Paramount Skydance’s debut earnings report under CEO David Ellison showed a company attempting to reinvent itself faster than its legacy businesses are collapsing. The quarter exposed the imbalance between a streaming operation that’s finally gaining scale and a television portfolio whose advertising and distribution revenues continue to erode.
Linear Revenue Erosion Deepens
Paramount Skydance reported revenue of approximately $6.7 billion, missing Wall Street’s $7 billion forecast. Advertising sales across its linear networks, including CBS and Comedy Central, declined 12% year over year. Distribution and affiliate fees fell 7% as people dump pay TV.
These declines underscore a persistent problem: the linear television business that still funds Paramount’s operations continues to contract faster than streaming can replace it. Execs described broadcast as “resilient” but cable as “rapidly deteriorating.”
Direct-to-Consumer Shows Real Growth
The company’s direct-to-consumer division was a bright spot. Streaming revenue rose 17% to about $2.1 billion, driven by Paramount+, which now has more than 79 million global subscribers. Engagement surged with the return of NFL programming, though executives acknowledged summer subscriber losses.
David Ellison emphasized that scaling streaming is the company’s top priority. He committed more than $1.5 billion in additional programming investments for 2026, including live sports, scripted series, and feature films. Paramount’s recent acquisition spree supports that goal, from locking in UFC rights for $7.7 billion over seven years to bringing the Duffer Brothers from Netflix and developing new projects based on Activision’s Call of Duty franchise.
Cost Cuts Fund the Pivot
Ellison’s turnaround plan centers on savings and simplification. Paramount raised its merger-related cost-savings target from $2 billion to at least $3 billion. More than $1.4 billion in efficiencies will be realized by the end of 2025, with another $1 billion by 2026.
The restructuring includes about 2,600 job cuts through layoffs, buyouts, and divestitures. Paramount is selling its Telefe network in Argentina and Chilevisión in Chile, both considered non-core assets. It also expects roughly $500 million in Q4 restructuring charges and several hundred million in “transformation” costs.
Technology as a Core Competency
Ellison outlined a broader vision that fuses content creation with Silicon Valley-style efficiency. He said Paramount must “make technology the core competency of the company,” investing in tools that enhance creative output rather than replace it. The plan includes consolidating Paramount’s multiple streaming and ad-tech platforms into a unified system capable of global scale.
This approach aims to modernize the company’s infrastructure while maintaining its creative identity. Yet, the specifics of the technology roadmap remain unclear. Investors will be watching for evidence of improved margins and better digital monetization over the next several quarters.
Ambitious Targets and Limited Time
Paramount is projecting total revenue of $30 billion by 2026 and adjusted operating income of roughly $3.5 billion. Those figures require meaningful growth in streaming and global distribution, along with cost discipline. The company posted a Q3 net loss of $257 million, showing how far it has to go.
Ellison has positioned the company as both a builder and a potential acquirer. Paramount reportedly made multiple bids for Warner Bros. Discovery, though Ellison insists there are “no must-haves.” He is open to M&A but believes the company can “build to get to where we want to go.”
The Streaming Wars Take
Paramount Skydance is signaling ambition but still confronting legacy drag. Streaming growth and a disciplined balance sheet give Ellison some credibility with investors, but the decline of linear cash flows remains acute.
The company’s $3 billion efficiency target and $1.5 billion content expansion define the next phase of its evolution. The question is whether Ellison can deliver streaming profitability before linear revenues fall further. The following 18 months will determine whether Paramount Skydance’s reset is transformation or triage.
The Streaming Wars is intentionally ad-free
We don’t run display ads. Not because we can’t, but because we don’t believe in them.
They interrupt the reading experience. They cheapen the work. And they burn advertisers’ money on impressions nobody actually wants.
So we chose a different model.
We say the things people in this industry are already thinking but don’t say out loud. We connect the dots beyond the headline and focus on explaining why things matter to the people working in this business.
If you believe industry coverage can exist without clutter and interruption, you can support it here → SUPPORT TSW.
Support is optional. But it directly funds research and continued coverage — and helps prove this model can work.
Support TSW →
