Paramount (PSKY), which owns popular TV networks such as Nickelodeon, Comedy Central, MTV, and CBS, recently raised eyebrows with its billion-dollar move to fix yearslong financial struggles. These challenges arose due to low profits from its streaming services and cable TV networks.
In July last year, Paramount announced that it was merging with media production giant Skydance Media to form a new company called Paramount Skydance.
Over $8 billion was invested in this merger, which will help Paramount enter new entertainment and media verticals, such as interactive gaming. It will also help Paramount further bolster its sports-related content by tapping into Skydance’s NFL partnership.
The acquisition was completed on Aug. 7, resulting in David Ellison taking over as CEO of Paramount.
“Today marks an exciting and pivotal moment as we prepare to bring Paramount’s legacy as a Hollywood institution into the future of entertainment,” said Ellison in an Aug. 7 press release.
“My vision is to honor exceptional storytelling while modernizing how we make and deliver content to support the world’s top creative talent, enhance experiences for audiences worldwide, and create sustainable value for our shareholders.”
Paramount employees will soon face a harsh workplace change
In an open letter released in August, Ellison revealed that under his leadership, he plans to reorganize Paramount into three business units: Studios, Direct-to-Consumer, and TV Media. He will also cut $2 billion in costs, resulting in layoffs.
During a press conference in August, Paramount President Jeff Shell said the layoffs will be swift and “painful.”
“We do not want to be a company that has layoffs every quarter,” said Shell. “So, it’s going to be painful. It’s always hard, but we don’t want to be a company that every quarter is laying people off. It is important for us to get done what we’re doing in one big thing and then be done with it.”
As Ellison’s cost-cutting plan sets in, Paramount reportedly plans to lay off 2,000 U.S. employees with additional job cuts overseas by next week, according to a recent report from Deadline.
Related: Paramount makes drastic decision amid shift in customer behavior
Previously, Paramount was expected to conduct 2,500 to 3,000 layoffs in early November. However, this upcoming round of layoffs, which is expected to start on Oct. 27, will only be the first round of job cuts that will continue until the end of this year.
The layoffs will reportedly impact several divisions at Paramount, such as theatrical, streaming, and linear. Some executives have already left the company.
The upcoming round of job cuts follows a memo sent to employees on June 10 by Paramount executives revealing that the company will lay off 3.5% of its U.S. employees as it navigates “the continued industry-wide linear declines and dynamic macro-economic environment.”
“We will be reducing our domestic workforce by 3.5%, with the majority of impacted staff being notified today,” said the executives in the memo. “This process may also result in some impacts to our workforce outside the US over time. As always, any changes will be considered in accordance with local legal obligations. We recognize how difficult this is and are very thankful for everyone’s hard work and contributions. These changes are necessary to address the environment we are operating in and best position Paramount for success.”
Paramount suffers from a growing consumer trend
Paramount’s focus on cutting jobs in its film, TV, and streaming business comes as it suffers from the nationwide cord-cutting trend. This involves customers ditching cable services offered by companies such as Spectrum and Comcast for streaming platforms to save money.
A recent survey from digital security firm All About Cookies found that only 46% of Americans still use traditional cable or satellite TV services, and only 14% of cord-cutters regret cutting their cable. Also, 76% of Americans are subscribed to paid streaming services.
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In 2021, Paramount introduced its paid streaming platform Paramount+ to appeal to changing consumer preferences. However, it has grown at a slow pace over the past few years as it faces growing competition.
Paramount’s competitors have also conducted layoffs as the cord-cutting trend continues to shake the entertainment industry. In June, Disney laid off hundreds of employees in its film and TV sectors and multiple corporate departments.
That same month, Warner Bros., which owns cable networks such as Cartoon Network, Discovery, and HBO, laid off roughly 100 employees in its cable TV sector.
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