Paramount Global today began a significant cost-cutting initiative, aiming to reduce $500 million in expenses by the end of 2024, as part of a broader strategic overhaul. The media giant plans to eliminate approximately 2,000 positions, representing 15% of its U.S.-based workforce. This decision follows a recent investor call where top executives hinted at impending charges related to the layoffs, predominantly affecting marketing, communications, and other corporate functions.

The layoffs, which will occur in three phases, are expected to be 90% complete by the end of September. Per Variety, Paramount’s interim co-CEOs George Cheeks, Brian Robbins, and Chris McCarthy stated in a memo to employees that the company has reached “an inflection point” where such changes are necessary to ensure the business’s long-term viability.

This move comes on the heels of Paramount’s $6 billion write-down on its cable networks, a stark acknowledgment of the declining value of traditional media assets in the face of the industry’s ongoing transition to streaming. The company’s financial challenges are further compounded by declining revenues across TV licensing, subscription fees, and advertising sales, with second-quarter revenues falling 11%—a significant miss against analyst expectations.

The layoffs are also part of Paramount’s preparation for its impending merger with Skydance Media, a deal that includes identifying $2 billion in cuts. The $500 million in cost savings announced today is just a fraction of the total reductions expected as the merger progresses, raising concerns about further layoffs in the future.

INSIDER TAKE

Paramount’s layoffs are a stark reminder of the rapidly changing media landscape. For those in the subscription industry, this development serves as both a warning and an opportunity to rethink operational strategies, invest in technology, and stay ahead of the curve in an increasingly competitive environment.

• Paramount’s aggressive cost-cutting measures reflect the broader challenges facing traditional media companies in the current landscape. The shift from linear TV to streaming has been both rapid and unforgiving, leaving companies like Paramount scrambling to adapt. The $6 billion write-down on cable networks highlights the stark reality that these once-lucrative assets are rapidly losing their value as consumer behavior shifts toward on-demand, digital content.

• For executives in the subscription industry, Paramount’s layoffs signal a critical need to reassess their own operational strategies. The significant reductions in marketing and communications staff suggest that Paramount is likely to lean more heavily on data-driven and automated marketing approaches, a trend that could become more widespread across the industry. Companies may need to invest more in technology and AI to maintain competitive marketing efforts while controlling costs.

• Moreover, the focus on streamlining corporate functions raises questions about the sustainability of large, centralized teams within the subscription economy. The push towards leaner operations might inspire similar moves across other media and entertainment companies, as they too face the dual pressures of declining traditional revenue streams and the high costs associated with streaming services.

• Finally, the looming merger with Skydance Media introduces a layer of uncertainty not only for Paramount employees but also for its competitors and partners. As Skydance identifies further cuts, subscription streamers should prepare for a potentially more aggressive Paramount, one that may streamline its content offerings and possibly disrupt existing partnerships as it repositions itself in the marketplace.