Exhibit 99
1 Non-GAAP measures are detailed in the Supplemental Disclosures at the end of this letter.
2
August 4, 2026
Summary Points:
•One year in, we’re proud of the great progress: including nearly doubling our theatrical slate
from 8 to 15 films in 2026 and on track to release 15+ in 2027; 40 new or returning DTC series
greenlit; and over 90 series and 800+ episodes expected from our TV studios in 2026.
•Q2 was our best quarter for retention in Paramount+'s history, powered by Dutton Ranch, UFC,
and the FIFA World Cup non-exclusively across six countries in Latin America, gaining ~2 million
new Paramount+ subscribers in the quarter to reach 81.6 million worldwide.
•Q2 film slate, led by Scary Movie, performed well, and we’re building our pipeline across
Television Studios, Paramount Animation, and Skydance Sports for both first- and third-party
distribution.
•Our focus on creative execution and efficiency at TV Media is working: CBS held seven of the
top 10 broadcast series in the most recent broadcast season, with an increase in profitability.
•We're raising our full-year 2026 outlook to a range of $3.8-$3.9 billion in adj. EBITDA (12.8%
margin) and now expect free cash flow conversion of at least 10%1.
•Our Upfront delivered double-digit growth in commitments across the company and was our
strongest since the CBS-Viacom merger, reflecting the strength of our cross-platform offering.
•We continue to prepare for our proposed combination with Warner Bros. Discovery, while
staying focused on executing our standalone strategy and delivering strong results.
3
Fellow shareholders,
A year ago, we laid out our three north star priorities that would guide the new Paramount:
•Investing in our growth businesses anchored by our creative engines and superior storytelling
•Scaling our direct-to-consumer business globally
•Driving efficiency enterprise-wide with a focus on long-term free cash flow generation
Looking back on the past twelve months, I’m incredibly proud of how our team has turned those
priorities into measurable progress, reflecting their talent, hard work, and dedication.
We’ve focused on transforming the business and investing in areas where we see the biggest
opportunity for growth. Our primary focus is high-quality storytelling, and we’ve nearly doubled our
theatrical output from eight releases in 2025 to 15 in 2026, while also delivering over 90 series and a
combined 800+ episodes. Beyond 2026, we are on track to release more than 15 films in 2027,
including new and franchise titles, such as Children of Blood and Bone, featuring an all-star cast, the
fourth installment of the Sonic the Hedgehog franchise, and Teyana Taylor’s directorial debut Get Lite.
At the same time, we’ve assembled one of the strongest creative rosters in the industry, welcoming
new and returning world-class storytellers including the Duffer Brothers, Matt Stone and Trey Parker,
Jon M. Chu, Issa Rae, Liz Tigelaar, and James Mangold, with many more to come.
Of course, great storytelling comes in many forms. We’ve also expanded our leadership in live sports
through new partnerships with the UFC, Zuffa Boxing, and UEFA, complementing an already strong
portfolio that includes the NFL, WNBA, the PGA TOUR, March Madness, and more. Notably, our seven-
year UFC media rights agreement brought every UFC event to Paramount+ beginning this year and,
within just a few months, has delivered some of the platform’s biggest audiences ever. It’s a powerful
validation of what we’ve long believed: premium live sports improve engagement, strengthen
retention, and increase the value of our service for subscribers.
All of this – greater investment in storytelling, new talent and expanded sports rights – is fueling a
deeper, broader slate on Paramount+. We’ve greenlit 40 new or returning series since August 2025,
including 10+ produced externally as we broaden our offering and expand our business with third-party
studios. While we’ll continue to grow our slate, these early investments have helped grow Paramount+
from approximately 77 million subscribers before the Skydance transaction to nearly 82 million today,
while deliberately improving the quality and economics of our subscriber base through selective
strategic exits (including 3 million exits in 1H’26). At the same time, we’re making meaningful progress
on the product side, with the first phase of convergence now underway, the introduction of Clips, and
continued improvements to the experience across our streaming services.
Together, these platform and content investments are translating into stronger customer engagement
with double-digit growth in view hours in Q2. Paramount+ also delivered the best quarter of retention
in the service’s history, underscoring the strength of our strategy and the value we’re creating for
subscribers. And we’ve achieved this while expanding margins through the first half of 2026. We
continue to expect digital advertising growth to accelerate in the back half of the year, supported by
our recently concluded Upfront, which delivered a double-digit percentage increase in commitments
year-over-year and marked the company’s strongest Upfront since the CBS-Viacom merger.
4
As we’ve expanded our slate and strengthened the streaming foundation that underpins our business,
we’ve made meaningful progress over the past year towards becoming a more efficient, agile
company. This impact is most evident in our TV Media business, where revenue is down 7% year-to-
date, yet profitability has increased 14% compared with the first half of 2025. We’re also seeing early
benefits from our platform unification efforts, bringing Paramount+ and Pluto TV onto a single
technology stack to improve efficiency, accelerate innovation, and deliver a better experience for
consumers.
One year in, we are proud of the progress we’ve made, and we’re energized by the path ahead. While
there is still significant work to be done, our confidence in the opportunity continues to grow, and
we’re excited for the future of this company powered by storytelling and accelerated by technology.
That confidence extends to our proposed combination with Warner Bros. Discovery. As we’ve executed
against our strategy over the past year, we’ve also prepared to close the transaction, and we remain
confident it will be completed, creating a stronger, more competitive, creative-first media company
that builds on the foundation we’ve established – one that benefits consumers, theater exhibitors, and
creatives.
We have publicly committed to releasing at least 30 high-quality films annually, each with a minimum
45-day theatrical window, while continuing to license content to, and acquire content from, third
parties. The rationale is straightforward: as technology-funded competitors like Netflix, Amazon and
Apple reshape the industry, combining Paramount and WBD creates a company with the breadth and
resources to compete on equal footing – making this transaction pro-competitive, pro-consumer, and
pro-creative community.
While we work to complete the transaction, our focus is on executing our standalone strategy and
delivering strong results. That’s what will ultimately define our success as a combined company, and it
remains the best measure of our progress.
With that broader context in mind, here’s a closer look at how each of our segments is performing
today and where we’re focused as we head into year two.
Direct-to-Consumer
Paramount+ delivered a standout quarter, with programming driving subscriber additions to a new
global high and double-digit growth in total engagement. Q2 also marked another milestone: our best
quarter for retention in the service’s history. Dutton Ranch, UFC, and the FIFA World Cup were key
factors, reinforcing how live sports and marquee content – including our Originals, CBS lineup, and
deep library – attract and retain subscribers. Together, these results drove 16% year-over-year
Paramount+ revenue growth in Q2 while accelerating our path to higher profitability for the year.
Dutton Ranch launched on May 15 as the biggest original series debut in Paramount+ history,
attracting 12.9 million viewers in its first week and finishing the season with a record-setting 13.4
million average views per episode. In June, we streamed UFC Freedom 250 live from the White House
South Lawn – a first-of-its-kind global production that drew a record 17 million viewers across the U.S.
and Latin America, the largest-ever audience for an exclusive live event on Paramount+. In Q2, we also
delivered the FIFA World Cup live across six Latin American countries, driving our best quarter of
engagement in LATAM and reaching millions of households. That momentum carried into July, as UFC
5
329 delivered the highest peak concurrent streams in the platform’s history for an exclusive live event,
trailing only Super Bowl LVIII. Since the start of the year, 20 million subscriber households have
watched more than 200 million hours of UFC programming on Paramount+, generating viewership
more than 23 times the average pay-per-view event over the past two years.
