LOS ANGELES and NEW YORK, Feb. 25, 2026 -- Paramount Skydance Corporation (Nasdaq: PSKY) today announced financial results for the fourth quarter and full year ended December 31, 2025. Please visit the Paramount Investors homepage to view David Ellison's, Chairman & Chief Executive Officer (CEO), Paramount, a Skydance Corporation, letter to shareholders in full.
An audio replay of Paramount Skydance Corporation's 4Q25 and full year conference call will be available on February 25 in the Events and Webcasts section of Paramount's Investors homepage, and at 866-813-9403 (domestic) or 929-458-6194 (international) using access code 474852.
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Summary Points:
• For 2026, we continue to expect total revenue of $30 billion, representing 4% year-over-year growth, with DTC being the primary driver, and Adj. EBITDA1 of $3.8 billion.
• DTC revenue grew 10% year-over-year in Q4, fueled by 17% growth at Paramount+, and we expect acceleration into 2026, driven by continued investment in premium storytelling, including: the UFC, Marshals, The Madison, The Agency, Star Trek: Strange New Worlds, and more; we ended the year with 79 million paid subscribers.
• Through our "Paramount One" initiative, we are activating the full strength of our platforms to amplify priority campaigns and tentpole events as demonstrated by the hugely successful launch of the UFC on Paramount+ in January.
• We are firmly on track to deliver at least $3 billion in efficiencies through 2027, with more than $2.5 billion in run-rate efficiencies expected by the end of 2026.
• We are making focused investments in technology and innovation across our streaming business to enhance our product and overall offering, recognizing that sustainable growth is driven not only by what audiences watch, but by the quality of the end-to-end user experience.
1 Non-GAAP measures are detailed in the Supplemental Disclosures at the end of this letter.
Fellow shareholders,
In August, we launched the new Paramount with three North Star priorities: 1) investing in our growth businesses anchored by our creative engines and exceptional storytelling; 2) scaling our direct-to- consumer business globally; and 3) driving efficiency enterprise-wide with a focus on long-term free cash flow generation. Over the past six months, we have made meaningful progress across each of these areas and remain confident in the path we've set to transform this storied company for the future.
Supercharging Our Creative Engine
As a storytelling company our mission is to entertain audiences around the world with the best films, television series, sports, news, and games. We continue to advance this mission by expanding our world-class roster of talent, strengthening our creative engines, and building a stronger slate across film, television, and streaming. We firmly believe that human talent and ingenuity will continue to be the driving factor in creating amazing stories, and with the innovation we're seeing in Al today, our goal is to provide storytellers the best tools available to help bring their ideas to life. At the same time, we're ardent defenders of intellectual property rights, as evidenced by our prompt cease-and-desist to prevent the use of our intellectual property (IP) in the content Seedance 2.0 creates.
Our ambition is to be the home for the industry's leading talent, both in front of and behind the camera. To that end, we have welcomed a growing roster of exceptional creatives - and we are incredibly grateful to them and all of the directors, producers, writers, editors and crew whose talent and dedication drive our success every day.
In December, we signed a first-look, three-year film and TV producing deal with Jon M. Chu, whose films include Wicked: For Good, which saw the biggest global opening ever for a movie based on a Broadway show, Crazy Rich Asians, the highest-grossing romantic comedy in nearly a decade, and many others. We signed a multi-year first-look film and TV producing deal with Issa Rae, the creator of Insecure. And most recently, Paramount Pictures signed a three-year first-look directing and producing deal with filmmaker Dan Trachtenberg, best known for the hit sci-fi thriller 10 Cloverfield Lane and for revitalizing the Predator franchise. Paramount Television Studios also signed an overall deal with Ashley Lyle and Bart Nickerson, the creative forces behind the Yellowjackets series.
Paramount's commitment to delivering quality storytelling that will resonate with audiences worldwide and drive sustainable growth is also reflected in our increased output, with 11 films and 11 new series greenlit since August. We have 15+ films currently dated for 2026-up from 8 releases in 2025.
Among them are: the seventh installment of the Scream franchise, premiering in theaters February 27; concert film Billie Eilish - HIT ME HARD AND SOFT-THE TOUR (LIVE IN 3D), directed by James Cameron and Eilish; Scary Movie, part of Paramount's first-look deal with Miramax; an Untitled Jackass Film with Johnny Knoxville; PAW Patrol: The Dino Movie, the third film installment of the hit franchise; Ebenezer: A Christmas Carol starring Johnny Depp; Street Fighter, in partnership with Legendary Entertainment; the Untitled John Tuggle Project starring David Corenswet and Isabel May; and Gina Prince-Bythewood's Children of Blood and Bone, based on the best-selling YA book series.
We will continue to build our slate into 2027 and beyond, including a new, untitled James Wan/Jason Blum/Oren Peli Paranormal Activity movie; the third installment of the A Quiet Place franchise; Sonic the Hedgehog 4, in partnership with SEGA; and a forthcoming Call of Duty film adaptation in partnership with Activision.
Paramount Television Studios' upcoming series debuts include Taylor Sheridan's newest creations, Marshals, which premieres on CBS on March 1 and will be on Paramount+ the next day in the U.S. and first-run in many international markets, and The Madison, starring Michelle Pfeiffer and Kurt Russell, also debuting on Paramount+ on March 14. These join season five of fan favorite Emily in Paris on Netflix, season two of the hit series Cross for Prime Video, and season three of School Spirits on Paramount+.
A core strength of Paramount is our ability to leverage our IP across our ecosystem, maximizing its creative and commercial potential. This integrated approach allows us to amplify our stories across film, television, streaming, live experiences, publishing, and consumer products.
Through our newly launched "Paramount One" initiative, we're able to align our businesses enterprise- wide to cross-promote priority campaigns and tentpole events. In doing so, we mobilize the full power of our platforms behind these priorities, as we did with the hugely successful launch of the UFC, which became the platform's largest exclusive live event to date, reaching approximately 7 million households in the U.S. and Latin America. This success was propelled by high-impact promotional spots across our CBS properties, including during THE NFL ON CBS's record-breaking Thanksgiving Day game and during our primetime coverage of New Years Eve on CBS, and more. This companywide coordination and all-hands-on-deck mentality enables us to amplify our reach, accelerate audience engagement, and unlock incremental value across our company and brands.
