[Music] Paramount is a major film studio and has been for well over a century they were like one of the original big ones over that time many of the most iconic movies ever produced have opened with that graphic of the Stars forming a circle over that mountain I'm guessing most of us have seen that dozens of times well sadly by most measures things have not been going well for Paramount lately this right here is probably one of the more dramatic visuals that I could show you $100 invested in the company in 2019 would now be
worth around $30 showing that people have been losing faith in paramounts part of that lack of confidence stems from the $14 billion of money that they owe which has been slowly decreasing but looking less likely that they will be able to keep up with the payments that include nearly a billion dollars in interest each year in early 2024 it was big news when their credit rating was downgraded and about a month later there was more big news when their CEO Bob bakish left his position that he had held for the past 8 years reportedly it
was due to disagreements with the owners and the board of directors who felt that his business plan was not aggressive enough to get them back to where they needed to be he was then replaced by three Executives from within the company who put together a new plan that they believe could reduce their cost by $500 million per year as part of it they have already shut down their TV studio and laid off about 2,000 people repres representing 15% of their work force but probably the biggest news of all is the pending merger with the production
company sky dance media if it all goes through the leader of sky dance David Ellison will take over at Paramount who happens to be the son of Larry Ellison the co-founder and former CEO of Oracle We Believe to meet this moment that technology and content need to work seamlessly together clearly there's a lot happening here so in this video I want to talk about the three segments of Paramount specifically how they began how they evolved and how things are looking today starting off with filmed entertainment mainly referring to the movies and historically this was their
main business back in the early days of Film Production Paramount was practically leading the industry for example their 1927 movie Wings won the first ever Oscar for Best Picture they had the slogan if it's a Paramount Picture it's the best show in town because they were known for for making quality movies part of the genius business plan at the time was vertical integration they would not just make the movies they would own the company that distributed them and then own the theater that played them which ultimately ended up backfiring that same year that Wings was
released competing Studio Warner Brothers released The Jazz Singer considered to be the first commercially successful talki as they called it you know a movie with talking in Sound by the 1930s talkis were outnumbering silent films and that meant that Paramount had to invest a lot of money into upgrading their theaters that were originally built to display silent films all of this was happening right as the Great Depression was setting in so as you might expect ticket sales were down the combination of factors placed Paramount in a bad position and they were forced into bankruptcy but
as the economy improved and they attracted people back into their theaters utilizing top actors like Bing Crosby Paramount was able to recover for a while in 1948 owning those movies theaters backfired a second time when the Supreme Court essentially ruled that the company that made the movie could not own the theater that showed the movie otherwise that company would have too much control and it would be too much like a monopoly the ruling applied throughout the industry but Paramount was singled out and likely the most affected by it within the year they sold all the
theaters sales were severely reduced because of it and to complicate things even further that happened right as televisions were becoming more common in American Homes which again as you might expect was impacting their theater sales because people were staying at home to watch TV by 1966 Paramount was among the lowest of the film studios when it was acquired by Golf and Western who slowly helped them recover throughout the 1970s Paramount released a bunch of popular movies I would say the most notable ones being The Godfather Parts one and two and I also want to mention
that Michael Eisner served as Paramount's president until 1984 as you may already know at that point he went over to Disney where where he really helped revive things I just wanted to highlight some of the major ups and downs when it comes to Paramount films because it shows how they have such a long-standing and strong foundation in the industry but also how much of their success or failure is based on the Public's response to the movies that they put out today Paramount is typically considered to be the smallest of the big film studios responsible for
less than 10% of total box office sales however in 2022 they did have an abnormally High year mainly because their movie Top gun Maverick was the highest grossing movie of the year that right there was far above anything else that they put out recently and sadly it does not seem to be the ideal movie to try to turn into a franchise with bigger releases each year Paramount's highest grossing franchise of all time by far would be Transformers however that one peaked in 2011 financially anyway with Dark of the Moon and each one has been making
less money and Michael Bay has not been directing them since the fifth one so my point here is unlike some of the other Studios Paramount does not have billion dooll franchises that can generate reliable Revenue each year today their biggest properties are probably Mission Impossible and Sonic the Hedgehog both of which have been doing well just not as well as the company needs them to right now all right I've been talking about movies this entire time because Paramount is mostly known for being a film studio however the Paramount company has gone through a lot of
