SEC Filing - Paramount

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-09553

Paramount Global

(Exact name of registrant as specified in its charter)

Delaware

04-2949533

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)

1515 Broadway

New York,

New York

10036

(Address of principal executive offices)

(Zip Code)

(212) 258-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Class A Common Stock, $0.001 par value

PARAA

The Nasdaq Stock Market LLC

Class B Common Stock, $0.001 par value

PARA

The Nasdaq Stock Market LLC

5.75% Series A Mandatory Convertible Preferred Stock, $0.001 par value

PARAP

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding at August 1, 2022:

Class A Common Stock, par value $.001 per share— 40,705,472

Class B Common Stock, par value $.001 per share— 608,421,429

PARAMOUNT GLOBAL

INDEX TO FORM 10-Q


		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30 , 2022 and June 30 , 2021	3

	Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30 , 2022 and June 30 , 2021	4

	Consolidated Balance Sheets (Unaudited) at June 30 , 2022 and December 31, 2021	5

	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30 , 2022 and June 30 , 2021	6

	Consolidated Statements of Stockholders ’ Equity (Unaudited) for the Three and Six Months Ended June 30 , 2022 and June 30 , 2021	7

	Notes to Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition.	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	53

Item 4.	Controls and Procedures.	64

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	65

Item 1A.	Risk Factors.	65

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	65

Item 6.	Exhibits.	66

PART I – FINANCIAL INFORMATION


Item 1.			Financial Statements.

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenues	$	7,779	$	6,564	$	15,107	$	13,976
Costs and expenses:
Operating	5,106		3,865		9,902		8,228
Selling, general and administrative	1,710		1,459		3,329		2,881
Depreciation and amortization	94		95		190		194
Restructuring and other corporate matters	50		35		107		35
Total costs and expenses	6,960		5,454		13,528		11,338
Net gain on sales	—		116		15		116
Operating income	819		1,226		1,594		2,754
Interest expense	(230)		(243)		(470)		(502)
Interest income	19		13		40		26
Net gains from investments	—		32		—		52
Loss on extinguishment of debt	(47)		—		(120)		(128)
Other items, net	(42)		(10)		(55)		(29)
Earnings from continuing operations before income taxes and equity in loss of investee companies	519		1,018		989		2,173
(Provision) benefit for income taxes	(129)		34		(163)		(192)
Equity in loss of investee companies, net of tax	(29)		(44)		(66)		(62)
Net earnings from continuing operations	361		1,008		760		1,919
Net earnings from discontinued operations, net of tax	61		41		103		53
Net earnings (Paramount and noncontrolling interests)	422		1,049		863		1,972
Net earnings attributable to noncontrolling interests	(3)		(13)		(11)		(25)
Net earnings attributable to Paramount	$	419	$	1,036	$	852	$	1,947

Amounts attributable to Paramount:
Net earnings from continuing operations	$	358	$	995	$	749	$	1,894
Net earnings from discontinued operations, net of tax	61		41		103		53
Net earnings attributable to Paramount	$	419	$	1,036	$	852	$	1,947

Basic net earnings per common share attributable to Paramount:
Net earnings from continuing operations	$	.53	$	1.52	$	1.11	$	2.96
Net earnings from discontinued operations	$	.09	$	.06	$	.16	$	.08
Net earnings	$	.62	$	1.58	$	1.27	$	3.05

Diluted net earnings per common share attributable to Paramount:
Net earnings from continuing operations	$	.53	$	1.50	$	1.11	$	2.93
Net earnings from discontinued operations	$	.09	$	.06	$	.16	$	.08
Net earnings	$	.62	$	1.56	$	1.27	$	3.01

Weighted average number of common shares outstanding:
Basic	649		646		649		634
Diluted	650		662		650		647

See notes to consolidated financial statements.

-3-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; in millions)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net earnings (Paramount and noncontrolling interests)	$	422	$	1,049	$	863	$	1,972
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments	(169)		11		(209)		(55)
Recognition of net actuarial loss and prior service costs	17		16		33		29
Other comprehensive income (loss) from continuing operations, net of tax (Paramount and noncontrolling interests)	(152)		27		(176)		(26)
Other comprehensive income (loss) from discontinued operations	(8)		3		(6)		5
Comprehensive income	262		1,079		681		1,951
Less: Comprehensive income (loss) attributable to noncontrolling interests	(1)		14		7		25
Comprehensive income attributable to Paramount	$	263	$	1,065	$	674	$	1,926

See notes to consolidated financial statements.