We also expanded our content footprint in Q2 by fully integrating BET+ into Paramount+, bringing
more than 1,000 hours of BET originals, movies, and specials to a larger audience and increasing
visibility for BET’s stories and creators. Following the migration, engagement among migrated
subscribers increased meaningfully versus the BET+ year-to-date average, driven by new seasons of
Tyler Perry’s Divorced Sistas, Zatima, All The Queen’s Men, and more.
Our third quarter slate is off to a strong start with the launches of Avatar Aang: The Last Airbender and
the third season of Lioness, and the return of MobLand coming next month. September also brings a
compelling live sports lineup, including UEFA, NFL simulcasts, UFC 331, and our first premium live
boxing event on Paramount+ on September 12. We greenlit new seasons of the hit series The Madison
and Dutton Ranch, along with Clueless, a limited series based on Paramount’s cult classic film and
starring Alicia Silverstone, and Ascent, a new thriller starring and executive produced by EGOT winner
Viola Davis. Both Clueless and Ascent will be filmed in Los Angeles.
Meanwhile, our product focus is on building on our programming momentum and planned
investments by strengthening our platform offering. This includes efforts to enhance our services,
which are already resulting in improved viewing experiences. Our in-house streaming player, validated
through more than 800 controlled experiments, has significantly improved video quality while virtually
eliminating high-rebuffering in low-bandwidth conditions, and Smart TV app startup times are now
66% faster.
Coming into the business, we understood we had a lot of work ahead to bring our streaming
experiences up to best-in-class standards and we are making progress against that as quickly as
possible – with ambitions to lead in innovation and experimentation over time.
We’re also working on introducing a variety of features, including our short-form video experience,
Clips, designed to deepen engagement. We also made progress in Q2 on efforts to evolve the product
experience on Pluto TV including expanding registration and first-party identity and growing the on-
demand offering as part of our broader platform update.
Together, these investments reflect a balanced strategy: executing against a roadmap already
underway while continuing to innovate so that Paramount+ and Pluto TV remain at the center of how
audiences discover and engage with our programming as we build an entertainment platform for the
future.
6
Studios
The segment is continuing to see strong, profitable growth year-over-year in the second quarter, a
meaningful improvement from a loss in the prior-year period. On the film side, our Studios turnaround
is showing real, measurable progress as our Q2 releases outperformed expectations, reflecting not only
the strength of our slate, but also a more disciplined, data-driven approach to greenlighting, marketing,
and distribution. By applying audience insights and analytics throughout the process, we’re making
smarter decisions and generating 11% more box office per dollar of marketing spend in 2026 compared
to 2025. With eight films still to come in the second half of this year, including PAW Patrol: The Dino
Movie, Street Fighter, and Mr. Irrelevant with the NFL – the league’s first theatrical release – we’re
continuing to build the broader, more diverse slate we set out to create. That momentum carries into
2027, with another strong lineup that spans iconic franchises, original storytelling, and bold new
creative voices, positioning the Studios for sustained, profitable growth.
Our Television Studios continue to build a strong pipeline of premium content across platforms and
markets. CBS Studios is producing or co-producing 15 new and returning series for the network’s
upcoming season, while expanding its reach with leading third-party streamers and international
broadcasters, including with the newest installment of the NCIS universe, NCIS: New York, as well as
high-profile series such as Netflix’s Little House on the Prairie, Apple TV’s Murderbot, Amazon’s Odd
Jobs, and F-Ward in Australia, among others.
Paramount Television Studios is producing a stellar slate of shows for our networks and third parties,
with 20 active titles for Paramount+, including Dexter: Resurrection, Tulsa King and its spinoff Frisco
King. Other recent wins include Ride or Die on Amazon Prime, which quickly became the top show in
the U.S. with an estimated 1.6 billion minutes watched, and XO, Kitty, which spent three weeks on
Netflix’s Global Top 10 Shows list and reached #1 in 54 countries, including the U.S. This quarter will
also see the launch of the newest season of Reacher on Amazon, and its anticipated spinoff, Neagley.
Paramount Animation is expanding its pipeline with a diverse slate of original and franchise-driven
projects, including The Naughty List, an original animated feature from filmmaker Robert Rodriguez; an
animated feature based on CBS’ Survivor franchise with Jeff Probst executive producing; and an
adaptation of the comic Freddy the 13th with Dan Trachtenberg directing. And Skydance Sports, our
premium studio under Paramount Sports Entertainment, is growing its portfolio as well, as highlighted
in the quarter by Netflix’s RAFA, the first primarily non-English docuseries nominated for a primetime
Emmy®.
Content licensing continues to gain momentum, with recent wins including key international deals for
CBS series and kids and family content; strong ongoing results from our domestic Pay 1 output deals;
and the continued success of studio-produced titles such as Swapped, a film from Skydance Animation
that is on track to become Netflix’s second most viewed original animated film. Across our studios, we
are focused on maximizing the value of our content by serving both our own platforms and a broad
range of strategic partners, with recent licensing partnerships with the likes of Amazon, Netflix, Tubi,
and Tencent.
As we reinvigorate the business, we’re seeing the value of our library increase, with healthy double-
digit revenue growth in Q2 and expected for the full year – a meaningful turnaround from prior years’
trends.
7
In June, we launched Paramount Games, our dedicated games division serving as both a publisher and
incubator for interactive entertainment built around our world-class IP. That same week, we
announced two major titles in development – TMNT: The Last Ronin and Star Trek: Shadow Frontier.
Our latest release, Avatar Legends: The Fighting Game, is performing very well with an 80 Metacritic
score.
TV Media
Our TV Media segment continues to deliver on the transformation we set out to achieve, growing
profit and margin even as the industry navigates secular pressure on linear and the ongoing shift to
streaming. CBS remains the anchor of that strategy, driven by strong live sports performance alongside
seven of the top 10 broadcast series in the most recent broadcast season. Flagship franchises like
Survivor's milestone 50th season delivered some of the network's biggest performances, further
reinforcing the crossover strength across our platform as CBS and Paramount+ had 10 of the top 20
series across all linear and streaming programming in Q2. Meanwhile, our cable portfolio brands,
including The Daily Show, RuPaul's Drag Race, PAW Patrol, and SpongeBob SquarePants, each set new
performance benchmarks, including The Daily Show achieving its highest ratings in nine years, while
the BET Awards drew its highest ratings and largest audience in years.
That momentum carries into next season – the 2026-2027 primetime schedule features 15 CBS Studios
series, including new additions Cupertino, Einstein, and Eternally Yours, alongside returning hit series
Sheriff’s Country and Matlock. CBS, CBS Studios, and CBS Media Ventures led all networks with a
combined 48 nominations for the 53rd Annual Daytime Emmy® Awards, further recognition of the
caliber of storytelling driving the network's performance.
Sports is another strong pillar of that strategy. In Q2, CBS Sports set ratings records across the board
with the most-watched Masters in over a decade, the most-watched UEFA Champions League Final
ever on U.S. English-language television, and our most-watched WNBA game ever following our new
long-term partnership with the league. Looking ahead, the NFL remains a strong partnership, and this
fall's expanded schedule – featuring an additional primetime game – underscores the value of live
sports in growing audience reach, advertiser demand, and engagement across both linear and
streaming. Together, these results reflect a TV Media business that is executing on its transformation
while continuing to serve our audiences where they are, including on broadcast or Paramount+, and
positions our most valuable brands and franchises for the future.
