Paramount Global CEO Bob Bakish, who has been a longtime advocate of “hard bundles,” believes that deals that integrate streaming apps into the linear TV bundle have the potential to be “additive” for the company when structured with the “right economic value.”
“The reality is operators have different priorities, but we’ve shown that we can adapt our partnerships to accomplish common objectives,” Bakish told analysts on Thursday. “As we go forward, it is possible that some of our partners will embrace a strategy that more tightly integrate DTC into the paid TV bundle and we expect that if they do, the bundles would have many of the same advantages we’ve observed in the various hard bundles we’ve deployed internationally, namely, a dramatically lower cost of acquisition and improvements in streaming churn, and it may improve TV ecosystem trends as well.”
Combining the scale of Paramount+’s ad-supported tier with pay TV could bring an incremental benefit to the company’s digital advertising offerings, additional marketing and promotional value and an opportunity to upsell Paramount+ with Showtime, Bakish added.
Bakish’s comments follow a new carriage agreement between Disney and Charter Communications, which will make ad-supported Disney+ Basic available to Spectrum TV Select package customers in the coming months. Additionally, ESPN+ will be provided to Spectrum TV Select Plus subscribers as will the sports network’s flagship direct-to-consumer service when it launches.
While Spectrum will continue to carry ABC Owned Television Stations, Disney Channel, FX, the Nat Geo Channel and the full suite of ESPN networks under the terms of the new deal, Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo will no longer be included in Spectrum TV video packages.
When asked if he expects similar moves by pay TV operators in Paramount’s future carriage negotiations, Bakish emphasized that it’s “not clear that all partners want to go this direction.” However, he said it would be an “accretive development” for the company if partners choose to go in that direction.
“It’s worth noting that we have already finalized agreements with multiple distributors to offer Paramount+ with Showtime to their customers as a true multi platform product. Importantly, this includes linear subscribers getting app credentials,” he added.
Bakish noted that Paramount’s has seen increased subscriber growth, no acquisition costs, lower churn and that no dropped linear channels in its hard bundles launch internationally. However, he warned that there’s always the potential downside of lower DTC revenue.
“There are puts and takes to this piece but the aggregate value that we’ve seen is clearly positive,” he added.
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