-4-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except per share amounts)


	At			At
	June 30, 2022			December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents		$	4,037		$	6,267
Receivables, net		6,959			6,984
Programming and other inventory		1,347			1,504
Prepaid expenses and other current assets		1,223			1,176
Current assets of discontinued operations		616			745
Total current assets		14,182			16,676
Property and equipment, net		1,705			1,736
Programming and other inventory		14,308			13,358
Goodwill		16,498			16,584
Intangible assets, net		2,739			2,772
Operating lease assets		1,544			1,630
Deferred income tax assets, net		1,258			1,206
Other assets		3,906			3,824
Assets held for sale		—			19
Assets of discontinued operations		821			815
Total Assets		$	56,961		$	58,620
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	853		$	800
Accrued expenses		2,108			2,323
Participants’ share and royalties payable		2,466			2,159
Accrued programming and production costs		1,607			1,342
Deferred revenues		885			1,091
Debt		37			11
Other current liabilities		1,231			1,182
Current liabilities of discontinued operations		449			571
Total current liabilities		9,636			9,479
Long-term debt		15,773			17,698
Participants’ share and royalties payable		1,413			1,244
Pension and postretirement benefit obligations		1,879			1,946
Deferred income tax liabilities, net		1,040			1,063
Operating lease liabilities		1,514			1,598
Program rights obligations		430			404
Other liabilities		1,683			1,898
Liabilities of discontinued operations		205			213
Redeemable noncontrolling interest		108			107

Commitments and contingencies (Note 14)

Paramount stockholders’ equity:
5.75% Series A Mandatory Convertible Preferred Stock, par value $.001 per share; 25 shares authorized and 10 shares issued (2022 and 2021)		—			—
Class A Common Stock, par value $.001 per share; 55 shares authorized; 41 shares issued (2022 and 2021)		—			—
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 1,111 (2022) and 1,110 (2021) shares issued		1			1
Additional paid-in capital		32,984			32,918
Treasury stock, at cost; 503 (2022 and 2021) Class B shares		(22,958)			(22,958)
Retained earnings		14,829			14,343
Accumulated other comprehensive loss		(2,080)			(1,902)
Total Paramount stockholders’ equity		22,776			22,402
Noncontrolling interests		504			568
Total Equity		23,280			22,970
Total Liabilities and Equity		$	56,961		$	58,620

See notes to consolidated financial statements.

-5-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


	Six Months Ended
	June 30,
	2022		2021
Operating Activities:
Net earnings (Paramount and noncontrolling interests)	$	863	$	1,972
Less: Net earnings from discontinued operations, net of tax	103		53
Net earnings from continuing operations	760		1,919
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities from continuing operations:
Depreciation and amortization	190		194
Deferred tax benefit	(56)		(110)
Stock-based compensation	77		101
Net gain on sales	(15)		(116)
Gains from investments	—		(52)
Loss on extinguishment of debt	120		128
Equity in loss of investee companies, net of tax	66		62
Change in assets and liabilities	(667)		(424)

Net cash flow provided by operating activities from continuing operations	475		1,702
Net cash flow provided by operating activities from discontinued operations	116		89
Net cash flow provided by operating activities	591		1,791
Investing Activities:
Investments	(141)		(114)
Capital expenditures	(151)		(138)

Proceeds from dispositions	36		408
Other investing activities	(1)		(25)
Net cash flow (used for) provided by investing activities from continuing operations	(257)		131
Net cash flow used for investing activities from discontinued operations	(1)		(2)
Net cash flow (used for) provided by investing activities	(258)		129
Financing Activities:

Proceeds from issuance of debt	1,078		38
Repayment of debt	(3,108)		(2,200)


Dividends paid on preferred stock	(29)		—
Dividends paid on common stock	(315)		(302)
Proceeds from issuance of preferred stock	—		983
Proceeds from issuance of common stock	—		1,672

Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(13)		(49)
Proceeds from exercise of stock options	—		408
Payments to noncontrolling interests	(77)		(157)
Other financing activities	(34)		(42)
Net cash flow (used for) provided by financing activities	(2,498)		351
Effect of exchange rate changes on cash and cash equivalents	(65)		(8)
Net (decrease) increase in cash, cash equivalents and restricted cash	(2,230)		2,263
Cash, cash equivalents and restricted cash at beginning of year (includes $135 (2021) of restricted cash)	6,267		3,119
Cash, cash equivalents and restricted cash at end of period (includes $7 (2021) of restricted cash)	$	4,037	$	5,382

See notes to consolidated financial statements.