Another recent example is our Teenage Mutant Ninja Turtles franchise, which has generated over $10 billion in global retail sales since Paramount acquired the property in 2009. Turtles has been a global phenomenon for more than 40 years, encompassing film, television, live experiences, digital games, publishing, and consumer products. It is one of the most successful franchises in entertainment history, and we are thrilled to be revitalizing the property through an ambitious and comprehensive expansion of Turtles, designed to drive sustained, multi-year growth. The robust portfolio of planned offerings includes two major theatrical releases - Seth Rogen's sequel to Mutant Mayhem in 2027 and a live- action/CG animation hybrid in 2028 - as well as our recently announced partnership with Mattel for franchise-themed toys, and much more.
Building on this integrated approach, our ecosystem is anchored by platforms that bring our stories to audiences at scale. At the heart of that reach, CBS has the most hit shows on broadcast television with 8 of the Top 10, including the #1 series Tracker, the #1 new show Sheriff Country, and the #1 news program 60 Minutes. The most-watched primetime entertainment lineup returns this week with Marshals and the epic 50th season of Survivor.
In our sports portfolio, THE NFL ON CBS shattered viewership records throughout the year, culminating in CBS' most-watched NFL season on record, propelled by the most-watched NFL regular-season game ever with the Chiefs-Cowboys game on Thanksgiving Day, with an average of more than 57 million viewers. For the third year in a row, THE NFL ON CBS national game at 4:25pm ET ranked as the #1 program in all of television, averaging more than 25.8 million viewers. We ended with the AFC Championship Game, which drew nearly 49 million viewers, making it the most-watched postseason game of the year on any network, with the exception of the Super Bowl.
At CBS News, the leadership team is focused on building 'one newsroom with one mission' - delivering exceptional journalism to the broadest possible audience. With trust in mainstream news and legacy media at historic lows, transformation is essential. The goal is to build a modern news organization equipped for the digital age and rooted in facts, rigorous reporting, and audience-first storytelling.
As part of this revitalization, we are focused on expanding the range of stories covered and the voices amplified. We are reimagining CBS News 24/7 with new formats and programming and by investing in key brands such as 60 Minutes, 48 Hours, and Sunday Morning through podcasts, newsletters, live journalism events, and more.
Scaling Our Streaming Services
Growing our direct-to-consumer business remains our top priority. Recognizing that great storytelling drives engagement, we're investing aggressively in compelling original content to attract a broad audience.
Over the past several months, we've announced several new series - some of which come from third- party production companies and studios as part of our strategy to bring the best storytelling to consumers - including: the legal thriller from A24, Discretion, starring and executive produced by Nicole Kidman and Elle Fanning; the six-episode limited series 9/12, produced by Paramount Television Studios and SISTER, starring and executive produced by Jeremy Strong; and Fear Not, a six-part true-crime limited series, starring and executive produced by Anne Hathaway, and produced with MGM Television.
These will join an already robust upcoming slate that includes The Madison and the much-anticipated Yellowstone spin-off, Dutton Ranch, coming to the service this summer. We're about to start production on an extension of Taylor Sheridan's hit series Tulsa King, titled Frisco King and starring Samuel L. Jackson. Looking ahead, over the next year we will premiere new seasons of The Agency, Star Trek: Strange New Worlds, Lioness, MobLand, Tulsa King, as well as the third installment of Landman, whose record-breaking second season reached over 25 million subscriber households and has been a top viewed series across all of streaming since its launch in November 2025. Our momentum is exciting, and we anticipate it will carry through to 2027 as our slate really begins to fully represent the vision of our DTC leadership team.
Sports also remains a key driver of streaming growth, particularly our partnership with the Ultimate Fighting Championship. We officially launched our 7-year partnership in January, becoming the exclusive home for all live numbered events and Fight Nights in the US and Latin America and in Australia for Fight Nights and select bouts in the numbered events, and we could not be more pleased with the early performance. As mentioned above, the debut of UFC 324 on Paramount+ exceeded our expectations as the platform's biggest-ever exclusive live event, with Paramount+ seeing its highest global view hours ever the week it launched.
Importantly, that performance was powered by significant investments made in the lead up to the launch. Ahead of UFC 324, our Product & Tech team focused on building and hardening the core platform to deliver a premium, global experience for fans across both live events and video-on-demand (VOD). The team launched approximately 1,400 VOD assets alongside live coverage, supported feeds in three languages, and expanded availability to 20 markets. The team also introduced advanced live features designed specifically for sports, including the ability to rewind live matches, instantly create and share highlight clips, and generate Al-powered recaps of the action - all while ensuring the platform was fully optimized for scale, reliability and seamless performance on day one.
In addition to the 13 marquee numbered events, we have 30 Fight Nights for a year-round lineup. Fans of UFC are coming to Paramount+ for the action and staying longer to enjoy other titles on the platform - we're seeing encouraging early signals across both engagement and retention from our UFC viewers.
On March 7, UFC returns to Las Vegas for UFC 326. The lead up to the last three matches of the fight card will be available on both Paramount+ and CBS, where we expect the reach of CBS will help expand upon the rapidly growing fan base on our platforms. Needless to say, we are incredibly excited about our partnership with the UFC and the growth opportunities ahead.
Another area where we see significant opportunity is with Pluto TV. Pluto continues to see healthy growth in time spent, which, coupled with ongoing improvements to the product experience and content offering, gives us confidence in our long-term trajectory. For example, we added the full The X Files catalog to Pluto TV in early January, and it has since become a top performing on-demand title.
Of course, sustainable growth in streaming depends not only on what people watch, but on the overall quality of the user experience. With this in mind, we have prioritized investing in technology and data capabilities to enhance our DTC offering. As highlighted last quarter, we are building a unified technology stack for Paramount+ and Pluto TV, with the first implementation milestone targeted for this summer. We are also encouraged by early product and monetization results from increasing the velocity of our experimentation, with A/B testing output increasing significantly quarter-over-quarter in Q4.
Another critical area of investment is our ad sales technology. By modernizing our platform and leveraging advanced data analytics, we can deliver more precise targeting, better measurement, and more engaging ad experiences for both viewers and advertisers. At the same time, we've brought in new leadership for our advertising business and are reworking our go-to-market strategy. We expect these investments will drive incremental revenue, enhance efficiency, and strengthen our offering in the marketplace.
Of note, we launched and piloted Precision+, an Al-powered advertising product that combines Paramount and third-party data to optimize ad delivery in real time, driving meaningful performance gains above benchmarks for advertisers, and giving Paramount greater control over advertising outcomes. We also developed and patented an Al-driven system that automatically detects broken, duplicated, mismatched, or noncompliant ads, ensuring a better experience for viewers and giving advertisers confidence that their campaigns are running correctly.
