Paramount is making a major change to its linear and streaming businesses, merging Paramount+ and Showtime in both areas.

In connection with the changes, executives warned of likely layoffs and changes to programming to follow in the coming weeks.

Paramount CEO Bob Bakish announced the move in a memo to staff Monday afternoon, confirming rumors that have been brewing for some time.

For starters, both the Showtime linear pay-TV channel and the premium tier of Paramount+ will be rebranded as Paramount+ with Showtime, with Chris McCarthy to lead the Showtime studio and linear channel, and Tom Ryan overseeing the streaming business.

Bakish added that the changes will also “unlock operational efficiencies and financial benefits” for the company.

“While we are confident this is the right move for our company, our consumers, and our partners, we know this change brings uncertainty for the teams working on these brands and businesses,” Bakish wrote. “We are committed to being as transparent and thoughtful as possible throughout this process, and we expect to share additional details in the coming weeks.”

In other words, there will be cuts associated with the merge, with details still TBD.

Other changes, like the pricing and plan for merging accounts for people with both Showtime and Paramount+ will also come in the next few weeks.

Another area that will see notable changes is in programming.

In a memo of his own, McCarthy touted the “complementary” audiences of Showtime and Paramount+, while adding that the company plans to lean into shows that tightly associated with Showtime’s “brand strengths and content filters,” calling out programs like Yellowjackets, Billions, Dexter and The Chi.

“To do this, we will divert investment away from areas that are underperforming and that account for less than 10% of our views,” McCarthy wrote. “We have already begun conversations with our production partners about what content makes sense moving forward and which shows have franchise potential.”

So Showtime shows that aren’t deemed core to those strengths may get the boot. On Monday, the first 3 shows to face the axe were revealed by the channel, with scripted dramas Let the Right One In and American Gigolo getting canceled and the Shailene Woodley-led adaptation of Three Women no longer moving forward at the premium cable network. The latter series, which has already completed production, is being shopped to other outlets.

The shift in business strategy comes as Paramount seeks to create a stronger hand in streaming as it tries to compete with the likes of Netflix, Disney and Warner Bros. Discovery.

WBD, for example, has already merged the linear HBO channel with its broader streaming offering, and will bring in Discovery programming later this year. Showtime, with its more premium sensibility, will likely play a similar role at Paramount+.

Last year Paramount added Showtime to Paramount+ in a discounted bundle offering, while keeping the Showtime linear app and channel separate. The new structure fully merges the two.

Bakish’s memo is below:

Team,

Almost one year ago, we announced that ViacomCBS would become Paramount — harnessing the power of our combined portfolio to become one, integrated company. Since then, I have been tremendously proud of the many ways we have worked together across platforms, brands, and continents to consistently deliver as global leaders in the future of entertainment.

In that same spirit, I’m thrilled to share the next step in our company’s evolution. Today, we’re announcing that we will be fully integrating SHOWTIME into Paramount+ across both streaming and linear platforms later this year — providing even more popular franchises and hit originals for viewers to enjoy. To reflect this change, both our premium streaming tier on Paramount+ and the SHOWTIME linear network will become “Paramount+ with SHOWTIME” in the U.S.

SHOWTIME has captivated audiences for decades with ambitious original series that defined premium content and fandom. Its name will always stand for critically acclaimed, groundbreaking entertainment and creative excellence. Now, with SHOWTIME’s content integrated into our flagship streaming service, and select Paramount+ originals joining the linear offering, Paramount+ will become the definitive multiplatform brand in the streaming space — and the first of its kind to integrate streaming and linear content in this way.

This new combined offering demonstrates how we can leverage our entire collection of content to drive deeper connections with consumers and greater value for our distribution partners. This change will also drive stronger alignment across our domestic and international Paramount+ offerings, as international Paramount+ already includes Showtime content. And, very importantly, this integration will unlock operational efficiencies and financial benefits across our broader portfolio.

Chris McCarthy will continue to lead the SHOWTIME studio and oversee network operations for the linear channel. In tandem, he will work closely with Tom Ryan, who will oversee the “Paramount+ with SHOWTIME” streaming business.

While we are confident this is the right move for our company, our consumers, and our partners, we know this change brings uncertainty for the teams working on these brands and businesses. We are committed to being as transparent and thoughtful as possible throughout this process, and we expect to share additional details in the coming weeks.

In the meantime, I would ask for your continued focus. Because of your hard work, dedication and collaboration, Paramount+ with SHOWTIME is set up for success. Thank you, as always, for all that you do.

Best,

Bob

Chris McCarthy’s full memo is below:

Hi everyone,

I wanted to follow up on the great news Bob just shared about the further integration of SHOWTIME and Paramount+ to create one powerful streaming service, and explain why I am so excited about this big step forward.

There are many benefits for Paramount+ and SHOWTIME on both the streaming and network sides, in three key areas:

Complementary and Differentiated Brands
Redirecting Increased Investment into SHOWTIME Strengths
Integrated Platform – Greater Focus on Content

I am sure you will have lots of questions, and to that end, we are planning a Town Hall in L.A. the week of February 23rd to go into the details and the highlights, which include:

Complementary and Differentiated Brands

The SHOWTIME brand has always attracted audiences who prefer content that has more edge and more mature themes, and that focuses on complicated characters and layered worlds. SHOWTIME content appeals to metro-minded viewers who are more culturally diverse with a higher concentration living in cities vs. the population at large. These audiences and themes are complementary to the Paramount+ brand, which is much broader, appealing to the entire family and general market audiences across the country.

Redirecting Investment into SHOWTIME Strengths
As a part of Paramount+, we can put more resources into building out the lanes that have made the SHOWTIME brand famous, as well as turning our hit shows into global hit franchises. To do this, we will divert investment away from areas which are underperforming and that account for less than 10% of our views. We have already begun conversations with our production partners about what content makes sense moving forward and which shows have franchise potential.
As a reminder, the SHOWTIME brand strengths and content filters are:

Complex Characters: Subversive antiheroes like: DEXTER, YOUR HONOR and YELLOWJACKETS
Powerful-Worlds: High-stakes powerful worlds like: BILLIONS and HOMELAND
Metro-Cultures: Culturally diverse takes like: THE CHI and the forthcoming FELLOW TRAVELERS.
Integrated Platforms – Greater Focus on Content

Now that SHOWTIME and our content will be integrated as the premium tier of Paramount+, we will reach more people globally across streaming and linear than ever before. On the network side, this will strengthen our offering to those consumers by allowing us to tap into Paramount+ originals in addition to the SHOWTIME originals, as well as Paramount Pictures movies that come to the services.
This is a winning strategy that provides more value to our streaming customers and more reasons for cable subscribers to upgrade to the soon-to-be-rebranded Paramount+ with SHOWTIME network. Most importantly, it allows us to put more of our focus on the things that make the SHOWTIME brand famous: our hit content.

More to come soon, but for now, thank you for your help as we work hard together to make Paramount+ with SHOWTIME one of the leading global streaming services!

Thank you,
Chris