Paramount Global is further joining its streaming and cable TV business by combining its Showtime TV network and streaming service, Paramount+.
The company said Monday it plans to integrate Showtime’s streaming service fully into Paramount+, its marquee standalone streaming platform and response to the streaming wars.
But the union doesn’t stop there. As part of this integration, the premium cable TV network, known for shows like “Yellowjackets,” “Billions,” and “Dexter,” will be rebranded as Paramount+ with Showtime. The TV channel will also feature content from Paramount+, which has produced original series that spun off from the popular “Yellowstone” and “Criminal Minds” franchises. People can subscribe to Showtime for an extra fee on their pay-TV bundle,
Pricing for the combined streaming platform and other details will be announced in coming weeks, a Paramount spokesperson said Monday. Paramount+ starts at $4.99 a month, and Showtime’s streaming service is $10.99 a month. A bundled offering of the two already exists, beginning at $11.99 a month.
In November, Paramount reported that Paramount+ had 46 million customers. The company reports fourth quarter earnings Feb. 16.
The move comes as media companies work to make their streaming businesses profitable. Competition is at an all-time high following a pandemic-fueled streaming boom, slowing the addition of subscribers. Stock prices have suffered, in part, due to this, and these companies have been experimenting to grow their streaming businesses.
Last year Netflix introduced a cheaper, ad-supported tier. While Disney was early to bundling its streaming options – Disney+, Hulu and ESPN+ – it also debuted an ad-supported option and increased prices last year. Warner Bros. Discovery has been pulling back on content for its HBO Max, as it looks to cut costs, and also plans to debut a combined HBO Max and Discovery streaming app in the spring.
“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,” Paramount CEO Bob Bakish said in a memo to employees Monday.
During the fall, Paramount restructured its Showtime business. Executive David Nevins, who’d been running the network since 2016, departed and Chris McCarthy and Tom Ryan took over. McCarthy also runs Paramount’s cable-TV networks like MTV and Comedy Central. Ryan runs Paramount’s streaming segment.
While McCarthy and Ryan will remain in place, Bakish acknowledged that the integration “brings uncertainty to the teams” that work on each brand.
–CNBC’s Stephen Desaulniers contributed to this report.
WWE Chairman and CEO Vince McMahon speaks at a news conference announcing the WWE Network at the 2014 International CES in Las Vegas.
Getty Images
All Elite Wrestling, a professional wrestling league owned by the Khan family, is interested in merging with World Wrestling Entertainment, according to people familiar with the matter.
The Khans, who also own the National Football League’s Jacksonville Jaguars and the Premier League’s Fulham F.C., could partner with a strategic media company to share the intellectual property while merging the wrestling leagues, said the people, who asked not to be named because the discussions are private. AEW has a TV carriage rights agreement with Warner Bros. Discovery‘s TNT and TBS.
The idea that Vince McMahon, the controlling shareholder of WWE, would merge his company with the much smaller AEW is a long shot. AEW hasn’t had talks with McMahon or Nick Khan, the company’s chief executive, said the people. McMahon may view selling to the Khans as a non-starter.
The Khans are open to discussing a potential role for McMahon, 77, after a sale but haven’t yet had those talks, one of the people said. It’s unclear what type of job McMahon would want with WWE after a sale, but WWE is a much larger and more established organization than AEW. McMahon, who was worth more than $3 billion as of July, is also known as the primary creative force behind WWE’s storylines.
Sports tycoon Shahid Khan, 72, is ranked 292 on the Bloomberg Billionaires Index with a net worth of $7.56 billion. He also owns auto parts manufacturer Flex-N-Gate.
Shahid Khan, the new owner of the Jacksonville Jaguars.
Disney plans to institute a targeted hiring freeze as well as some job cuts, according to an internal memo sent to executives.
“We are limiting headcount additions through a targeted hiring freeze,” CEO Bob Chapek said in a memo to division leads sent Friday and obtained by CNBC. “Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold. Your segment leaders and HR teams have more specific details on how this will apply to your teams.”
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He added: “As we work through this evaluation process, we will look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review.” Disney has approximately 190,000 employees.
