Paramount Global announced the layoff of 800 employees this week, representing 3% of the company’s workforce. This cutback follows a string of headlines that have left the impression that the media giant is struggling, with its stock price falling by more than 50% over the past year. Recent reports indicate that the company is engaged in talks with potential acquirers which include Warner Bros. Discovery, Skydance Media, and the Allen Media Group.
One of the most significant reasons for Paramount’s financial struggles is the company’s streaming service Paramount+. The streaming division has lost hundreds of millions of dollars every quarter since its debut in 2021. On the bright side, it has built a subscriber base of 63 million customers as of October. However, the incoming revenue from these customers has not been able to match the costs of maintaining the platform, even after recent price hikes. What’s more, ad revenues from Paramount’s legacy cable channels have plummeted.
The Wall Street Journal reported that Paramount Global and NBCUniversal are discussing the possibility of merging the Paramount+ and Peacock services to combine forces and reduce costs. Peacock is suffering many of the same issues as Paramount+, with ballooning costs and too few subscribers. Another benefit of this combination would be to increase the scope of content for customers of both services, to rival that of Netflix, Disney, and Max.
It’s worth noting that even Disney has decided that it will be better off by partnering with its erstwhile competitors Warner Bros. and Fox to create a new bundled offering for live sports. It makes sense that the same pressures could also make Paramount and NBCUniversal follow suit.
See also: Paramount+ Owner Discussed Combining It With Comcast’s Peacock (WSJ)