies to fund strategic reinvestments in its high-growth DTC and content engines. We are prioritizing the scaling of our global streaming business, executing a decisive turnaround at our iconic film studio, and maximizing the value of our flagship broadcast assets. This is a foundational period designed to build a more focused, profitable, and technologically advanced media leader positioned for sustainable long-term value creation.