Chapek also told executives business travel should be limited to essential trips only. Meetings should be conducted virtually as much as possible, he wrote in the memo.
Disney is also establishing “a cost structure taskforce” to be made up of Chief Financial Officer Christine McCarthy, General Counsel Horacio Gutierrez and Chapek.
“I am fully aware this will be a difficult process for many of you and your teams,” Chapek wrote. “We are going to have to make tough and uncomfortable decisions. But that is just what leadership requires, and I thank you in advance for stepping up during this important time.”
The moves come after Disney reported disappointing quarterly results. Shares of the company fell sharply Wednesday, hitting a new 52-week low, before rebounding later in the week.
McCarthy said during Disney’s earnings call Tuesday that the company was looking for ways to trim costs.
“We are actively evaluating our cost base currently, and we’re looking for meaningful efficiencies,” she said. “Some of those are going to provide some near-term savings, and others are going to drive longer-term structural benefits.”
Disney’s streaming services lost $1.47 billion last quarter, more than double the unit’s loss from a year prior. McCarthy said losses will improve in 2023, and Chapek has promised streaming will become profitable by the end of 2024.
Other large media and entertainment companies, including Warner Bros. Discovery and Netflix, have cut jobs this year as valuations have slumped. Disney hasn’t announced any plans to eliminate jobs.
The full memo can be read here:
Disney Leaders-
As we begin fiscal 2023, I want to communicate with you directly about the cost management efforts Christine McCarthy and I referenced on this week’s earnings call. These efforts will help us to both achieve the important goal of reaching profitability for Disney+ in fiscal 2024 and make us a more efficient and nimble company overall. This work is occurring against a backdrop of economic uncertainty that all companies and our industry are contending with.
While certain macroeconomic factors are out of our control, meeting these goals requires all of us to continue doing our part to manage the things we can control—most notably, our costs. You all will have critical roles to play in this effort, and as senior leaders, I know you will get it done.
To be clear, I am confident in our ability to reach the targets we have set, and in this management team to get us there.
To help guide us on this journey, I have established a cost structure taskforce of executive officers: our CFO, Christine McCarthy and General Counsel, Horacio Gutierrez. Along with me, this team will make the critical big picture decisions necessary to achieve our objectives.
We are not starting this work from scratch and have already set several next steps—which I wanted you to hear about directly from me.
First, we have undertaken a rigorous review of the company’s content and marketing spending working with our content leaders and their teams. While we will not sacrifice quality or the strength of our unrivaled synergy machine, we must ensure our investments are both efficient and come with tangible benefits to both audiences and the company.
Second, we are limiting headcount additions through a targeted hiring freeze. Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold. Your segment leaders and HR teams have more specific details on how this will apply to your teams.
Third, we are reviewing our SG&A costs and have determined that there is room for improved efficiency—as well as an opportunity to transform the organization to be more nimble. The taskforce will drive this work in partnership with segment teams to achieve both savings and organizational enhancements. As we work through this evaluation process, we will look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review. In the immediate term, business travel should now be limited to essential trips only. In-person work sessions or offsites requiring travel will need advance approval and review from a member of your executive team (i.e., direct report of the segment chairman or corporate executive officer). As much as possible, these meetings should be conducted virtually. Attendance at conferences and other external events will also be restricted and require approvals from a member of your executive team.
Our transformation is designed to ensure we thrive not just today, but well into the future—and you will hear more from our taskforce in the weeks and months ahead.
I am fully aware this will be a difficult process for many of you and your teams. We are going to have to make tough and uncomfortable decisions. But that is just what leadership requires, and I thank you in advance for stepping up during this important time. Our company has weathered many challenges during our 100-year history, and I have no doubt we will achieve our goals and create a more nimble company better suited to the environment of tomorrow.
Thank you again for your leadership.
-Bob
WATCH: Disney had to get into streaming, but Meta just did too much hiring
Shonda Rhimes attends 2018 Vanity Fair Oscar Party on March 4, 2018 in Beverly Hills, CA.