These examples reflect the deliberate investments we're making across our streaming business to improve our product experience and offering.
Driving Efficiency and Optimizing Investment Enterprise-wide
We've also made strong progress against our third North Star priority: driving enterprise-wide efficiency with a focus on long-term free cash flow generation. In our Q3'25 shareholder letter, we raised our estimate of total efficiencies through our transformation efforts from at least $2 billion to at least $3 billion. And our confidence in achieving this level of efficiency through the business has only grown over the past quarter as we've built upon our early successes across our four major transformation workstreams:
1. Making technology a core competency of the company
2. Enhancing corporate-wide efficiency and scalability across our operations
3. Unifying the organization under clear, cohesive leadership
4. Optimizing our workforce for the future
We are seeing particularly strong progress across the first and second workstreams. For example, in Q4, we executed new partnerships that will drive efficiency in our cloud spend, resulting in savings of over $50 million annually on average. Separately, we made significant progress in converging the back-end systems of our streaming services and remain on track for a mid-year launch. Similarly, we continue to advance the migration of our entire business to Oracle Fusion as our companywide ERP platform, positioning us to respond more nimbly to an evolving landscape. This unified system will streamline operations, improve data visibility, and enable faster, more informed decision-making across the enterprise.
As we modernize our systems with initiatives like Oracle Fusion, we are also retooling the ways our teams work together. In early January, we executed phase one of our return to office initiative across our New York and Los Angeles offices. By fostering greater in-person collaboration, we expect to accelerate innovation and unlock even greater creativity across the organization.
Also of note, we finalized our sale of ChilevisiĆ³n in January, which, in addition to the divestiture of Telefe in Argentina, represents efforts to focus on our core businesses while streamlining our operations by roughly 1,600.
From an organizational perspective, we have our full leadership team in place, which is focused on transforming all areas of the company. Operationally, we have successfully integrated the Skydance business into our studio operations. Since the Skydance transaction announcement, we are on track to deliver at least $3 billion in efficiencies through 2027, and we are on track to realize over $2.5 billion in total run-rate efficiencies through the end of 2026.
Q4 Results and Q1 and 2026 Outlook
A summary of Q4 results and our Q1 and 2026 outlook are below. As noted last quarter, beginning with
this report, our Paramount+ subscriber metric will reflect only paying subscribers, excluding those on
free trials. Subscriber figures prior to Q4'25 have been restated to exclude free trials.
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| Note: (1) Diluted EPS from continuing operations attributable to Paramount or Paramount Skydance; (2) weighted average number of diluted shares outstanding |
The following discussion summarizes our financial performance and outlook. We discuss profitability for the periods before ("predecessor") and after ("successor") the transaction close (subsequently pre- close and post-close) in accordance with the financial reporting requirements for our transaction. Additional supplemental information is also available on our IR website.
Q4'25
In Q4, total revenue of $8.1 billion increased 2% versus revenue of $8.0 billion in Q4'24 for the predecessor company, led by an increase in licensing and subscription revenues, partially offset by declines in theatrical, advertising, and affiliate revenues. By segment:
• DTC revenue increased 10% year-over-year, driven by 17% growth in Paramount+ revenue. Paramount+ ARPU increased by 10% with paid subscribers up 4%. DTC revenue from non- Paramount+ sources, primarily Pluto, declined -16% year-over-year, primarily due to ongoing monetization headwinds. In Q4, Paramount+ subscribers increased by 1 million quarter-over- quarter.
• In TV Media, revenue declined -5% year-over-year. Results were driven by advertising declines of -10% including a seven percentage point impact from political spending and the Big Ten championship in Q4'24 and a decline in affiliate revenue of -7% year-over-year due to lower pay TV subscriber volume, partially offset by 10% year-over-year growth in licensing.
• Filmed Entertainment revenue increased 16% year-over-year versus Q4'24 revenue, primarily due to the consolidation of Skydance licensing and other revenue, partially offset by a significant decline in theatrical revenue as we compared against the Q4'24 release slate which included Gladiator II, Sonic the Hedgehog 3, and Smile 2.
Operating income was -$339 million (-4% margin), which included $546 million of restructuring and transaction-related costs. Adj. OIBDA was $612 million (8% margin), a 51% increase year-over-year. By segment:
• DTC adj. OIBDA was -$158 million (-7% margin), reflecting seasonally higher content costs somewhat offset by a content expense benefit from reductions in content assets resulting from the change in accounting basis resulting from the merger. Across the year, we saw healthy improvement in DTC adj. OIBDA margins, reflecting continued topline momentum and disciplined investments in growth as well as the impact of our new accounting basis.
• TV Media adj. OIBDA was $1.1 billion (23% margin), up 15% year-over-year, as we continue to prioritize disciplined cost management relative to the declines in pay TV and linear advertising
revenues.
• Filmed Entertainment adj. OIBDA was -$119 million (-9% margin). This performance, which is largely attributed to weak theatrical performance, did not meet our expectations and, as we mentioned in our prior letter, is an area we are actively addressing as we work to rebuild our film slate for profitable growth in 2026, 2027, and beyond.
Cash flow from operations was $217 million in Q4. Free cash flow was $101 million in the same period, including payments for restructuring, transaction-related items, and transformation initiatives of $153 million.
Go-forward reporting
As we have previously noted, we plan to re-segment our business starting with our Q1'26 results to reflect our reorganization across DTC, TV Media, and Studios, which will give better transparency to our results and align with how we manage the business. Recasted financials for prior periods will be provided prior to our Q1'26 report. With our re-segmentation, we also plan to update our segment expense allocations to better reflect how we operate and make cost decisions across the business, with centralized costs that were previously allocated at the segment level moving to corporate overhead. Finally, we will also transition from adj. OIBDA as a measure of non-GAAP profitability to adj. EBITDA, which excludes stock-based compensation.
2026
For 2026, we continue to expect total revenue of $30 billion, or 4% growth year-over-year, inclusive of predecessor and successor periods. We expect DTC will be the primary driver of this growth, with revenue accelerating due to increases in subscription and advertising revenue growth. We expect Paramount+ to have healthy, accelerating underlying subscriber growth year-over-year. However, our strategic decision to exit approximately 4-5 million hard bundle subscribers with unattractive economics, which accounted for less than 2% of Paramount+ revenue in 2025, will result in only modestly higher total paid subscribers compared to 2025. This deliberate mix shift prioritizes strong underlying subscriber growth, accelerating ARPU, and overall revenue growth over reported subscriber count.