8
Driving Efficiency and Optimizing Investment Enterprise-wide
We continue to make progress on our transformation at Paramount, and we now expect to deliver
over $2.7 billion of run-rate efficiencies by the end of 2026 versus $2.5 billion previously, and continue
to expect $3 billion-plus in efficiencies from the Skydance-Paramount combination.
Our progress is evident in our external financials in TV Media, where profitability grew year-over-year
while revenue declined, reflecting steps to rightsize the cost structure relative to overall declines in
linear revenues. For example, even as we made more efficient programming decisions across TV Media
– with average production costs per episode down nearly 10% year-over-year for the 2025-2026
broadcast season – we saw an increase in our share of the top 20 series. This shows we can manage
the segment for profitability while still delivering great entertainment value to audiences.
Across other areas of the business, we’re continuing to make progress on making technology a core
competency of the company and operating more efficiently as an enterprise. As one example, we are
building enterprise apps in-house across procurement, recruiting, finance, and HR using AI
development tools with rapid build times and savings versus third-party solutions. We also have the
majority of the workforce using AI tools across an accelerating number of workflows. In particular, we
are seeing velocity and volume of features shipped increasing across our streaming engineering team.
Our work to unify company systems is on track as additional divisions went live on Oracle Fusion in
July, and we are on our way to bringing the entire company onto a unified ERP system by early next
year.
These efficiencies are also enabling the company to make disciplined reinvestments into growth areas
of our business, such as spending over $1.5 billion in new content in 2026 for current and future
programming – including UFC, our expanding film slate, and a broader Originals lineup – and strategic
scaling of our product and technology capabilities such as investing in AI across our engineering teams
and building our ad tech teams and offerings.
2 We present periods before ("predecessor") and after ("successor") the close of the Skydance Transaction (see Financial
Statement Presentation). Because our current GAAP segment structure was not in effect during the predecessor period, the
2025 predecessor revenues by segment shown in this letter constitute a non-GAAP presentation. See Supplemental
Disclosures Regarding Non-GAAP Financial Measures for reconciliations to the historical GAAP segment presentation.
9
Q2 Results and Q3 and 2026 Outlook
A summary and discussion of Q2 results and our Q3 and 2026 outlook are below2.
In millions, except per share amounts | Predecessor | Successor | Outlook | ||||||||||||
7/1/25 - | 8/7/25 - | ||||||||||||||
Q2’25 | 8/6/25 | 9/30/25 | Q4’25 | Q1’26 | Q2’26 | Q3’26 | 2026 | ||||||||
Direct-to-Consumer | $2,264 | $923 | $1,344 | $2,309 | $2,398 | $2,474 | |||||||||
Y/Y Growth (%) | 11% | 9% | |||||||||||||
Studios | 1,135 | 462 | 738 | 2,060 | 1,283 | 1,314 | |||||||||
Y/Y Growth (%) | 11% | 16% | |||||||||||||
TV Media | 3,454 | 1,198 | 2,042 | 3,799 | 3,666 | 3,128 | |||||||||
Y/Y Growth (%) | (6)% | (9)% | |||||||||||||
Eliminations | (4) | (2) | (3) | (20) | — | (3) | |||||||||
Total Revenue | $6,849 | $2,581 | $4,121 | $8,148 | $7,347 | $6,913 | $6,950 - $7,150 | $30,000 | |||||||
Y/Y Growth (%) | 1% | 2% | 2% | 1% | 4% - 7% | 4% | |||||||||
Operating Income (Loss) | $399 | $80 | $244 | $(339) | $616 | $475 | |||||||||
Operating Margin (%) | 5.8% | 3.1% | 5.9% | (4.2)% | 8.4% | 6.9% | |||||||||
Net Earnings (Loss) | $57 | $(244) | $(13) | $(573) | $168 | $41 | |||||||||
Diluted EPS (1) | $.08 | $(.36) | $(.01) | $(.52) | $.15 | $.04 | |||||||||
Adjusted EBITDA (2) | $863 | $313 | $684 | $674 | $1,161 | $1,099 | $875 - $975 | $3,800 - $3,900 | |||||||
Y/Y Growth (%) | (6)% | 42% | 59% | 27% | (12%) - (2%) | 16% - 19% | |||||||||
Adj. EBITDA Margin (%) | 12.6% | 12.1% | 16.6% | 8.3% | 15.8% | 15.9% | 13.1% | 12.8% | |||||||
Net Cash Provided by (Used For) Operating Activities | $159 | $(175) | $268 | $217 | $185 | $319 | |||||||||
Free Cash Flow (2) | $114 | $(207) | $222 | $101 | $96 | $258 | |||||||||
Shares Outstanding (3) | 680 | 675 | 1,098 | 1,104 | 1,118 | 1,120 | |||||||||
Paramount+ Revenue | $1,771 | $709 | $1,060 | $1,837 | $1,974 | $2,061 | |||||||||
Y/Y Growth (%) | 23% | 17% | 17% | 16% | |||||||||||
Paramount+ Subscribers | 76.8 | 77.9 | 78.9 | 79.6 | 81.6 | ||||||||||
Y/Y Growth (%) | 14% | 4% | 2% | 6% | |||||||||||
Note: (1) Diluted EPS from continuing operations attributable to predecessor or successor; (2) See Supplemental
Disclosures Regarding Non-GAAP Financial Measures (3) Weighted average number of diluted shares
outstanding
10
Q2’26
In Q2, total revenue of $6.9 billion increased 1% versus revenue of $6.8 billion in Q2'25 for the
predecessor company, led by growth in DTC and Studios revenues, largely offset by a continued decline
in TV Media. Operating income was $475 million (6.9% margin) including $153 million of transaction-
related costs. Adj. EBITDA was $1.1 billion, a 15.9% margin, and increased 27% year-over-year, with
profitability up across all segments.
Direct-to-Consumer
•DTC revenue increased 9% year-over-year to $2.5 billion, led by Paramount+ revenue growth of
16% year-over-year, reflecting subscriber growth of approximately 6% and ARPU growth of
approximately 12%. We added approximately 2 million subscribers in Q2, ahead of our
expectations as subscriber growth accelerated (including nearly 2 million international hard
bundle exits in the quarter). Outperformance was driven by our programming slate, including
FIFA World Cup in certain Latin American countries, UFC, and our Originals, all of which
contributed to Q2 being our lowest churn quarter in Paramount+’s history. DTC advertising
revenue grew 8% year-over-year, with Paramount+ ad revenue growing over 30% in the
quarter. As previously noted, we completed our integration of BET+ into Paramount+ in the
quarter, which along with Showtime declines, amounted to a modest headwind to total DTC
growth.
•DTC adj. EBITDA was $366 million (14.8% margin), up 44% versus $254 million in Q2'25, as
revenue growth and cost efficiencies, including a benefit related to the change in accounting
basis resulting from the Skydance transaction, more than offset planned investment in
programming.
Studios
•Studios revenue increased 16% year-over-year to $1.3 billion, reflecting a strong quarter of
third-party deliveries at Paramount Television Studios and the consolidation of Skydance
licensing revenues, partially offset by lower theatrical revenue from lapping Mission: Impossible
– The Final Reckoning in the prior year. The Q2 film slate, led by Scary Movie, performed well
and came ahead of our expectations.