Presley Ann | Patrick McMullan | Getty Images
Shonda Rhimes, the high-powered producer behind “Bridgerton” and “Inventing Anna,” is among a number of showrunners, creators and writers who have expressed displeasure with Netflix‘s decision to include mid-video ads in their content, according to people familiar with the matter.
Rhimes and Intrepid Pictures’ Trevor Macy and Mike Flanagan are among a group of creators who have told Netflix executives they believe the ads interrupt their storytelling, said the people, who asked not to be named because the discussions are private. Netflix has told creators it won’t be sharing any revenue from advertising with them, the people said.
Netflix isn’t the first streamer to have an ad-supported tier. But it has used its previous aversion to commercials as a marketing tool to help land deals with creators. Rhimes signed a multiyear deal with Netflix in 2021 to exclusively make content for the streaming service. When she inked the deal, Netflix had a firm policy not to include advertising in its programming, a longtime tenet of co-founder and co-CEO Reed Hastings. Both Rhimes and Netflix declined to comment.
Netflix released a lower-priced advertising-supported service in the U.S. and other countries this week. Netflix made the decision to offer an ad-supported tier as revenue and subscriber growth have plateaued coinciding with the end of the global coronavirus pandemic. Netflix has about 223 million global subscribers.
Netflix executives have told creators they have thoughtfully placed midroll advertising at intervals that make sense with each episode’s storyline, according to people familiar with the matter. They’ve also told creators they don’t expect that many people to sign up for the basic advertising tier relative to subscribers who will pay for no commercials, the people said.
“We’re using our internal content tagging teams essentially to find those natural breakpoints so that we can deliver the ad in the least obtrusive point,” Netflix operating chief Greg Peters said in October.
Still, several creators haven’t been pleased with the explanations. Intrepid Pictures makes horror films and series for Netflix. Those are particularly bad fits for ad insertions because they kill building tension. One 50-minute episode of Intrepid’s “The Haunting of Hill House” is comprised of five long, single-shot takes.
That episode, the series’ sixth (“Two Storms”), is now interrupted by three one-minute long commercial breaks, made up of three ads each, in the $6.99 tier. One the main reasons Intrepid signed an exclusive overall deal with Netflix in 2019 was the streamer’s total avoidance of advertising, according to people familiar with the company’s thinking. A spokesperson for Intrepid declined to comment.
No revenue share
Not all creators are upset with Netflix. Ryan Murphy, who signed a $300 million with Netflix in 2018, crafts his series’ episodes in three acts, leading to easy ad placement, according to a person familiar his work. Scott Frank, co-creator of “The Queen’s Gambit,” has also not complained, according to a person familiar with his thinking.
The Directors Guild of America and the Writers Guild of America declined to comment for this story.
Splitting revenue from advertising, especially commercials that interrupt the storytelling flow, could be a way to mollify irritated creators who feel Netflix has changed the rules midgame. But Netflix won’t be doing that, according to people familiar with the matter. Netflix owns its original programming and can insert ads where and when it wants, giving creators little leverage other than voicing complaints.
Still, other media and entertainment companies have avoided the issue of interruptive ads or agreed to share revenue in some cases. Warner Bros. Discovery‘s HBO Max decided not to include midroll advertising in HBO programming to skirt the issue of interrupting prestige programming. When HBO has sold shows to linear cable networks in syndication, such as when “The Sopranos” aired on A&E, creators have been able to participate in revenue sharing, according to a person familiar with the matter. An HBO spokesperson declined to comment.
Some creators that have made content exclusively for Disney+ also have rights to participate in advertising revenue sharing, depending on contractual language, according to a person familiar with Disney‘s policies. But unlike Netflix, Disney owns linear cable networks that could eventually air Disney+ programming with commercials. A Disney spokesperson declined to comment.
–CNBC’s Sarah Whitten contributed to this article.