changes to a point where filmed entertainment only accounts for about 10% of its total Revenue Paramount's biggest of the three segments accounts for 64% of Revenue and that would be TV media I recommend this video I made about Viacom if you want to hear about the details of how it happened but just a quick overview is that a controversial figure named suar Redstone is mostly responsible for joining Paramount with a bunch of television stations in 1987 his family's company National amusements bought Viacom for $3.4 billion who already own multiple cable channels like MTV Nickelodeon and
Showtime later on he would add more channels into the mix like Comedy Central and bet the significant part here is in 1994 Viacom bought the majority of Paramount for about10 billion that was the deal that made Paramount heavily invested in the success or failure of Television it gets tricky but in 1999 viacon became even more invested in television when it bought CBS split apart from in 2006 then reconnected with it in 2019 in 2022 that company was going by the name Viacom CBS but changed it to Paramount Global I know this is one of the
more complex businesses as far as naming and the structure of it but the name Paramount now represents much more than just the film studio I think it is almost ironic that Paramount struggled when television first became popular in the 1950s and now Paramount is struggling because television is becoming unpopular popular and that part I guess is mostly straightforward right people call it cutting the cord when they cancel their TV bundle and sign up for some streaming services instead or just start watching YouTube or whatever that has been the direction of things for a while now
and it has been hurting Paramount TV media Revenue has been steadily declining and that is bad news when TV media makes up the majority of the company in 2024 Paramount wrote down the value of its cable TV business by $6 billion which actually happened the day after War Warner Brothers Discovery did a similar write down for $9 billion so almost across the board right now television channels are not doing well I think it is interesting that when Viacom and CBS first merged in 1999 the reported value of that combined company was $80 billion when they
merged the second time 20 years later the reported value of the new company was now $30 billion and today the value of that company on the stock market is now down to around 8 billion now since the world seems to be transitioning away from traditional television and there is probably not much that Paramount can do about that it seems like they may want to transition away from it as well and invest in some other areas Paramount's final and newest segment is direct to Consumer consisting of multiple streaming platforms like Pluto TV that they bought back
in 2019 for $340 million but mainly Paramount plus it was launched in 2021 as a retooled version of CBS all access and finally I can show you some more uplifting graphs here like how Paramount plus has gained 77 million subscribers I mean this is their fastest growing segment by far it is basically their only growing segment with Revenue more than doubling since the service was launched now accounting for more than a quarter of their business I know this all seems so great so far but there are some major downsides to it for one 77 million
subscribers is a large number obviously but maybe not large enough back when they changed their name in 2020 2 they said that their goal was to reach 100 million Paramount plus subscribers by 2024 so clearly they are not meeting their own expectations 77 million subscribers is actually trailing far behind some of the bigger platforms like Netflix who recently surpassed 300 million also if you remember Paramount has a lot of debt and has been desperately searching around for places where they could cut cost so they don't exactly have the same financial means to invest in content
that some of the others may have in fact when you compare just the stock prices between the two Netflix is almost 50 times more valuable so I just want to convey how far back Paramount plus is behind the industry leader but probably the most concerning part of all of this is the fact that Paramount plus has not made any money yet they have invested billions of dollars into the service without any tangible return now the losses have been shrinking and they claim to be on track to become profitable very soon but there is a lot
of uncertainty here it is not the ideal situation when your most profitable segment is shrinking and your fastest growing segment isn't profitable and there's a lot of debt that has to be addressed so it is going to be interesting to follow where everything goes from here let me know in the comments what do you think about Paramount are all of these recent moves going to be enough to pull them out of the situation or do you think that they will continue to struggle what do they have to do to revive the business we have seen
them recover many times before so how can they make it happen again I do want to say that there have been other factors working against them as well like the $50 million Severance to former CEO Bob Bish or the impact of the recent strikes but the video focused more on what I believe to be the core of the issues also I'm curious what is your favorite Paramount Property I realize a lot of us might just think of them as that graphic before movie but Paramount has been behind a lot of iconic stuff and any other
thoughts you have about Paramount or anything else in this video leave them in in the comments I'd like to hear what you have to say thank you for watching [Music]