-6-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; in millions)


	Three Months Ended June 30, 2022
	Preferred Stock			Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total Paramount Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)			(Shares)
March 31, 2022	10	$	—	649	$	1		$	32,946	$	(22,958)		$	14,599		$	(1,924)		$	22,664		$	493	$	23,157
Stock-based compensation activity	—	—		—	—			38		—			—			—			38			—		38
Preferred stock dividends	—	—		—	—			—		—			(14)			—			(14)			—		(14)
Common stock dividends	—	—		—	—			—		—			(160)			—			(160)			—		(160)
Noncontrolling interests	—	—		—	—			—		—			(15)			—			(15)			12		(3)
Net earnings	—	—		—	—			—		—			419			—			419			3		422
Other comprehensive loss	—	—		—	—			—		—			—			(156)			(156)			(4)		(160)
June 30, 2022	10	$	—	649	$	1		$	32,984	$	(22,958)		$	14,829		$	(2,080)		$	22,776		$	504	$	23,280


	Six Months Ended June 30, 2022
	Preferred Stock			Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total Paramount Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)			(Shares)
December 31, 2021	10	$	—	648	$	1		$	32,918	$	(22,958)		$	14,343		$	(1,902)		$	22,402		$	568	$	22,970
Stock-based compensation activity	—	—		1	—			66		—			—			—			66			—		66
Preferred stock dividends	—	—		—	—			—		—			(29)			—			(29)			—		(29)
Common stock dividends	—	—		—	—			—		—			(318)			—			(318)			—		(318)
Noncontrolling interests	—	—		—	—			—		—			(19)			—			(19)			(71)		(90)
Net earnings	—	—		—	—			—		—			852			—			852			11		863
Other comprehensive loss	—	—		—	—			—		—			—			(178)			(178)			(4)		(182)
June 30, 2022	10	$	—	649	$	1		$	32,984	$	(22,958)		$	14,829		$	(2,080)		$	22,776		$	504	$	23,280

See notes to consolidated financial statements.

-7-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(Unaudited; in millions)


	Three Months Ended June 30, 2021
	Preferred Stock			Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total Paramount Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)			(Shares)
March 31, 2021	10	$	—	646	$	1		$	32,866	$	(22,958)		$	11,144		$	(1,882)		$	19,171		$	672	$	19,843
Stock-based compensation activity	—	—		—	—			35		—			—			—			35			—		35
Preferred stock dividends	—	—		—	—			—		—			(14)			—			(14)			—		(14)
Common stock dividends	—	—		—	—			—		—			(158)			—			(158)			—		(158)
Noncontrolling interests	—	—		—	—			—		—			(1)			—			(1)			(128)		(129)
Net earnings	—	—		—	—			—		—			1,036			—			1,036			13		1,049
Other comprehensive income	—	—		—	—			—		—			—			29			29			1		30
June 30, 2021	10	$	—	646	$	1		$	32,901	$	(22,958)		$	12,007		$	(1,853)		$	20,098		$	558	$	20,656


	Six Months Ended June 30, 2021
	Preferred Stock			Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total Paramount Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)			(Shares)
December 31, 2020	—	$	—	617	$	1		$	29,785	$	(22,958)		$	10,375		$	(1,832)		$	15,371		$	685	$	16,056
Stock-based compensation activity	—	—		9	—			461		—			—			—			461			—		461
Stock issuances	10	—		20	—			2,655		—			—			—			2,655			—		2,655
Preferred stock dividends	—	—		—	—			—		—			(15)			—			(15)			—		(15)
Common stock dividends	—	—		—	—			—		—			(310)			—			(310)			—		(310)
Noncontrolling interests	—	—		—	—			—		—			10			—			10			(152)		(142)
Net earnings	—	—		—	—			—		—			1,947			—			1,947			25		1,972
Other comprehensive loss	—	—		—	—			—		—			—			(21)			(21)			—		(21)
June 30, 2021	10	$	—	646	$	1		$	32,901	$	(22,958)		$	12,007		$	(1,853)		$	20,098		$	558	$	20,656

See notes to consolidated financial statements.

-8-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollars in millions, except per share amounts)

1) BASIS OF PRESENTATION

Description of Business—Effective February 16, 2022, we changed our name from ViacomCBS Inc. to Paramount Global, and effective at the open of market trading on February 17, 2022, our Class A Common Stock, Class B Common Stock and 5.75% Series A Mandatory Convertible Preferred Stock (“Mandatory Convertible Preferred Stock”) ceased trading under the ticker symbols “VIACA,” “VIAC” and “VIACP” and began trading under the ticker symbols “PARAA,” “PARA” and “PARAP,” respectively, on The Nasdaq Stock Market LLC. References to “Paramount,” the “Company,” “we,” “us” and “our” refer to Paramount Global and its consolidated subsidiaries, unless the context otherwise requires.