WATCH: Netflix launches ad-based subscription plan
LOS ANGELES, CALIFORNIA – SEPTEMBER 12: 74th ANNUAL PRIMETIME EMMY AWARDS — Pictured: Jason Sudeikis accepts the Outstanding Lead Actor in a Comedy Series award for “Ted Lasso” on stage during the 74th Annual Primetime Emmy Awards held at the Microsoft Theater on September 12, 2022. — (Photo by Chris Haston/NBC via Getty Images)
Chris Haston/nbc | Nbcuniversal | Getty Images
HBO’s “Succession” and AppleTV+’s “Ted Lasso” were among the most nominated titles for 74th annual Emmy Awards, but they faced steep competition from shows like “Squid Game,” “Severance,” “Abbott Elementary” and “Hacks.”
“Saturday Night Live” cast member Kenan Thompson is hosting the ceremony which is airing on NBC and is being streamed live on Peacock from the Microsoft Theater in Los Angeles.
While the ceremony typically airs on Sunday, NBC also has broadcast rights to National Football League games on Sunday nights, so it has opted to showcase the award winners on Monday.
Emmy voters spread awards across various shows before “The White Lotus” started rolling, powered by writer-director Mike White. Other winners included Michael Keaton for “Dopesick,” Jennifer Coolidge for “The White Lotus” and Julia Garner for “Ozark.”
Sheryl Lee Ralph (“Abbott Elementary”) won for best supporting actress in a comedy series, becoming only the second Black woman in the history of the Emmys to win in this category. Jackee Harry took home the prize for “227″ in 1987. “Squid Game” helmer Hwang Dong-hyuk was the first South Korean to win for Outstanding Directing for a Drama Series. At 26, Zendaya, of “Euphoria,” is the youngest person to win the award for Outstanding Leading Actress prize twice.
Amanda Seyfried won for her portrayal of disgraced Theranos founder Elizabeth Holmes in “The Dropout.”
“Succession” earned 25 nominations, the most of any series, while “Ted Lasso” and HBO’s “The White Lotus” each garnered 20 nominations. Following close behind were HBO Max’s “Hacks” and Hulu’s “Only Murders in the Building” — each with 17 nominations — and HBO’s “Euphoria,” which nabbed 16.
The Television Academy did not break out awards by network this year. Last year, there was some mild controversy about how nominations were tallied, as many networks also have streaming services. While it seemed suitable to lump network shows and streaming shows from the same company together, some in the industry felt they should be considered separate distributors.
Amazon Studios shared its first image of its upcoming untitled “Lord of the Rings” series, due on its streaming service Sept. 2, 2022.
Amazon Studios
Amazon said Saturday that the first episode of its “The Lord of the Rings: The Rings of Power” series attracted over 25 million viewers globally in its first day, making it the biggest ever debut for a show on its Prime Video streaming service.
The series is based on the appendices of J.R.R. Tolkien’s “Lord of the Rings” books and is the most expensive television series of all time.
“It is somehow fitting that Tolkien’s stories – among the most popular of all time, and what many consider to be the true origin of the fantasy genre – have led us to this proud moment,” Amazon Studios head Jennifer Salke said in a statement.
At the show’s U.K. premiere, Amazon founder billionaire Jeff Bezos hinted at how precious the series is to fans, saying one of his sons had told him “don’t eff this up” when he learned of Amazon’s acquisition of the story rights.
Episodes of the show will continue to debut weekly on Amazon Prime.
Earlier this month, HBO said its “House of the Dragon,” a “Game of Thrones” prequel series, was the biggest series premiere in its history.
Clarification: This story was updated to reflect that “The Rings of Power” is based on the appendices to “The Lord of the Rings.”
Warner Bros. Discovery’s HBO Max is removing 36 movies and TV series from its platform. There are three main reasons why it’s happening.
The films and series − which include 20 original HBO Max shows such as teen drama “Generation,” and “Sesame Street” spinoff “The Not-Too-Late Show with Elmo” − will be removed by end of Friday. The decision comes ahead of Warner Bros. Discovery plans to combine Discovery+ with HBO Max into a new service that will launch in the U.S. in mid-2023.
“As we work toward bringing our content catalogs under one platform, we will be making changes to the content offering available on both HBO Max and Discovery+. That will include the removal of some content from both platforms,” an HBO Max spokesman said in a statement.