•Studios adj. EBITDA was $36 million (2.7% margin), compared to -$31 million in Q2'25, driven by
improved film slate profitability and TV licensing contribution.
TV Media
•TV Media revenue declined 9% year-over-year to $3.1 billion. Advertising revenue declined 14%
year-over-year, including an approximately eight percentage point headwind from lapping
NCAA Final Four and Championship game advertising in the prior-year quarter, as noted last
quarter, as well as an approximate three percentage point headwind from our sales of Telefe
and Chilevision. This was partially offset by an approximately two percentage point benefit from
political advertising. Affiliate revenue declined 6% year-over-year, consistent with continued
pay TV subscriber erosion while rates remain resilient.
•TV Media adj. EBITDA was $1.1 billion, a 34.0% margin versus a 26.4% margin for Q2’25,
benefiting from disciplined expense management to more than offset revenue declines.
11
Q3’26
In Q3’26, we expect total revenue of $6.95 billion to $7.15 billion, or 4% to 7% growth year-over-year
versus Q3’25 for the predecessor company, with accelerating growth in DTC and Studios and
moderating declines in TV Media. In Q3, we expect Paramount+ quarter-over-quarter subscribers will
be flattish.
We expect adj. EBITDA of $875 million to $975 million, or a 13.1% margin at the midpoint, with
approximately $70 million of stock-based compensation in the quarter. We expect profitability will
improve year-over-year in Studios and TV Media. In Direct-to-Consumer, we expect a mid- to high-
single-digit margin in Q3 due primarily to the seasonal timing of content amortization expense, while
still expecting full-year growth in our streaming profit. We anticipate transformation costs of roughly
$200 million in Q3, which will impact our reported free cash flow.
2026
For 2026, we continue to expect total revenue of $30 billion, or 4% growth year-over-year, inclusive of
predecessor and successor periods. Our expectations by segment are largely consistent with those we
outlined in our Q4’25 letter. We are increasing our adj. EBITDA forecast from our previous $3.8 billion
to $3.8 to $3.9 billion, or a 12.8% margin at the midpoint. Our profit growth reflects progress against
our $3 billion-plus efficiencies and cost management balanced with disciplined reinvestment. We now
expect free cash flow conversion of at least 10% before roughly $800 million of transformation costs.
2026 remains an important year of investment – in business transformation, and in content and
technology, which we expect will contribute to our growth in 2027 and beyond. Across segments:
•For DTC, we continue to expect accelerating revenue growth across subscription and
advertising revenue. Underlying subscriber growth will be healthy and accelerating year-over-
year, with total paid subscribers modestly higher compared to 2025, including approximately 4
million strategic international hard bundle exits. We continue to expect to grow our DTC profit
in 2026 relative to 2025, with profitability weighted more meaningfully to the first half of the
year due to the timing of programming investments in Q3 and Q4 as noted above.
•We expect growth in our new Studios segment driven by accelerating licensing and other
revenues, including a full-year impact of legacy Skydance revenue, as well as higher licensing
from first run, current, and library titles across our studios. Our theatrical slate continues to
outperform expectations, though we still expect lower theatrical revenue year-over-year due to
lower average box office revenue per film across more releases in 2026 as we build into our
2027+ slates. We expect Studios segment profitability will increase in 2026 versus 2025.
•In TV Media, we expect continued headwinds to affiliate revenue due to pay TV subscriber
declines with some moderation in linear advertising declines versus 2025, including expected
political spending in 2026 in the back half of the year. We expect to have improving margins in
TV Media as well as growth in total adj. EBITDA in 2026.
•We forecast corporate expenses of approximately $1.5 billion for the year.
12
Capital Structure & Capital Allocation
We ended the quarter with $1.6 billion in cash and cash equivalents and $15.2 billion in gross debt. In
Q2, we repaid $350 million of our outstanding revolver borrowings to end the quarter at $1.8 billion
drawn. As a reminder, we drew $2.15 billion on our revolving credit facility in Q1 to pay the $2.8 billion
termination fee WBD owed to Netflix upon entering into our merger agreement. This total amount will
be repaid by us from proceeds we will receive from the private placement we entered into in
connection with the WBD transaction. We have $86 million in debt maturing for the remainder of
2026.
Warner Bros. Discovery Transaction
As it relates to the planned acquisition of Warner Bros. Discovery, we fully expect the transaction to
close and remain focused on preparing for a successful combination once it is complete. Over the past
several months, our leadership team and legal partners have worked closely with antitrust and
competition authorities around the world. As a result, regulatory bodies and governments representing
65 jurisdictions — including the European Commission, Australia, Brazil, China, the U.S., Germany,
France, Spain, Canada, South Africa, Saudi Arabia, and South Korea — have either cleared the
transaction or elected not to challenge it on competition and/or foreign direct investment grounds.
As these clearances demonstrate, the transaction is fully consistent with antitrust laws. The claims in
the pending antitrust litigation do not reflect the realities of today's highly competitive entertainment
marketplace. Even combined, Paramount and Warner Bros. Discovery would account for just 13% of
total U.S. television and streaming viewing time, 18% of the domestic box office over the past 12
months, and 22% on average over the last two years. Those figures reflect a company competing in an
intensely competitive marketplace against tech giants such as Netflix, Amazon, Apple, and others —
not one with the market power to dictate outcomes for audiences, creators, or distributors. We remain
confident the transaction will be completed, creating a stronger, more competitive media company.
Closing
One year in, we are proud of the progress we’ve made and confident in our strategy. These results are
a testament to our people, whose hard work and dedication have made them possible. Looking ahead,
we will build on this momentum and grow our business by investing in great storytelling, better serving
audiences, and operating more efficiently to create long-term value for shareholders.