We also expect growth in our new Studio segment from licensing and other, including a full-year impact of Skydance revenue, as well as higher licensing across our other studios, partially offset by significantly lower theatrical revenue year-over-year as we work to recalibrate our film slate and compare against Mission: Impossible - The Final Reckoning and due to lower average box office revenue per film across more releases in 2026. In TV Media, we expect continued headwinds to affiliate revenue due to pay TV subscriber declines. We also expect linear advertising declines will moderate versus 2025, including the combined effects of expected political spending in 2026 and the sale of Telefe and ChilevisiĆ³n. Across the factors above, we'd expect total company revenue to be relatively more weighted to the second half of the year, with profitability roughly evenly weighted.
We forecast adj. EBITDA of $3.8 billion, or a 12.7% margin, which excludes roughly $300 million of stock-based compensation. We will balance near-term profitability with reinvestment as we make progress against our $3 billion-plus efficiencies plan while investing in content and technology, both of which we expect to drive significant DTC revenue growth and overhead cost reductions in 2027 and beyond. In DTC, we continue to expect to grow our profitability in 2026 relative to 2025. We expect to be profitable in our Studio segment, and to have stable margins in TV Media.
We continue to expect free cash flow conversion of approximately 5% before roughly $800 million of transformation costs, as previously noted. We expect future years to have better free cash flow conversion as 2026 is an important year for investing in the transformation of the business and ramping up our content slate, which we expect to fuel growth in 2027 and beyond.
Q1'26
In Q1'26, we expect total revenue of $7.15 billion to $7.35 billion or -1% to 2% growth year-over-year versus Q1'25 for the predecessor company led by DTC revenue growth, partially offset by declines in TV Media and a slight decline in Studios revenue due to comparing against stronger theatrical performance in Q1'25 which included the continued benefit of Sonic the Hedgehog 3 and Gladiator II. For our Q1 DTC forecast, we expect strong revenue growth, accelerating nicely quarter over quarter. Growth will be driven by Paramount+ ARPU growth and domestic subscriber adds, partially offset from the exit of international hard bundles that accounted for over 1 million paid subscribers at the end of 2025. We expect the exit of hard bundles will result in flattish quarter over quarter subscribers.
We expect adj. EBITDA of $900 million to $1 billion, or a 13.1% margin at the midpoint, with approximately $75 million of stock-based compensation in the quarter. We expect continued year- over-year improvement in total DTC profitability in Q1. We anticipate transformation costs of several hundred million in Q1, which will impact our reported free cash flow.
Our medium-term financial goals are to transition to sustainable topline growth driven by DTC, with increasing margins and FCF conversion, while managing our balance sheet to regain investment grade debt metrics.
Capital Structure & Capital Allocation
We ended the quarter with $3.3 billion in cash and cash equivalents and $13.7 billion in gross debt. We continue to expect to achieve investment grade debt metrics by the end of 2027 as we make progress against our current transformation plan. Early in Q1, we repaid $347 million of debt maturing with cash on hand and have $86 million in debt maturing for the remainder of 2026. In late Q4, we extended our outstanding revolving credit facility of $3.5 billion.
Our capital allocation priorities remain:
1. Invest organically for long-term profitable growth in our business
2. Consider M&A where it accelerates our path towards achieving our North Star and other financial goals
3. Manage our balance sheet to regain and then maintain investment grade credit metrics
4. Return excess cash to shareholders beyond our current dividend once we reach investment grade credit metrics
Our Proposal to Acquire Warner Bros. Discovery
On February 24, WBD's Board of Directors determined that Paramount's revised $31 per share, all-cash offer to acquire WBD could reasonably be expected to lead to a "Company Superior Proposal" under the terms of WBD's merger agreement with Netflix, Inc. We welcome the WBD Board's determination and look forward to continuing to engage constructively with WBD to deliver the benefits of Paramount's proposal to WBD shareholders, the creative community and consumers.
For perspective, we approach investment decisions at Paramount, including our offer to acquire WBD, through the lens of our North Star priorities and financial goals. While we are confident in our standalone strategy and growth trajectory for Paramount, we view WBD as an accelerant to achieving these goals more quickly, in a way that is economically compelling for Paramount shareholders.
Closing
While we are pleased with our progress this quarter and year-to-date, we remain focused on the work ahead, confident in our strategy, and committed to delivering long-term value for our shareholders - progress made possible by the tremendous efforts, dedication, and commitment of our people, who continue to drive our success forward.
Sincerely,
David Ellison
Chairman & CEO
Paramount, a Skydance Corporation
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 with respect to our cash tender offer for all of the outstanding shares of Series A Common Stock of 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 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; 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.
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 "Transactions").
Our consolidated financial statements within our Form 10-K for 2025 are presented in two distinct periods to indicate a new basis of accounting established for Paramount Global's net assets upon the closing of the Transactions. 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." Due to the new accounting basis, the results of operations and cash flows are not comparable between the Successor and Predecessor periods.
The presentation within this letter, 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-K for 2025 for additional details regarding the new accounting basis established following the Transactions.
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About Paramount, a Skydance Corporation
Paramount, a Skydance Corporation (Nasdaq: PSKY) is a leading, next‑generation global media and entertainment company, comprised of three business segments: Studios, Direct-to-Consumer, and TV Media. The Company's portfolio unites legendary brands, including Paramount Pictures, Paramount Television, CBS – America's most-watched broadcast network, CBS News, CBS Sports, Nickelodeon, MTV, BET, Comedy Central, Showtime, Paramount+, Pluto TV, and Skydance's Animation, Film, Television, Interactive/Games, and Sports divisions. For more information, please visit www.paramount.com.
Paramount's Fourth Quarter and Full Year 2025 Financial Results earnings call courtesy of Seeking Alpha:
Paramount Skydance Corporation (PSKY) Q4 2025 Earnings Call Transcript
Company Participants
Kevin Creighton - EVP of Corporate Finance & Investor Relations
David Ellison - Chairman & CEO
Jeffrey Shell - President & Director
Dennis Cinelli - Chief Financial Officer
Andrew Gordon - Chief Strategy Officer, COO & Director
Conference Call Participants
Peter Supino - Wolfe Research, LLC
John Hodulik - UBS Investment Bank, Research Division
Steven Cahall - Wells Fargo Securities, LLC, Research Division
Robert Fishman - MoffettNathanson LLC
Ric Prentiss - Raymond James & Associates, Inc., Research Division
Kutgun Maral - Evercore ISI Institutional Equities, Research Division
Michael Morris - Guggenheim Securities, LLC, Research Division
Bryan Kraft - Deutsche Bank AG, Research Division
Presentation
Operator
Good afternoon. My name is Nadia, and I'll be the conference operator today. I would like to welcome everyone to Paramount's Q4 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Kevin Creighton, Paramount's EVP of Investor Relations. You may now begin your conference call.