It may seem strange for HBO Max to remove series it specifically made for the platform − streaming services are full of little-watched shows and movies. But for Warner Bros. Discovery, there are three main motivations behind the cuts: slashing costs, moving away from content aimed at kids and families and decluttering the service.
Cost cutting
While HBO Max already paid for the production of these shows, it’s still on the hook for residuals, including so-called back-end payments to cast, crew and writers, based on long-term viewership metrics.
By removing these films and shows, especially the ones HBO Max created rather than licensed, executives can cut expenses immediately. Warner Bros. Discovery has promised at least $3 billion in synergies stemming from the merger of WarnerMedia and Discovery, announced in May.
The content eliminations in total will save “tens of millions of dollars,” according to two people familiar with the matter, who asked not to be named because the finances are private.
The reasoning isn’t the same as why superhero movie “Batgirl” was scrapped earlier this month. That decision took advantage of a change-of-strategy merger tax benefit that allowed for writing off incomplete projects. The HBO Max shows already launched and have been on the service, so they don’t apply for that benefit.
Eschewing kids and family
Most of what HBO Max is pulling is either reality TV or kids and family content. (A full list of removed content is at the end of this story).
HBO Max will get its unscripted content from Discovery, which will add nearly its entire catalog of reality TV, including from HGTV, Food Network and Animal Plant, to the combined service next year. HBO Max laid off 14% of its staff earlier this week, including many from its unscripted division.
The move away from kids and family content is new. HBO Max executives decided viewers are simply not going to the service to watch kids programming. Even “Sesame Street,” which HBO Max acquired in 2019 in a five-year deal, isn’t pulling strong numbers, according to people familiar with the matter. That prompted the removal of “The Not-Too-Late Show with Elmo,” the people said.
HBO specializes in adult-themed content that skews toward a male audience. Discovery specializes in adult-themed reality content that is watched by more women. While the combined services hit both adult gender demographics, they don’t target kids. Instead of adding more content to fill that niche, Warner Bros. Discovery has decided to move away from the category with its future investment budget, said the people.
Decluttering
Streaming executives across the industry frequently talk of Netflix having a “discovery” problem. Netflix has so much content, they say, that it’s hard to search for its best stuff. While Netflix tries to mitigate this with algorithms and Top 10 lists, the service has hundreds of shows that get lost in the shuffle because there’s so much content gumming up the search process.
Everything getting pulled from “HBO Max” was infrequently watched, according to people familiar with the matter.
With the coming addition of Discovery+ content, Warner Bros. Discovery executives are concerned HBO Max may get bogged down with little-watched films and shows. That could cause viewers to associate the service with having a lot of stuff they don’t want to watch — the “Netflix problem,” said one HBO Max executive, who asked not to be named because the decision was private.
Traditional pay-TV has also struggled with the problem. Cable TV has ballooned in cost, averaging about $100 per month, while adding more and more poorly viewed cable networks over the years. The result is that customers have been rejecting cable TV in droves.
This risk of having too much content is one of the reasons Disney has historically kept Disney+, ESPN+ and Hulu separate. Disney executives have long felt consumers will pay a lower price for a more tailored experience.
Warner Bros. Discovery CEO David Zaslav may want to raise the price for a combined HBO Max-Discovery+ offering, especially as competitors Disney and Netflix have recently raised prices. Eliminating little watched content, while adding a slew of new Discovery + content, could help justify the increase.
***
HBO Max announced the following series will be removed this week:
12 Dates of Christmas
About Last Night
Aquaman: King of Atlantis
Close Enough
Detention Adventure
Dodo
Ellen’s Next Great Designer
Elliott From Earth
Esme & Roy
The Fungies!
