Paramount Skydance Raises Profit Outlook as Streaming Margins Expand
Free cash flow climbed sequentially to $258 million from $96 million.
Paramount Skydance (PSKY), the media and entertainment company, raised its 2026 profit outlook as stronger streaming margins and cost reductions offset deepening declines in traditional television.
The quarter marked a widening split across the business. Direct-to-consumer and studio revenue advanced, while TV Media contracted more sharply and pulled total revenue below the first quarter’s level.
Revenue fell sequentially to $6.913 billion from $7.347 billion and rose 1% from a year earlier, slowing from 2% growth in the prior quarter. Diluted earnings declined to $0.04 a share from $0.15 sequentially as net earnings dropped to $41 million from $168 million. Operating income fell to $475 million, including $153 million of transaction-related costs, and the operating margin narrowed to 6.9%.
Direct-to-consumer revenue increased to $2.474 billion, though year-over-year growth eased to 9% from 11% in the first quarter. The segment’s adjusted EBITDA rose to $366 million from $251 million sequentially, lifting its margin to 14.8% from about 10%. Paramount+ added about 2 million subscribers to reach 81.6 million, accelerating from a 0.7 million increase in the prior quarter, while posting its lowest churn and best retention on record.
Paramount+ revenue reached $2.061 billion as roughly 12% growth in average revenue per user outpaced subscriber growth of about 6%. Direct-to-consumer advertising revenue rose 8%, with Paramount+ advertising increasing more than 30%.
Studios revenue rose 16% from a year earlier to $1.314 billion, accelerating from 11% growth in the first quarter, and adjusted EBITDA swung to a $36 million profit from a $31 million loss a year earlier. TV Media revenue, meanwhile, fell 9% to $3.128 billion as advertising dropped 14% and affiliate revenue declined 6%. Cost reductions lifted the TV Media adjusted EBITDA margin to 34.0% from 29% in the prior quarter despite the revenue pressure.
The company now expects 2026 adjusted EBITDA of $3.8 billion to $3.9 billion, compared with its previous $3.8 billion forecast, while maintaining its $30 billion revenue outlook. Expected year-end run-rate efficiencies increased to more than $2.7 billion from more than $2.5 billion. Third-quarter adjusted EBITDA is projected at $875 million to $975 million, with higher content amortization expected to reduce the direct-to-consumer margin to the mid- to high-single digits.
Paramount completed the BET+ integration into Paramount+ during the quarter, migrating more than 1,000 hours of programming. It also launched Paramount Games in June, creating a dedicated games division with titles based on Teenage Mutant Ninja Turtles and Star Trek in development.