Paramount Global has announced the closure of its TV studio, as part of restructuring efforts to save $500 million in costs. The plans include cutting 800 jobs, representing 15 percent of its US workforce. Paramount Television Studios (PTVS) is to shut down this week, while projects currently in development will move to CBS Studios, a subsidiary of the entertainment giant.
The news comes ahead of Paramount’s proposed merger with Skydance Media, which houses its own TV studio, suggesting management may have thought running both studios a duplicate expense. In fact the studios have already worked together to co-produce a number of shows, such as Reacher and Jack Ryan.
But unlike Skydance, Paramount has a D2C streaming service, which trails its rivals in terms of market share. At present, PTVS produces major titles for some of those rival streaming services, including Netflix (13 Reasons Why) and Amazon Prime Video (Reacher). The closure therefore seems designed to prioritise the profitability of Paramount’s own D2C business.
Reasons why
In a memo to staff, Paramount’s co-CEOs noted that the closure was “not a decision based on how PTVS performed”, but a reflection of “significant changes in the TV and streaming marketplace and the need to streamline our company.”
The move could partly be seen as a result of the upcoming consolidation; Disney also began winding down its linear operations after acquiring Fox in 2019, as the media giant migrated its content onto Disney+. Warner Bros. Discovery (WBD) has also considered spinning off its linear TV business, although reports suggest CEO David Zaslav has since cooled on the idea.
Even without these cost-saving initiatives, the network TV production market appears to be contracting in the US. Research from Omdia reveals that in 2022/23, there were 56 new drama series and 23 new comedies on the US networks. In 2023/24, this was down to 31 dramas and 11 comedies. The research firm notes that production was also hit by the Hollywood strikes last year.
But while film and TV studios saw their schedules disrupted by the strikes, the SVOD giants were more insulated, and were able to recover more quickly than businesses dependent on linear schedules and theatrical releases. According to Ampere Analysis, Netflix and Amazon Prime Video accounted for more than half (53 percent) of global streaming commissions in the first quarter of 2024.
Cable stakes
Paramount on the other hand remains embedded in cable, via channels such as MTV and Nickolodeon, which is arguably slower still in terms of new programming. “The reduction in new TV programme orders is likely to be even more steep,” comments Tim Westcott, Practice Lead, Digital Content & Channels at Omdia. “A more streamlined production operation reflects a contracting market.”
Both Paramount and WBD have felt the impact of cord-cutting on their cable businesses, writing down a combined $15 billion in value from their TV networks in the latest quarter. And while their streaming businesses strive to fill the gap, the uptake of free ad-supported streaming TV (FAST) channels in the US has usurped much of the traditional role of cable TV.
“It’s significant how much MTV/Nickelodeon content has migrated to FAST,” observes Omdia’s Tim Westcott. “Where cable used to be a thriving market for thematic channels, FAST is now their natural habitat.”