Sincerely,
David Ellison
Chairman & CEO
Paramount, a Skydance Corporation
13
Cautionary Note Concerning Forward-Looking Statements
This letter contains both historical and forward-looking statements, including statements related to our future financial
results and performance, potential achievements and transactions (including in connection with our pending merger
with Warner Bros. Discovery, Inc.) and their expected benefits, and industry trends and developments. All statements
that are not statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Similarly, statements that describe our objectives, plans or goals
are or may be forward-looking statements. These forward-looking statements reflect our current expectations
concerning future results and events; can generally be identified by the use of statements that include phrases such as
“believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “may,” “could,” “estimate” or other similar
words or phrases; and involve known and unknown risks, uncertainties and other factors that are difficult to predict and
which may cause our actual results, performance or achievements to be different from any future results, performance
or achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among
others: risks related to our streaming business; the adverse impact on our advertising revenues as a result of changes in
consumer behavior, advertising market conditions and deficiencies in audience measurement; risks related to operating
in highly competitive and dynamic industries; the unpredictable nature of consumer behavior, as well as evolving
technologies and distribution models; risks related to our decisions to invest in new businesses, products, services and
technologies, and the evolution of our business strategy; the potential for loss of carriage or other reduction in or the
impact of negotiations for the distribution of our content; damage to our reputation or brands; losses due to asset
impairment charges for goodwill, content and long-lived assets, including finite-lived intangible assets; liabilities related
to discontinued operations and former businesses; increasing scrutiny of, and evolving expectations for, sustainability
initiatives; evolving business continuity, cybersecurity, privacy and data protection and similar risks; challenges in
protecting and maintaining our intellectual property rights; domestic and global political, economic and regulatory
factors affecting our businesses generally; the inability to hire or retain key employees or secure creative talent;
disruptions to our operations as a result of labor disputes; risks and costs associated with the integration of, and our
ability to integrate, the businesses of Paramount Global and Skydance Media, LLC successfully and to achieve anticipated
synergies; litigation relating to the Skydance Transactions potentially resulting in substantial costs; volatility in the price
of our Class B common stock; the effect our dual-class capital structure and the concentrated ownership may have on
the price of our Class B common stock or business; risks related to a private sale of a controlling interest in our Company,
including that our stockholders may not realize any change of control premium on shares of our Class B common stock
and that we may become subject to the control of a presently unknown third party; risks associated with our status as a
“controlled company” under Nasdaq rules, including our exemption from certain corporate governance requirements;
risks associated with the lack of voting rights of our Class B common stock; risks that anti-takeover provisions in our
amended and restated certificate of incorporation (“Charter”) and amended and restated bylaws, and under Delaware
law could deter, delay, or prevent a change of control; risks that exclusive forum provisions in our Charter could limit a
stockholder’s choice of forum for certain claims and discourage lawsuits against our directors and officers; risks that
corporate opportunity provisions in our Charter could permit certain persons to pursue competitive opportunities that
might otherwise be available to us; risks associated with our holding company structure, including our dependence on
distributions from our subsidiaries to meet our tax obligations and other cash requirements; disruptions the WBD
Merger may cause to our and WBD’s business and commercial relationships; the negative impact that a failure to
consummate the WBD Merger could have on our business, financial condition, results of operations and stock price; the
risk that the WBD Merger may be prevented or delayed or the anticipated benefits reduced if we do not obtain certain
regulatory approvals; the risk that the WBD Merger Agreement may be terminated in accordance with its terms,
including if any conditions to the closing of the WBD Merger are not satisfied; the risk that litigation relating to the WBD
Merger could prevent or further delay the closing of the WBD Merger or result in the payment of damages after closing;
challenges realizing synergies and other anticipated benefits expected from the WBD Merger, including integrating
WBD’s business successfully; risks to our business, financial condition or results of operations as a result of the
incurrence of substantial costs and indebtedness in connection with the WBD Merger; risks of reduced ownership and
economic interest by our existing stockholders as a result of the WBD Merger; and other factors described in our news
releases and filings with the Securities and Exchange Commission, including but not limited to our most recent Annual
Report on Form 10-K and our reports on Form 10-Q and Form 8-K. There may be additional risks, uncertainties and
factors that we do not currently view as material or that are not necessarily known. The forward-looking statements
included in this letter are made only as of the date hereof, and we do not undertake any obligation to publicly update
any forward-looking statements to reflect subsequent events or circumstances.
14
Financial Statement Presentation
On August 7, 2025, Paramount Global and Skydance Media, LLC (“Skydance”) became subsidiaries of
Paramount Skydance Corporation, pursuant to a transaction agreement entered into on July 7, 2024
(the transactions contemplated by the Transaction Agreement, the “Skydance Transactions”).
As a result of the new accounting basis established for Paramount Global’s net assets upon the closing
of the Skydance Transactions, the results of operations and cash flows are not comparable between
the Successor and Predecessor periods. Accordingly, our consolidated financial statements within our
Form 10-Q for the second quarter of 2026 are presented in two distinct periods. The periods prior to
August 7, 2025 include only Paramount Global and are identified as “Predecessor”, and the periods
beginning on August 7, 2025 reflect Paramount Skydance Corporation and are identified as
“Successor”. The presentation in this letter, the accompanying financial statements, and supplemental
disclosures of non-GAAP financial measures also reflect the distinction between the Successor and
Predecessor periods.
Refer to Note 1 of our Form 10-Q for the second quarter of 2026 for additional information regarding
the new accounting basis established in connection with the Skydance Transactions.
15
PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
Successor | Predecessor | Successor | Predecessor | ||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||||
Revenues | $6,913 | $6,849 | $14,260 | $14,041 | |||||||||||||
Costs and expenses: | |||||||||||||||||
Operating | 4,443 | 4,624 | 9,298 | 9,585 | |||||||||||||
Selling, general and administrative | 1,443 | 1,401 | 2,854 | 2,944 | |||||||||||||
Depreciation and amortization | 364 | 87 | 726 | 175 | |||||||||||||
Impairment charges | — | 157 | — | 157 | |||||||||||||
Restructuring and transaction- related items | 188 | 181 | 291 | 266 | |||||||||||||
Total costs and expenses | 6,438 | 6,450 | 13,169 | 13,127 | |||||||||||||
Gain on dispositions | — | — | — | 35 | |||||||||||||
Operating income | 475 | 399 | 1,091 | 949 | |||||||||||||
Interest expense | (255) | (214) | (493) | (431) | |||||||||||||
Interest income | 29 | 32 | 67 | 70 | |||||||||||||
Other items, net | (34) | (39) | (58) | (76) | |||||||||||||
Earnings before income taxes and equity in loss of investee companies | 215 | 178 | 607 | 512 | |||||||||||||
Provision for income taxes | (120) | (50) | (275) | (150) | |||||||||||||
Equity in loss of investee companies, net of tax | (54) | (67) | (116) | (140) | |||||||||||||
Net earnings (Parent and noncontrolling interests) | 41 | 61 | 216 | 222 | |||||||||||||
Net earnings attributable to noncontrolling interests | — | (4) | (7) | (13) | |||||||||||||
Net earnings attributable to Parent | $41 | $57 | $209 | $209 | |||||||||||||
Basic net earnings per common share attributable to Parent | $.04 | $.08 | $.19 | $.31 | |||||||||||||
Diluted net earnings per common share attributable to Parent | $.04 | $.08 | $.19 | $.31 | |||||||||||||
Weighted average number of common shares outstanding: | |||||||||||||||||
