On August 10, 2024, Paramount Global, the entertainment giant, announced plans to reduce costs and streamline operations to address the declining traditional TV business and prepare for its merger with Skydance Media. The company revealed that it will cut approximately 15% of its U.S. workforce, equivalent to around 2,000 positions.
According to The Hollywood Reporter, Paramount’s layoffs are part of a $500 million cost-saving initiative to achieve profitability on streaming platforms by 2025. The job cuts primarily target positions in sales, communications, finance, legal, and technology departments that are deemed redundant.
Prior to this announcement, Paramount had already outlined a cost reduction plan of about $2 billion, with layoffs being a significant component of the strategy. In February of this year, Paramount had announced the layoff of around 800 employees. In July, the merger between Paramount and the emerging Hollywood production company Skydance Media was announced, with the deal expected to be finalized in the first half of 2025, valuing the new company at approximately $28 billion.
Paramount not only owns Paramount Pictures but also controls media brands such as CBS, Nickelodeon, and the UK’s Channel 5. Faced with the ongoing decline in cable TV viewership, Paramount has had to reassess the value of its various business units before merging with Skydance Media, ensuring a more accurate reflection of their contributions to the overall company operations.
Despite the job cut plans, Paramount’s streaming business has shown positive results in the current quarter. The company’s streaming platforms, including Paramount+, reported their first profitable quarter driven by growth in advertising revenue.
Paramount’s second-quarter financial report revealed that despite challenges posed by the decreasing value of traditional TV business, Paramount+ saw a 46% year-over-year revenue increase, generating a profit of $26 million, reversing the $424 million loss from the same period last year.
In a joint statement, Paramount’s CEOs George Cheeks, Chris McCarthy, and Brian Robbins expressed optimism, stating, “We are steadily progressing towards our goal of making Paramount+ profitable by 2025.”
Paramount Global’s stock price has declined by 31% this year, largely due to the drop in cable TV subscriptions and a sluggish TV advertising market. Paramount+ subscriptions decreased by 2.8 million to 68 million households in the second quarter. Following the financial report release, Paramount’s stock price rose by over 5% in after-hours trading on the 8th. Management indicated that the layoff process is expected to commence in the coming weeks and be completed by the end of the year.