Generation Hustle
Genera+ion
Infinity Train
Little Ellen
Mao Mao, Heroes of Pure Heart
Messy Goes to Okido
Mia’s Magic Playground
Mighty Magiswords
My Dinner with Herve
My Mom, Your Dad
Odo
OK K.O.! – Let’s Be Heroes
The Ollie & Moon Show
Pac-Man and the Ghostly Adventures
Ravi Patel’s Pursuit of Happiness
Select Sesame Street Specials
Make It Big, Make It Small
Share
Squish
Summer Camp Island
The Not-Too-Late Show with Elmo
The Runaway Bunny – Special
Theodosia
Tig n’ Seek
Uncle Grandpa
Victor and Valentino
Yabba Dabba Dinosaurs
WATCH: Warner Bros. Discovery CEO David Zaslav speaks to CNBC about his strategy
CNBC’s Jim Cramer on Monday said the most important data this week is the Bureau of Labor Statistics release of the July nonfarm payrolls report on Friday morning.
“If it shows some job growth with no wage inflation, then the fabulous July rally can stand. But if it shows booming hiring with exceptionally large wage increases, then some of this rally, if not much of it, is going to be repealed,”the “Mad Money” host said.
Job growth has been strong this year, leading economists to say the U.S. is not in a recession even with two back-to-back quarters of negative GDP.
Another strong jobs report could mean the Federal Reserve, which added a three-quarters a percentage point interest rate hike last week, will have to take stronger action to slow down the economy and inflation.
Cramer also previewed this week’s slate of earnings. All earnings and revenue estimates are courtesy of FactSet.
Q2 2022 earnings release at TBD time; conference call at 8 a.m. ET
Projected loss: loss of 27 cents per share
Projected revenue: $7.36 billion
Cramer said he believes Uber will always struggle to make money unless it gets “real” autonomous vehicles.
AMD
Q2 2022 earnings release at 4:15 p.m. ET; conference call at 5 p.m. ET
Projected EPS: $1.03
Projected revenue: $6.53 billion
AMD will likely report a strong performance, Cramer predicted.
Starbucks
Q3 2022 earnings release at 4:05 p.m. ET; conference call at 5 p.m. ET
Projected EPS: 77 cents
Projected revenue: $8.15 billion
Cramer said he wants to bet on Starbucks CEO Howard Schultz, not against him.
Airbnb
Q2 2022 earnings release between 4 p.m. and 4:05 p.m. ET; conference call at 4:30 p.m. ET
Projected EPS: 45 cents
Projected revenue: $2.11 billion
The company will likely report it’s doing well, Cramer said, adding that he believes shares of Airbnb won’t go higher unless it turns its cash flow into actual earnings.
JetBlue
Q2 2022 earnings release at 7 a.m. ET; conference call at 10 a.m. ET
Projected per share loss: 11 cents
Projected revenue: $2.45 billion
Cramer said he believes the Justice Department will block JetBlue’s deal to acquire Spirit Airlines.
PayPal
Q2 2022 earnings release at 4:15 p.m. ET; conference call at 5 p.m. ET
Projected EPS: 87 cents
Projected revenue: $6.78 billion
“If PayPal misses again, this is Elliott’s ballgame,” Cramer said, referring to activist investor Elliott Management’s recently acquired stake in the payment platform.
Wednesday: CVS
Q2 2022 earnings release at 6:30 a.m. ET; conference call at 8 a.m. ET
Projected EPS: $2.18
Projected revenue: $76.41 billion
Cramer said he expects the retail giant to report great numbers.
Thursday: Eli Lilly, Warner Bros Discovery, DoorDash
Eli Lilly
Q2 2022 earnings release at 6:25 a.m. ET; conference call at 9 a.m. ET
Projected EPS: $1.70
Projected revenue: $6.85 billion
Cramer said he believes the success of Eli Lilly’s new weight loss drug will help the company report a great quarter.
Warner Bros Discovery
Q2 2022 earnings release after the bell; conference call at 4:30 p.m. ET
Projected EPS: 12 cents
Projected revenue: $11.85 billion
Cramer said he believes the company will try to muddle through getting rid of its huge debt load totaling around $55 billion.
DoorDash
Q2 2022 earnings release at 4:05 p.m. ET; conference call at 6 p.m. ET
Projected per share loss: 21 cents
Projected revenue: $1.52 billion
Cramer said he’s unsure whether DoorDash will be able to revive its stock price.
Disclosure: Cramer’s Charitable Trust owns shares of AMD and Eli Lilly.