Basic | 1,117 | 675 | 1,113 | 673 | |||||||||||||
Diluted | 1,120 | 680 | 1,119 | 679 | |||||||||||||
16
PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except per share amounts)
At | At | |||||||
June 30, 2026 | December 31, 2025 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $1,627 | $3,274 | ||||||
Receivables, net | 6,178 | 6,615 | ||||||
Programming and other inventory | 1,655 | 1,461 | ||||||
Prepaid expenses and other current assets | 1,560 | 1,970 | ||||||
Total current assets | 11,020 | 13,320 | ||||||
Property and equipment, net | 2,216 | 2,195 | ||||||
Programming and other inventory | 15,641 | 15,028 | ||||||
Goodwill | 2,034 | 1,600 | ||||||
Intangible assets, net | 5,649 | 6,238 | ||||||
Operating lease assets | 1,033 | 1,126 | ||||||
Deferred income tax assets, net | 1,347 | 1,282 | ||||||
Advance consideration for WBD acquisition | 2,800 | — | ||||||
Other assets | 2,671 | 2,553 | ||||||
Total Assets | $44,411 | $43,342 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $511 | $906 | ||||||
Accrued expenses | 2,158 | 2,077 | ||||||
Participants’ share and royalties payable | 2,606 | 2,646 | ||||||
Accrued programming and production costs | 1,801 | 1,832 | ||||||
Deferred revenues | 1,486 | 1,355 | ||||||
Debt | 665 | 433 | ||||||
Other current liabilities | 1,373 | 1,350 | ||||||
Total current liabilities | 10,600 | 10,599 | ||||||
Long-term debt | 14,491 | 13,225 | ||||||
Participants’ share and royalties payable | 1,437 | 1,361 | ||||||
Pension and postretirement benefit obligations | 1,169 | 1,185 | ||||||
Deferred income tax liabilities, net | 68 | 85 | ||||||
Operating lease liabilities | 1,046 | 1,150 | ||||||
Programming obligations | 581 | 400 | ||||||
Other liabilities | 2,209 | 2,450 | ||||||
Commitments and contingencies | ||||||||
Parent stockholders’ equity: | ||||||||
Class A Common Stock, par value $.001 per share; 55 shares authorized; 32 (2026 and 2025) shares issued | — | — | ||||||
Class B Common Stock, par value $.001 per share; 7,000 (2026) and 5,500 (2025) shares authorized; 1,089 (2026) and 1,076 (2025) shares issued | 1 | 1 | ||||||
Additional paid-in capital | 13,307 | 13,386 | ||||||
Accumulated deficit | (1,544) | (1,753) | ||||||
Accumulated other comprehensive income | 7 | 59 | ||||||
Total Parent stockholders’ equity | 11,771 | 11,693 | ||||||
Noncontrolling interests | 1,039 | 1,194 | ||||||
Total Equity | 12,810 | 12,887 | ||||||
Total Liabilities and Equity | $44,411 | $43,342 | ||||||
17
PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Successor | Predecessor | ||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||
2026 | 2025 | ||||||||
Operating Activities: | |||||||||
Net earnings (Parent and noncontrolling interests) | $216 | $222 | |||||||
Adjustments to reconcile net earnings to net cash flow provided by operating activities: | |||||||||
Depreciation and amortization | 726 | 175 | |||||||
Impairment charges | — | 157 | |||||||
Deferred tax provision | 50 | 21 | |||||||
Stock-based compensation | 161 | 87 | |||||||
Gain on dispositions | — | (35) | |||||||
Equity in loss of investee companies, net of tax and distributions | 118 | 141 | |||||||
Change in assets and liabilities | (767) | (429) | |||||||
Net cash flow provided by operating activities | 504 | 339 | |||||||
Investing Activities: | |||||||||
Investments | (172) | (148) | |||||||
Capital expenditures | (150) | (102) | |||||||
Advance consideration for WBD acquisition | (2,800) | — | |||||||
Proceeds from dispositions | 13 | 66 | |||||||
Other investing activities | (6) | — | |||||||
Net cash flow used for investing activities | (3,115) | (184) | |||||||
Financing Activities: | |||||||||
Borrowings under credit facility | 2,700 | — | |||||||
Repayment of credit facility borrowings | (900) | — | |||||||
Repayment of notes and debentures | (347) | — | |||||||
Dividends paid on common stock | (117) | (70) | |||||||
Payment of payroll taxes in lieu of issuing shares for stock-based compensation | (104) | (26) | |||||||
Payments to noncontrolling interests | (189) | (65) | |||||||
Other financing activities | (51) | — | |||||||
Net cash flow provided by (used for) financing activities | 992 | (161) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (28) | 84 | |||||||
Net (decrease) increase in cash and cash equivalents | (1,647) | 78 | |||||||
Cash and cash equivalents at beginning of year | 3,274 | 2,661 | |||||||
Cash and cash equivalents at end of period | $1,627 | $2,739 | |||||||
18
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES
(Unaudited; in millions, except per share amounts)
Adjusted EBITDA (defined below), Adjusted earnings before income taxes, adjusted provision for
income taxes, adjusted net earnings attributable to parent, and adjusted diluted EPS, which are
measures of performance not calculated in accordance with accounting principles generally accepted
in the United States (“U.S. GAAP” or “GAAP”) (together, the “adjusted measures”) exclude certain
items identified as affecting comparability that are not part of our normal operations, including
programming charges, impairment charges, restructuring charges, transaction-related items, other
corporate matters, gain (loss) on dispositions, gain (loss) from investments and discrete tax items,
each where applicable. We define Adjusted EBITDA as net earnings (loss) attributable to Parent before
interest expense and income; (provision for) benefit from income taxes; other items; equity in earnings
(loss) of investee companies, net of tax; and depreciation and amortization, adjusted to exclude stock-
based compensation expense (which is a noncash expense that management does not consider to be
part of our underlying operating performance) and certain items identified as affecting comparability
that are not part of our normal operations.
We use these adjusted measures to, among other things, evaluate our operating performance. These
measures are among the primary measures used by management for planning and forecasting of
future periods, and they are important indicators of our operational strength and business
performance. In addition, we use Adjusted EBITDA to, among other things, value prospective
acquisitions. We believe these measures are relevant and useful for investors because they allow
investors to view our performance in a manner consistent with the method used by our management;
and because they exclude items that are not representative of our normal operations, they provide a
clearer perspective on underlying performance, and make it easier for investors, analysts and peers to
compare our operating performance to other companies in the industry and to compare our results
across reporting periods.
Because the adjusted measures are measures of performance not calculated in accordance with U.S.
GAAP, they should not be considered in isolation of, or as a substitute for, our results as reported
under U.S. GAAP, including net earnings (loss), (provision for) benefit from income taxes, net earnings
(loss) attributable to Parent, and diluted EPS, as applicable, as indicators of operating performance and
undue reliance should not be placed on these adjusted measures. Other companies may define these
measures, including Adjusted EBITDA, differently and, as a result, our adjusted measures may not be
directly comparable to similarly titled measures of other companies.
We are not able to reconcile forward-looking non-GAAP financial measures because we are unable
without unreasonable efforts to accurately estimate the individual adjustments for such
reconciliations, as applicable, or to quantify the probable significance of these items at this time.
19
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions, except per share amounts)
The following tables reconcile the adjusted measures to their most directly comparable financial
measures in accordance with U.S. GAAP. The tax impacts on the items identified as affecting
comparability in the tables below have been calculated using the tax rate applicable to each item.
Successor | Predecessor | Successor | Predecessor | ||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||||
Net earnings attributable to Parent (GAAP) | $41 | $57 | $209 | $209 | |||||||||||||
Net earnings attributable to noncontrolling interests | — | 4 | 7 | 13 | |||||||||||||
Equity in loss of investee companies, net of tax | 54 | 67 | 116 | 140 | |||||||||||||
Provision for income taxes | 120 | 50 | 275 | 150 | |||||||||||||
Other items, net | 34 | 39 | 58 | 76 | |||||||||||||
Interest expense, net | 226 | 182 | 426 | 361 | |||||||||||||
Gain on dispositions (a) | — | — | — | (35) | |||||||||||||
Transaction-related items (a) | 153 | 4 | 256 | 24 | |||||||||||||
Restructuring charges (a) (b) | 35 | 177 | 35 | 242 | |||||||||||||
Impairment charges (a) | — | 157 | — | 157 | |||||||||||||
Stock-based compensation (b) | 72 | 39 | 152 | 83 | |||||||||||||
Depreciation and amortization | 364 | 87 | 726 | 175 | |||||||||||||
Adjusted EBITDA (Non-GAAP) | $1,099 | $863 | $2,260 | $1,595 | |||||||||||||
(a) See notes on the following tables for additional information on items affecting comparability.