Kevin Creighton
EVP of Corporate Finance & Investor Relations
Good afternoon, and thank you for taking the time to join us for the Paramount Fourth Quarter 2025 Earnings Call. I'm Kevin Creighton, EVP of Corporate Finance and Investor Relations. Joining me today is our Chairman and Chief Executive Officer, David Ellison; our President, Jeff Shell; our Chief Financial Officer, Dennis Cinelli; and our Chief Strategy and Operating Officer, Andy Gordon. As a reminder, we will be making forward-looking statements today that involve risks and uncertainties. Our remarks will also include non-GAAP financial measures, and reconciliations of these measures can be found in our earnings letter or in our trending schedules, which contain supplemental information. These can be found on our Investor Relations website. I'll now turn it over to David for a few brief remarks before we take analyst questions.
David Ellison
Chairman & CEO
Thanks, Kevin, and good afternoon, everyone. As you saw in our Q4 results and in the most recent shareholder letter, we ended the fiscal year with a strong first full quarter under our leadership team and positive momentum heading into 2026, meeting or exceeding guidance for the quarter that we laid out in our Q3 letter. It's been a productive 6-plus months since the launch of the new Paramount, and we are pleased with the progress made in a relatively short time. Our North Star priorities continue to guide everything we do, and we're confident we are on the right trajectory and are excited about the opportunities ahead. Before we get to your questions, I did want to take a moment to acknowledge Andy Warren's tenure as our Interim CFO. Andy is widely respected across our organization and the industry, and we are truly fortunate to have had his leadership during this important period.
We're incredibly grateful for everything he's done to help position the company for success and appreciate his continued partnership as a strategic adviser. I also want to officially welcome Dennis Cinelli. He brings significant financial and operational experience, having held senior roles at GE, Uber and Scale AI, where he served most recently as CFO. He was also briefly a member of our Board of Directors before assuming his current role. We're thrilled that he's joined our leadership team and look forward to you getting to know him better going forward. Finally, I'll briefly address our proposal to acquire Warner Bros. Discovery. On Monday, we submitted a revised bid of $31 per share, all cash, and we look forward to continuing to engage with their leadership team and Board. While we appreciate that this is obviously something you all have questions about, we won't be commenting further during today's call. With that, I'll turn it back over to Kevin for your questions.
Kevin Creighton
EVP of Corporate Finance & Investor Relations
All right. Thank you, David. And Nadia, we'll go ahead and open it up for questions. Thank you.
Question-and-Answer Session
Operator
[Operator Instructions] The first question goes to Peter Supino of Wolfe Research.
Peter Supino
Wolfe Research, LLC
I wondered if you could comment on your initial experience as the home of UFC on your streaming service. And maybe tie those comments more broadly to your latest thinking on the viability of being something for everyone every day. I think that's your stated strategy in streaming. And obviously, it's an extremely tall competitive order. And I just wondered kind of what you've learned in the last 6 months of owning the asset that makes you more or less confident in that objective.
David Ellison
Chairman & CEO
No, absolutely. And really appreciate the question. First, we couldn't be more thrilled about the way the UFC partnership has started. UFC 324 was really a phenomenal start for us. We reached approximately 7 million households across the U.S. and Latin America and was also the platform's largest exclusive live event to date. We've also seen the advertising demand for UFC be strong. And overall, the partnership has really started ahead of expectations. In addition to that, we've really seen UFC fans engage with the vast others of our content offering. They're watching Landman. They're watching other series.
So we're really seeing that flywheel work for us. And we also are really seeing it work well with Zuffa Boxing. And we really believe in the theory of actually owning combat sports, having that entire category as a home on Paramount+ is something that's been working really well for us to date. More broadly, we greenlit our 11 original series since we took over 6 months ago and are really seeing strong basically growth in our streaming service, up over 17% year-to-date on Paramount+. So from that standpoint, we're really seeing that momentum to continue and feel really good about the start of the partnership with UFC and Dana White.
Peter Supino
Wolfe Research, LLC
Is there anything we want to add on sort of the last 6 months in streaming?
Jeffrey Shell
President & Director
Yes. So first of all, I would just add to the UFC comments that David just made that we're really at the very beginning of this partnership, and we're going to experiment a lot. The beauty of having this sport exclusively and being the exclusive partners of the UFC is we can try lots of stuff. Our upcoming fight in March 7 is going to be partially on CBS, and we look forward to lots of experimentation as we grow the brand. I think the first 6 months on streaming have gone really well. We've seen accelerating growth in Paramount+, doing better and better every quarter. The key now is to get ongoing engagement and the content that I'm sure we're going to talk about later that we have coming is pretty exciting for doing that. From a kind of financial perspective, the ad revenue has been much more promising than we expected. And it's really -- the key now is driving that engagement and that usage because we can monetize it at Paramount+. And so we're feeling pretty good about the momentum we have at streaming so far.
Operator
The next question goes to John Hodulik of UBS.
John Hodulik
UBS Investment Bank, Research Division
Jeff, maybe for you, a follow-up on the comments on D2C. You guys guided to better profitability next year against some slightly higher subs. What are you seeing in terms of ARPU? There seem to be some moving parts with exiting the hard bundles, but some price increases that translates to better revenue growth. And then on the cost side, just aggregate sort of that commentary on leading to better D2C results.
Jeffrey Shell
President & Director
Yes. Thanks, John. I'm going to actually pass it over to Dennis for this one.
Dennis Cinelli
Chief Financial Officer
Yes. John, good to meet you, and I'm excited to be here. So thanks, everybody. I think it's -- John, is it helpful probably for us to just frame our guidance overall. which a big part of that is DTC. As we've put out, overall, we expect revenue this year of $30 billion, up 4% year-on-year. DTC is going to be the driver of that. We expect DTC to continue to accelerate growth year-on-year. So growth will accelerate in '26 versus '25. The driver of that is a couple of things. We continue to see subscriber growth, what we're calling underlying healthy subscriber growth accelerate in '26. This will result in better ARPU from a mix shift as well as we realize the price increases in Q1.
