Paramount Skydance Beats Revenue Estimates, Misses on Profit Amid Warner Bros. Merger Scrutiny

Paramount Skydance reported mixed second-quarter financial results, with a slight revenue beat overshadowed by a significant profit miss as the company continues to work toward closing its planned $110 billion acquisition of Warner Bros. Discovery.

Quarterly Performance Breakdown

The entertainment company's revenue for the quarter rose 1% year-over-year to $6.91 billion, surpassing analyst estimates of $6.88 billion, according to data from LSEG. However, net profit came in at $41 million, or 4 cents per share, well below the consensus estimate of $109 million, or 9 cents per share.

The results showed a divergence across the company's main business segments:

• Streaming: Revenue grew 9% to nearly $2.5 billion. The flagship Paramount+ service added 2 million subscribers, bringing its total to 81.6 million, boosted by content like the "Yellowstone" sequel "Dutton Ranch" and live sports.
• Studio: The film division reported $1.3 billion in revenue, supported by strong content licensing and sales to third-party services. This helped offset a weaker theatrical slate compared to the prior year.
• Television: The traditional TV unit, which includes CBS and cable networks, saw revenue decline 9% to $3.1 billion.

Merger Faces Headwinds

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The earnings report comes as Paramount Skydance faces a significant antitrust lawsuit from California and 11 other states seeking to block its acquisition of Warner Bros. Discovery. In its earnings statement, the company said the lawsuit "does not reflect the realities of today’s highly competitive entertainment marketplace."

CEO David Ellison reiterated that he fully expects "the transaction to close." The company has agreed to pause the deal until June 2027 at the latest while awaiting a ruling. If the merger does not close by September 30, Paramount could owe Warner Bros. shareholders $7 million a day in "ticking fees," which could amount to as much as $1.7 billion if the deal is delayed until the 2027 deadline.

Outlook and Strategy

Looking ahead, Paramount Skydance projected revenue for the current quarter to be between $6.95 billion and $7.15 billion, with profit before certain items expected to reach between $875 million and $975 million. The company anticipates continued growth in its streaming and studio divisions.

Chief Operating Officer Andy Gordon told Reuters that the company has successfully merged its streaming services onto a single technology platform, which should allow for more effective content promotion. The company also highlighted a new multi-year consumer products deal with Mattel for its Teenage Mutant Ninja Turtles brand.