(b) Stock-based compensation expense of $9 million for both the three and six months ended June 30, 2026 (Successor), and $4 million for
both the three and six months ended June 30, 2025 (Predecessor) is included in “Restructuring and transaction-related items.”
20
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions, except per share amounts)
Three Months Ended June 30, 2026
Successor | |||||||||||||||
Three Months Ended June 30, 2026 | |||||||||||||||
Earnings Before Income Taxes | Provision for Income Taxes | Net Earnings Attributable to Parent | Diluted EPS | ||||||||||||
Reported (GAAP) | $215 | $(120) | $41 | $.04 | |||||||||||
Items affecting comparability: | |||||||||||||||
Restructuring charges (a) | 35 | (5) | 30 | .02 | |||||||||||
Transaction-related items (b) | 153 | (15) | 138 | .12 | |||||||||||
Discrete tax items | — | (4) | (4) | — | |||||||||||
Adjusted (Non-GAAP) | $403 | $(144) | $205 | $.18 | |||||||||||
(a) Reflects severance costs associated with changes in management and aligning the business around our strategic priorities
following the Skydance Transactions.
(b) Principally reflects legal, advisory, and other professional fees associated with the planned WBD Merger and related
integration.
Three Months Ended June 30, 2025
Predecessor | |||||||||||||||
Three Months Ended June 30, 2025 | |||||||||||||||
Earnings Before Income Taxes | Provision for Income Taxes | Net Earnings Attributable to Parent | Diluted EPS | ||||||||||||
Reported (GAAP) | $178 | $(50) | $57 | $.08 | |||||||||||
Items affecting comparability: | |||||||||||||||
Impairment charges (a) | 157 | (39) | 118 | .17 | |||||||||||
Restructuring charges (b) | 177 | (42) | 135 | .20 | |||||||||||
Transaction-related items (c) | 4 | (1) | 3 | .01 | |||||||||||
Discrete tax items | — | 2 | 2 | — | |||||||||||
Adjusted (Non-GAAP) | $516 | $(130) | $315 | $.46 | |||||||||||
(a) Reflects a charge to reduce the carrying values of FCC licenses in certain markets to their estimated fair values.
(b) Reflects severance costs associated with strategic changes in our global workforce.
(c) Reflects legal, advisory, and other professional fees relating to the Skydance Transactions.
21
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions, except per share amounts)
Six Months Ended June 30, 2026
Successor | |||||||||||||||
Six Months Ended June 30, 2026 | |||||||||||||||
Earnings Before Income Taxes | Provision for Income Taxes | Net Earnings Attributable to Parent | Diluted EPS | ||||||||||||
Reported (GAAP) | $607 | $(275) | $209 | $.19 | |||||||||||
Items affecting comparability: | |||||||||||||||
Restructuring charges (a) | 35 | (5) | 30 | .03 | |||||||||||
Transaction-related items (b) | 256 | (21) | 235 | .21 | |||||||||||
Discrete tax items | — | (8) | (8) | (.01) | |||||||||||
Adjusted (Non-GAAP) | $898 | $(309) | $466 | $.42 | |||||||||||
(a) Reflects severance costs associated with changes in management and aligning the business around our strategic priorities
following the Skydance Transactions.
(b) Principally reflects legal, advisory, and other professional fees associated with the planned WBD Merger and related
integration.
Six Months Ended June 30, 2025
Predecessor | |||||||||||||||
Six Months Ended June 30, 2025 | |||||||||||||||
Earnings Before Income Taxes | Provision for Income Taxes | Net Earnings Attributable to Parent | Diluted EPS | ||||||||||||
Reported (GAAP) | $512 | $(150) | $209 | $.31 | |||||||||||
Items affecting comparability: | |||||||||||||||
Impairment charges (a) | 157 | (39) | 118 | .17 | |||||||||||
Restructuring charges (b) | 242 | (58) | 184 | .27 | |||||||||||
Transaction-related items (c) | 24 | (1) | 23 | .04 | |||||||||||
Gain on dispositions (d) | (35) | 2 | (33) | (.05) | |||||||||||
Discrete tax items | — | 9 | 9 | .01 | |||||||||||
Adjusted (Non-GAAP) | $900 | $(237) | $510 | $.75 | |||||||||||
(a) Reflects a charge to reduce the carrying values of FCC licenses in certain markets to their estimated fair values.
(b) Includes severance costs and charges for the impairment of lease assets.
(c) Reflects legal, advisory, and other professional fees relating to the Skydance Transactions.
(d) Principally reflects a gain associated with the disposition of a noncore business.
22
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions)
Beginning in 2026, we transitioned our reporting structure into three new segments: Studios, Direct-
to-Consumer, and TV Media and updated our segment expense allocations to better reflect how we
operate and make cost decisions across the business. As a result of the new accounting basis
established for Paramount Global’s net assets upon the closing of the Skydance Transactions (see
Financial Statement Presentation), the GAAP basis for our segment information for the Predecessor
period is based on our previous segments, Filmed Entertainment, Direct-to-Consumer, and TV
Media. To provide information consistent with how management reviews results, this letter includes
non-GAAP presentations in which the 2025 Predecessor amounts have been recast under the new
segment presentation and therefore constitute a non‑GAAP presentation. Reconciliations from the
GAAP presentation to this recast non-GAAP presentation are provided on the following pages.
Studios/Filmed Entertainment
Our Studios segment consists of our television and film studio operations, including CBS Studios,
Paramount Television Studios, Nickelodeon Animation, Paramount Pictures, Paramount Animation,
and Miramax, as well as Skydance Animation, Film, and Television, Paramount Sports Entertainment
and Paramount Games Studios. For the Predecessor period, our Filmed Entertainment segment was
most comparable to our new Studios segment and excluded studio operations related to our TV
Media businesses, including CBS Studios and Paramount Television Studios.
Three Months Ended June 30, 2025
GAAP | Non-GAAP | ||||||||||
Predecessor | Predecessor | ||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||
2025 | 2025 | ||||||||||
Filmed Entertainment | Adjustments (b) | Studios | |||||||||
Theatrical | $254 | $— | $254 | ||||||||
Licensing and other | 434 | 443 | 877 | ||||||||
Advertising | 2 | 2 | 4 | ||||||||
Revenues | 690 | 445 | 1,135 | ||||||||
Content costs | 394 | 343 | 737 | ||||||||
Advertising and marketing | 195 | 5 | 200 | ||||||||
Other | 185 | 44 | 229 | ||||||||
Expenses | 774 | 392 | 1,166 | ||||||||
Adjusted EBITDA/Adjusted OIBDA (a) | $(84) | $53 | $(31) | ||||||||
23
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions)
Period from July 1-August 6, 2025
GAAP | Non-GAAP | ||||||||||
Predecessor | Predecessor | ||||||||||
Period From July 1 - August 6, | Period From July 1 - August 6, | ||||||||||
2025 | 2025 | ||||||||||
Filmed Entertainment | Adjustments (b) | Studios | |||||||||
Theatrical | $73 | $— | $73 | ||||||||
Licensing and other | 202 | 185 | 387 | ||||||||
Advertising | 1 | 1 | 2 | ||||||||
Revenues | 276 | 186 | 462 | ||||||||
Content costs | 131 | 147 | 278 | ||||||||
Advertising and marketing | 106 | 2 | 108 | ||||||||
Other | 75 | 3 | 78 | ||||||||
Expenses | 312 | 152 | 464 | ||||||||
Adjusted EBITDA/Adjusted OIBDA (a) | $(36) | $34 | $(2) | ||||||||
(a) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted
OIBDA to Adjusted EBITDA.