As we previously mentioned -- as we sort of mentioned, and I want to call this out is we're making this deliberate decision to exit from uneconomic hard bundles. So you'll see that in our subscriber growth this year. But if you take those underlying exits out, we will continue to see net adds grow year-on-year. And just to give you a call out, those uneconomic hard bundles represented less than 2% of Paramount+ revenue in 2025. So coupled with the subscriber growth, we also expect DTC ad revenue to grow this year. We've been talking a lot about how we're investing in programming to drive better engagement, better ad tech as well as the team there that Jeff alluded to. And so we expect to meaningfully recover DTC ad growth in the year.
At the same time, back to your question, how that comes together, we are investing in the business, but we expect DTC profitability to improve year-on-year as we both grow revenue and manage our investments. It's worth just taking a step back maybe and talking about the rest of the business. So DTC will be the growth driver. But as we think about the rest of the portfolio we have, right, so TV Media, we expect to see some declines in revenue, mostly in line with the industry headwinds around pay TV, though we expect our advertising revenue decline to be more moderate as we execute overall and better ad sales, we feel really good about the upfronts coming up this year. We also have tailwinds from political spending in 2026. One thing to call out, we do offset some of the -- you do have some impact from our sale of Telefe in ChilevisiĆ³n.
In TV Media overall, I just want to call out, we've been really impressed with the team managing that business in -- while revenues will decline, we expect overall profitability in that business to be stable on both a profit dollars and a margin basis. And then the other thing is the studios, right? So studios, we do expect theatrical revenue to decline. I think we've been very clear overall that we're in a rebuild phase of that business. As we execute that rebuild, we'll see some of that come through in the '26 slate, but most of that will come through in future years. And so even with theatrical revenue dropping down, we do expect better cost management as well as benefits from our licensing deals to drive studio profitability up.
So if you put this together, overall, we're reaffirming guidance for the year on both on revenue as well as profit, adjusted EBIT outlook of $3.8 billion. That excludes our $300 million of stock-based compensation but is improving year-on-year driven by both the top line and as we realize our synergies. So we put out there, we will expect to realize $3 billion plus of our synergies. This includes both across our entire business. And so we expect to sort of profitability to improve in DTC and our new studio segment, still margins in TV Media. And I think the last question probably is just like what does that look like beyond '26. And I think without giving specific guidance, we just want to make sure we're here talking about how the team around the table, David on down, we're owner operators. We're investing for long-term value creation, and we expect that to show through over the next many years.
Operator
The next question goes to Steven Cahall of Wells Fargo.
Steven Cahall
Wells Fargo Securities, LLC, Research Division
First, just wanted to ask if you've had any conversations yet with the NFL. It's a big topic for investors, especially with you and Fox having so many games on Sunday. And as you're thinking about where that could go in the future, I was wondering if there's any potential for the games on Paramount+, which I think are currently geo-fenced to be available sort of nationwide within that rather than only being on Sunday ticket. So it seems like you've got some opportunities maybe as well as some risks with the NFL renewal. So I would love to know how you're thinking about that. And then just on the outlook for '26 and maybe '27, if we think about free cash flow, I think you've said before that you're committed to investment grade with all 3 rating agencies. I think that implies that on a total basis, including restructuring, you'd be free cash flow positive by next year. So just wondering if I'm thinking about that one correctly.
Jeffrey Shell
President & Director
Thanks, Steve. This is Jeff. I'll take the first and then pass it over to Andy for the second. So we have a great -- you asked have we talked to the NFL. We talk to the NFL almost daily. We have a great relationship with the NFL. We were the very first NFL broadcaster back when it started, and it's been nearly a century of relationship. And during that century, this past year was our most watched year ever, everything clicked this last year for us with the most viewership, the biggest watched game, the biggest watch window, that 425 window nationally for CBS. So everything is really going well with the partnership, and we feel very good about them, and I think they feel very good about us. So we're not particularly concerned.
Obviously, there -- it's been widely publicized that there is a renewal discussion coming up. And we don't talk about individual negotiations. But suffice it to say, we feel pretty confident we're going to be in business with the NFL for a long time, and we have properly accounted for what we expect to be whatever impact of that negotiation in our kind of internal forecast going forward. Let me just -- one thing about the geofencing, let's talk about that for a second. One of the unique things about our relationship with the NFL, and I would actually say it's probably similar to Fox's relationship with the NFL is the anchor of their flywheel is really their reach and the anchor of their reach is really the reach of both CBS and Fox on Sunday afternoons.
So the way we get the NFL that reach, which has really helped contribute for both of our benefit to the success of the NFL is by our vast array of both owned and operated stations, of which we have 28 and affiliates. And so it's important that those games get regionalized and that we aggregate that viewership and maximize the viewership in each market for the best game, both for us and Fox. And that accrues to the benefit of the NFL and to us and really maximizes the reach on any given Sunday. So I don't think we're going to be doing anything with Peacock -- Paramount+ that's any different. And I don't think that Fox is going to be doing anything different than we are doing on linear, which is to maximize that reach and that regionalization of that window, which I think works for all of us. Maybe pass it over to Andy for the...
Andrew Gordon
Chief Strategy Officer, COO & Director
Yes, sure. Steve, thanks for the second question. Let me take the investment-grade part first, and obviously, it's interrelated with free cash flow conversion. But we -- as we told you in the last quarter, we are absolutely committed to getting to investment-grade credit metrics. This is, of course, relative to our stand-alone position, and we expect to hit those in '27. With regard to free cash flow, I'd just point out that notwithstanding the fact we paid down over $300 million of debt in the first quarter and in addition, have $800 million of restructuring charges, you take the restructuring charges out, we actually are hitting 5% free cash flow conversion this year, which, of course, is not where we want to be. And as we sort of accelerate that into '27 and the out years, we expect to get back to industry norms and hopefully exceed that. That's certainly part of our strategic plan. So I would say there's no real change from that and what we talked about in November.
Operator
The next question goes to Robert Fishman of MoffettNathanson.
Robert Fishman
MoffettNathanson LLC
When you think about your growth ahead, can you talk about how critical to creating long-term shareholder value to reinvigorate and build upon your core franchises and IP? And if you can comment how Warner Bros. and HBO IP would help accelerate that growth over the next 3 to 5 years, either for a stand-alone Paramount+ or a combined platform with HBO Max? And then on a related note, just how do we think about overall content spending, again, either stand-alone or with Warner Bros., especially factoring in the sports and the long-term strategy to grow that profit and cash flow?
Kevin Creighton
EVP of Corporate Finance & Investor Relations
Yes. Thanks, Robert, for the question. We won't be answering anything related to Warner, as David mentioned in his opening remarks. So just a reminder for everyone else on the line, but we'll go ahead and how do we think about sort of franchise and long-term value, as we mentioned in the letter.
