August 9th 2024.
In a recent announcement, media giant Paramount Global shared its plans to reduce its US-based workforce by 15 per cent, resulting in the loss of approximately 2,000 jobs. This strategic decision is part of a larger cost-cutting initiative that aims to improve the company's financial standing.
According to Chris McCarthy, co-chief executive officer of Paramount Global, the job cuts will target two specific areas - redundant roles in marketing and communications, as well as finance, legal, technology, and other support functions. These changes will be implemented in the coming weeks and are expected to be completed by the end of the year. McCarthy acknowledged the difficulty of these decisions but emphasized the necessity for the company's future success.
The second-quarter earnings conference call, as reported by Xinhua news agency, revealed significant financial challenges for Paramount. The company reported a staggering operating loss due to a $5.98 billion write-down on the value of its cable TV networks. This devaluation is connected to Paramount's impending acquisition by Skydance Media, which is set to be finalized by September 30, 2025.
The decision to reduce its workforce is not new for Paramount, as it was previously announced as part of a cost-saving plan by the company's three co-chief executive officers. This plan aims to cut annual costs by $500 million in preparation for the upcoming merger with Skydance. The need for this restructuring is driven by declining revenues in Paramount's traditional media operations. In the second quarter alone, overall revenue fell by 11 per cent to $6.8 billion, with the company's TV segment experiencing a 17 per cent decrease in revenue.
This decline in TV revenue is attributed to a decrease in advertising revenue by 11 per cent and a 5 per cent drop in affiliate and subscription fees. These numbers reflect the challenges faced by traditional media companies in an increasingly digital landscape. However, amidst the financial turbulence, Paramount's streaming business proved to be a bright spot after turning a profit for the first time. In the second quarter, streaming revenue increased by 13 per cent, and subscription revenue grew by 12 per cent compared to the previous year, as stated in the earnings report.
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