(b) Reflects the inclusion of the historical TV Media studio operations and updates to our segment expense allocations to better
reflect how we operate and make cost decisions across the business.
24
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions)
Direct-to-Consumer
Our Direct-to-Consumer segment consists of our portfolio of domestic and international pay and
free streaming services, including Paramount+ and Pluto TV, as well as our domestic premium cable
network, Paramount+ with Showtime. For the Predecessor period, the Direct-to-Consumer segment
excluded Paramount+ with Showtime.
Three Months Ended June 30, 2025
GAAP | Non-GAAP | ||||||||||
Predecessor | Predecessor | ||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||
2025 | 2025 | ||||||||||
Direct-to-Consumer | Adjustments (b) | Direct-to-Consumer | |||||||||
Advertising | $494 | $— | $494 | ||||||||
Affiliate and subscription | 1,665 | 104 | 1,769 | ||||||||
Licensing and other | 1 | — | 1 | ||||||||
Revenues | 2,160 | 104 | 2,264 | ||||||||
Content costs | 1,085 | 29 | 1,114 | ||||||||
Advertising and marketing | 294 | 11 | 305 | ||||||||
Other | 624 | (33) | 591 | ||||||||
Expenses | 2,003 | 7 | 2,010 | ||||||||
Adjusted EBITDA/Adjusted OIBDA (a) | $157 | $97 | $254 | ||||||||
25
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions)
Period from July 1-August 6, 2025
GAAP | Non-GAAP | ||||||||||
Predecessor | Predecessor | ||||||||||
Period From July 1 - August 6, | Period From July 1 - August 6, | ||||||||||
2025 | 2025 | ||||||||||
Direct-to-Consumer | Adjustments (b) | Direct-to-Consumer | |||||||||
Advertising | $179 | $— | $179 | ||||||||
Affiliate and subscription | 704 | 40 | 744 | ||||||||
Revenues | 883 | 40 | 923 | ||||||||
Content costs | 412 | 16 | 428 | ||||||||
Advertising and marketing | 114 | 6 | 120 | ||||||||
Other | 252 | (14) | 238 | ||||||||
Expenses | 778 | 8 | 786 | ||||||||
Adjusted EBITDA/Adjusted OIBDA (a) | $105 | $32 | $137 | ||||||||
(a) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted
OIBDA to Adjusted EBITDA.
(b) Reflects the inclusion of our premium cable channel, Paramount+ with Showtime, which was included in the TV Media
segment in 2025, and updates to our segment expense allocations to better reflect how we operate and make cost
decisions across the business.
26
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions)
TV Media
Our TV Media segment consists of our (1) broadcast operations—the CBS Television Network, our
domestic broadcast television network; CBS Stations, our owned television stations; and our
international free-to-air networks, including Network 10 and Channel 5; (2) domestic basic cable
networks, including MTV, Comedy Central, Paramount Network, The Smithsonian Channel,
Nickelodeon, BET Media Group, CBS Sports Network, and international extensions of certain of
these brands; and (3) CBS Media Ventures, which produces and distributes first-run syndicated
programming. TV Media also includes a number of digital properties such as CBS News 24/7 for 24-
hour news and CBS Sports HQ for sports news and analysis. For the Predecessor period, the TV
Media segment also included television studio operations and the premium cable network,
Paramount+ with Showtime.
Three Months Ended June 30, 2025
GAAP | Non-GAAP | ||||||||||
Predecessor | Predecessor | ||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||
2025 | 2025 | ||||||||||
TV Media | Adjustments (b) | TV Media | |||||||||
Advertising | $1,657 | $(2) | $1,655 | ||||||||
Affiliate and subscription | 1,780 | (104) | 1,676 | ||||||||
Licensing and other | 574 | (451) | 123 | ||||||||
Revenues | 4,011 | (557) | 3,454 | ||||||||
Content costs | 1,956 | (380) | 1,576 | ||||||||
Advertising and marketing | 116 | (16) | 100 | ||||||||
Other | 1,076 | (210) | 866 | ||||||||
Expenses | 3,148 | (606) | 2,542 | ||||||||
Adjusted EBITDA/Adjusted OIBDA (a) | $863 | $49 | $912 | ||||||||
27
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions)
Period from July 1-August 6, 2025
GAAP | Non-GAAP | ||||||||||
Predecessor | Predecessor | ||||||||||
Period From July 1 - August 6, | Period From July 1 - August 6, | ||||||||||
2025 | 2025 | ||||||||||
TV Media | Adjustments (b) | TV Media | |||||||||
Advertising | $485 | $(1) | $484 | ||||||||
Affiliate and subscription | 696 | (40) | 656 | ||||||||
Licensing and other | 247 | (189) | 58 | ||||||||
Revenues | 1,428 | (230) | 1,198 | ||||||||
Content costs | 657 | (153) | 504 | ||||||||
Advertising and marketing | 59 | (7) | 52 | ||||||||
Other | 430 | (73) | 357 | ||||||||
Expenses | 1,146 | (233) | 913 | ||||||||
Adjusted EBITDA/Adjusted OIBDA (a) | $282 | $3 | $285 | ||||||||
(a) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted
OIBDA to Adjusted EBITDA.
(b) Reflects the transfer of the historical TV Media studio operations to the Studios segment and our premium cable channel,
Paramount+ with Showtime, to the Direct-to-Consumer segment, and updates to our segment expense allocations to
better reflect how we operate and make cost decisions across the business.
28
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions)
Free Cash Flow
Free cash flow is a non-GAAP financial measure. Free cash flow reflects our net cash flow provided by
operating activities less capital expenditures. We deduct capital expenditures when we calculate free
cash flow because investment in capital expenditures is a use of cash that is directly related to our
operations. Our net cash flow provided by operating activities is the most directly comparable U.S.
GAAP financial measure.
Management believes free cash flow provides investors with an important perspective on the cash
available to us to service debt, pay dividends, make strategic acquisitions and investments, maintain
our capital assets, satisfy our tax obligations, and fund ongoing operations and working capital needs.
We believe the presentation of free cash flow is relevant and useful for investors because it allows
investors to evaluate the cash generated from our underlying operations in a manner similar to the
method used by management. Free cash flow is one of the quantitative performance metrics used in
determining our annual incentive compensation awards. In addition, free cash flow is a primary
measure used externally by our investors, analysts and industry peers for purposes of valuation and
comparison of our operating performance to other companies in our industry.
As free cash flow is not a measure calculated in accordance with U.S. GAAP, free cash flow should not
be considered in isolation of, or as a substitute for, either net cash flow provided by operating activities
as a measure of liquidity or net earnings as a measure of operating performance. Free cash flow, as we
calculate it, may not be comparable to similarly titled measures employed by other companies.
The following table presents a reconciliation of our net cash flow provided by operating activities to
free cash flow.
Successor | Predecessor | Successor | Predecessor | ||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||||
Net cash flow provided by operating activities | $319 | $159 | $504 | $339 | |||||||||||||
Capital expenditures | (61) | (45) | (150) | (102) | |||||||||||||
Free cash flow (Non-GAAP) | $258 | $114 | $354 | $237 | |||||||||||||