David Ellison
Chairman & CEO
Yes. No, absolutely, so I'll speak to that. And look, as we're the largest shareholder of the Class Bs, we really approach everything through the lens of how do we create long-term basically shareholder value, which really means we're long-term investors, we're long-term owner operators, and we really have a long-term horizon in terms of how we're approaching this. If you step back across all of our businesses, we're actually really pleased about the investments that we're making really going back to our North Star priorities. We talked about streaming. I'll start in the Studio segment. As Dennis said, we inherited a slate that has underperformed. We're going to see significant improvement in the profitability of the film slate this year.
But I think if you really look at how we are doubling down on our franchises and really reinvigorating them and reinvesting in them, which is something that we did in partnership when we were -- obviously, when I ran Skydance, and to date, in the little over 6 months that we've been here, we've actually -- we're going to release 16 movies this year versus the 8 films that we inherited. And we're really going to be at a steady state of over 15 movies per year. We've greenlit 11 movies basically since we've been here in the first 6 months, including films like A Quiet Place and Sonic, which is really us doubling down on our franchises. Taylor Sheridan, Pete Berg are hard at work at Call of Duty, which we're really excited about. And we have Scream opening this weekend. Again, going to Paramount+ in addition to the investments that we've obviously made in the UFC and sports, we've actually greenlit 11 original series on top of the incredible slate that we're fortunate enough to step into.
And we're also investing significantly in the improved product experience on both P+ and Pluto. So consumers are going to continue to get more incredible content they love and an overall better user experience, which we think will really position ourselves well for growth into the future. And then when you step back and look at our linear really anchored by CBS, we had 8 of the top 10 shows on broadcast, the #1 show in Tracker, the #1 new show in Sheriff County, the #1 news program in 60 minutes. And so we really are seeing strong demand for our content across our portfolios, and we're only seeing that accelerate going forward. So it's been 6 months, but we really do feel good about the work the team has really done to date. And you can expect that to accelerate into the future quickly.
Kevin Creighton
EVP of Corporate Finance & Investor Relations
How do we think about the content spend for Paramount overall?
David Ellison
Chairman & CEO
Yes. So overall content spend -- sorry, I want to make sure that. So we talked about -- we've obviously increased our content spend as we announced last quarter by $1.5 billion, which is really going towards all the things that I talked about, which is really scaling our film slate, scaling our original series, investing more into sports. And we do believe that, that will create long-term shareholder value because, again, like it is a priority for us to make sure that we can win in the content space, make sure that we are the most technologically capable media company and really have the appropriate operational efficiencies across the company. that's what really drives all the decisions here. And I think we're off to a really strong start in the first 6 months.
Operator
The next question goes to Rick Prentiss of Raymond James.
Ric Prentiss
Raymond James & Associates, Inc., Research Division
A question in the letter, you talked about leveraging your IP across the ecosystem. Give us some concrete examples of what you hope to achieve going across film, television, streaming, live experiences, publishing, consumer products and how we might see that? And if you were to benchmark yourself against the peer group, how do you think you are doing as far as monetizing that IP?
David Ellison
Chairman & CEO
So it's a great question. And I'll point to a couple of things. Like one, I'll use Teenage Mutant Ninja Turtles as obviously the most recent example of really we're obviously -- we have 2 films that we're obviously making, obviously, in the Turtles landscape, we have series, and we also have consumer products. Huge compliment to obviously, Josh, who came to us from Mattel, who in the first month of basically being at Paramount, created the most significant consumer products partnership in the history of the company, over 5x what have been done to date, which I think is kind of a great example in this quarter of really how we're maximizing our IP across the flywheel that we've created. And one of the other things if you take a step back, I think that we're really proud of is really the Paramount One initiative that we've launched really as a marketing platform.
The UFC is one of the first things that we obviously ran through that, where we really activated all of our linear channels, our direct-to-consumer platforms and really the entire ecosystem. to deliver billions of impressions, which really helped drive that launch of UFC 324, which again came in ahead of our expectations and really helped us create the largest live event in the history of Paramount+. And you're going to see us activating that Paramount One ecosystem across a lot of our tent-pole franchises going forward, across our series launches as we really integrate this business to operate as one company. And we're seeing that work incredibly well in the first couple of months. And I just have to really give a tremendous amount of credit to the team that have really been breaking down silos and operating as one business, and the results are incredibly promising. We're still in the beginning, 6 months in, but we're really excited about the trajectory.
Operator
The next question goes to Kutgun Maral of Evercore ISI.
Kutgun Maral
Evercore ISI Institutional Equities, Research Division
A few on AI, if I could. First, GenAI is clearly progressing quickly and dramatically. Short-form clips don't threaten the core of your studios today, but future length personalized stories could become feasible. So how are you positioning the company for that evolution? Do you expect content creation to become commoditized? Or do brands and IP become more valuable in this world? And at a high level with AI, maybe you could talk about your guiding principles on licensing and any guardrails? And finally, one of your peers recently outlined a path to bring curated AI-generated short clips into its streaming service. Do you see a future where AI-enabled short-form user-generated or prompted content lives inside Paramount+?
David Ellison
Chairman & CEO
So it's a great question. And first, look, I'll kind of step back to where really say like it is -- one of our core goals is to become the most technologically capable media company. And there's no question that AI is going to be a significant transformation across our industry and others. But I want to say that, first and foremost, we are really a home for storytellers, and we are a content company first. And so we really view artificial intelligence as an unbelievable tool for artists that will be a significant unlock on creativity. With that said, we are also big believers that when you really go back to 1992 when -- I believe it was James Cameron and Digital Domain when they basically did away with opticals and actually started getting into digital composites was really the beginning of the kind of software-based CPU pipelines that we've all been iterating off of for the last several decades.
And I think there's no question that we're at one of those inflection points where model-driven GPU pipelines are going to get deployed across the business. But again, we really view that as a tool for artists to be able to unlock creativity. When you look at some of the things we're doing internally in terms of how we're investing, when you look at the engineers that we obviously have at the company currently, you can expect us to kind of 10x the size of the headcount that we are basically investing towards this and really want to be in a position where we can be a leader in the industry in terms of how this transformation is shaped. To your question about do I think it will be commoditized, the answer is no. I don't think there's anything that's going to replace artists. I don't think there's anything that's going to replace the creativity of original storytelling.