Beginning in 2022, primarily as a result of our increased strategic focus on our direct-to-consumer businesses, we made certain changes to how we manage our businesses and allocate resources that resulted in a change to our operating segments. Our management structure has been reorganized to focus on managing our business as the combination of three parts: a traditional media business, a portfolio of global direct-to-consumer streaming services, and a film studio. Accordingly, beginning in the first quarter of 2022 and for all periods presented we are reporting results based on the following segments:

•TV Media—Our TV Media segment consists of our domestic and international broadcast networks, including the CBS Television Network, Network 10, Channel 5, Telefe, and Chilevisión; our premium and basic cable networks, including Showtime, BET, Nickelodeon, MTV, Comedy Central, Paramount Network, Smithsonian Channel, international extensions of these brands, and CBS Sports Network; our television production operations, including CBS Studios, Paramount Television Studios and CBS Media Ventures, which primarily produces or distributes first-run syndicated programming; and our owned broadcast television stations, CBS Stations.

•Direct-to-Consumer—Our Direct-to-Consumer segment consists of our portfolio of pay, free and premium global direct-to-consumer streaming services (“DTC services”), including Paramount+, Pluto TV, Showtime Networks’ premium subscription streaming service (Showtime OTT), BET+ and Noggin.

•Filmed Entertainment—Our Filmed Entertainment segment consists of Paramount Pictures, Paramount Players, Paramount Animation, Nickelodeon Studio, and Miramax.

Basis of Presentation—The accompanying unaudited consolidated financial statements have been prepared on a basis consistent with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules of the Securities and Exchange Commission (SEC). These financial statements should be read in conjunction with the more detailed financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. Certain previously reported amounts have been reclassified to conform to the current presentation.

Discontinued Operations—On November 25, 2020, we entered into an agreement to sell our publishing business, Simon & Schuster, which was previously reported as the Publishing segment, to Penguin Random House LLC (“Penguin Random House”), a wholly owned subsidiary of Bertelsmann SE & Co. KGaA, for $2.175 billion in cash. As a result, Simon & Schuster has been presented as a discontinued operation in our consolidated financial statements for all periods presented (see Note 2).

-9-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Use of Estimates—The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may vary from these estimates under different assumptions or conditions.

Net Earnings per Common Share—Basic net earnings per share (“EPS”) is based upon net earnings available to common stockholders divided by the weighted average number of common shares outstanding during the period. Net earnings available to common stockholders is calculated as net earnings from continuing operations or net earnings, as applicable, adjusted to include dividends on our Mandatory Convertible Preferred Stock.

Weighted average shares for diluted EPS reflects the effect of the assumed exercise of stock options and vesting of restricted stock units (“RSUs”) or performance stock units (“PSUs”) only in the periods in which such effect would have been dilutive. Diluted EPS also reflects the effect of the assumed conversion of preferred stock, if dilutive, which includes the issuance of common shares in the weighted average number of shares and excludes the above-mentioned preferred stock dividend adjustment to net earnings available to common stockholders.

Excluded from the calculation of diluted EPS, because their inclusion would have been antidilutive, were stock options and RSUs of 11 million and 9 million for the three and six months ended June 30, 2022, respectively, and stock options and RSUs of 7 million and 5 million for the three and six months ended June 30, 2021, respectively. Also excluded from the calculation of diluted EPS for the three and six months ended June 30, 2022 was the effect of the assumed conversion of 10 million shares of Mandatory Convertible Preferred Stock into shares of common stock because the impact would have been antidilutive. The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.


	Three Months Ended		Six Months Ended
	June 30,		June 30,
(in millions)	2022	2021	2022	2021
Weighted average shares for basic EPS	649	646	649	634
Dilutive effect of shares issuable under stock-based compensation plans	1	4	1	7
Assumed conversion of Mandatory Convertible Preferred Stock	—	12	—	6
Weighted average shares for diluted EPS	650	662	650	647

-10-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Additionally, because the impact of the assumed conversion of the Mandatory Convertible Preferred Stock would have been antidilutive, net earnings from continuing operations and net earnings used in our calculation of diluted EPS for the three and six months ended June 30, 2022 were adjusted to include the preferred stock dividends recorded during the period. The table below presents a reconciliation of net earnings from continuing operations and net earnings to the amounts used in the calculations of basic and diluted EPS.


	Three Months Ended			Six Months Ended
	June 30, 2022			June 30, 2022
Amounts attributable to Paramount:
Net earnings from continuing operations		$	358		$	749
Preferred stock dividends		(14)			(29)