I would actually point towards -- when you look at the value of intellectual property, whether it was Sora on their launch or whether it was Seedance, and I think you saw us obviously defend against both of -- defend our IP against both of those things. But the fact that there was so much engagement around the characters and intellectual property that audiences love, I think, speaks to the value of that intellectual property. And we are in a unique position to be able to take advantage of that. There's nothing I'm really in a position that I can fully elaborate on further. But again, I think when you look at the power of IP enabled by AI is going to be something that is, I think, a tailwind for us as a company, and we're excited to help kind of be key drivers of that innovation.
Operator
The next question goes to Michael Morris of Guggenheim.
Michael Morris
Guggenheim Securities, LLC, Research Division
I wanted to ask about the studio first. Dennis, I think you mentioned an expected decline in theatrical revenue in '26. I'm hoping you can reconcile that with the significant increase that you're expecting in the number of titles being released. And as you think about that decline, does that pertain to the Studio business overall? Or is it only the theatrical component and you expect growth in licensing? And then if I could, just on the Pluto headwinds that you cited, the trend there seems to be well below the CTV industry overall. Is this a business that you expect to turn around as a growth driver? Or is this maybe not core to the future as you see it?
Dennis Cinelli
Chief Financial Officer
Thanks, Michael. Yes, let me take the first part and then hand over to David. So on the Studio business overall, we will see growth overall on the Studio business on a revenue basis. And that will be driven primarily by the licensing and also combining Skydance into that segment. What I was talking about is theatrical, right? So in theatrical, we are increasing the number of films, but we are comping last year, which was a big output in Mission Impossible. So that's what will drive the theatrical decline year-on-year for 2026. And then the second part of your question, as we think about Pluto, I mean, I think what you'll see is in the DTC segment, right, in Q4, we grew 10% year-on-year.
Paramount+ was up 17%, non-Paramount+ was down 16%. And as we call out, that's primarily driven by Pluto, and it's primarily driven by the monetization of Pluto. I think what we should call out is actually Pluto engagement is up. So monthly active users, the engagement of those users is actually up. And so what we're facing is a monetization headwind, which we are addressing, and we addressed that in our guidance. And I think it's worth passing over to David to talk overall about how we think about Pluto and the and our FAST strategy.
David Ellison
Chairman & CEO
Yes. And I want to expand on what Dennis said on the studio side. So again, we stepped into last year a film slate that underperformed. We have scaled from 8 movies to 16 releases this year, and it's going to be significantly more profitable. But when you really think about getting our core franchises back online, you don't really see that start to occur until '27 just because of what the life cycle is of obviously making a tent pole. It's 2 years to basically from beginning to release at the earliest. So I would look at -- we're making significant improvements in profitability across our film slate this year. And then in '27, when you start seeing films like A Quiet Place and Sonic, Call of Duty, several of our other franchises that basically we'll be releasing in '27, '28 and beyond, you will see our box office numbers increase.
You will see profitability increase. But there is a 2-year life cycle kind of minimum to those big event films. And I actually think the team has done an exceptional job putting us in a good position for this year for the level of growth that we're going to have across our theatrical slate. And then you will see that accelerate significantly into '27. As Dennis said, really looking at Pluto, stepping back, I am a big believer in the FAST space. And I think when you really look at globally, FAST is something that is only going to grow in importance. And when you look at the signs that are also really encouraging on Pluto is we are seeing engagement grow. The headwind we're facing is really monetization, and we're doing several things to correct that. And while Pluto has always been a leader in the FAST space, it's a profitable platform.
It was, from our perspective, underinvested in by the previous owners and managers, both in a content standpoint as well as from a product standpoint. And we've also brought in, obviously, new leadership to help us on the advertising side. We have new leadership on the D2C side that are really working really well hand-in-hand to make sure that we improve the product and improve the monetization. Really, our overall streaming convergence that we talked about on our last earnings call, where we had really 3 separate stacks that were running on multiple clouds, all independent of one another, that convergence obviously will be done in the coming quarters. And you will see continued product improvement to both Pluto and P+. And with that, we'll see the monetization curve correct, and we'll really start seeing better monetization, better growth and more in line with peers with expectations to be above.
Operator
The final question goes to Bryan Kraft of Deutsche Bank.
Bryan Kraft
Deutsche Bank AG, Research Division
First on UFC, I know you had cited 7 million MAUs. I was curious as to whether you can give us some color on the number of unique viewers that you had, just given that you have 79 million subs, trying to understand what the percentage of those subscribers overall is that are engaging with UFC at some level. And then secondly, I was wondering if you could talk about what you've been seeing since you completed the acquisition, both in churn and CAC. How are those trending? How much opportunity do you see for improvement in both of those key metrics over the next 1 or 2 years? And how critical is it to improve either or both of those to the long-term economic success of the streaming business?
David Ellison
Chairman & CEO
Yes. No, absolutely. So look, I want to reiterate, we're incredibly happy with the way our partnership with the UFC has started. When it goes to the 7 million households across U.S. and Latin America, that was above our expectation. And again, it is the largest exclusive sporting event that we've had, obviously, in Paramount+ history. So -- and we are seeing that momentum continue. In terms of basically churn, we are seeing that trend in the right direction. But I still think there's areas for us to be able to continue to improve, which is why you're seeing us invest the way that we are both in content as well as in the product.
We know at 79 million global subscribers, there's a lot of opportunity for growth ahead of us. And when you look at the investments that we're making, again, in the first 6 months, greenlighting 11 original series as well as the work that Dane Glasgow and his team are really doing to significantly improve the product, I think you'll see us improve in all of those metrics going forward. And obviously, we believe those investments will significantly yield long-term shareholder value. So we're pleased about the work to date, but you're only going to see that improve going forward in the future. I mean, Jeff, anything you want to add to that?
Jeffrey Shell
President & Director
No, I just think -- what I would say is there's a seasonality aspect to the business, too. So churn is something that we traditionally saw at Paramount+ really spike up in the summer after the Masters and kind of come back down with the NFL. So 2 of the things we've talked about today that David's talked about, both the UFC and its year-round programming, combined with the increased movie slate, which then pays dividends as it goes to Paramount+ year-round, I think that's going to have a significant impact on churn in addition to the other factors that David just talked about.
Dennis Cinelli
Chief Financial Officer
And Bryan, just jumping in, this is Dennis. One thing to correct. The stat is 7 million households that engage in UFC 324.
Kevin Creighton
EVP of Corporate Finance & Investor Relations
Great. Thank you, team, and thank you all for joining the call today. We appreciate it. Feel free to reach out if you have any questions.
Operator
Thank you. This now concludes today's call. Thank you all for joining, and you may now disconnect your lines.
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