Paramount CEO Bob Bakish Still Sees Value in Licensing Content to Rivals

While Paramount's licensing revenues are down, they still contribute a big share to the company's overall revenues.

Bob Bakish stands on stand with hands out in front of Paramount logos.
Bob Bakish is the president and CEO of Paramount. Getty Images for MTV

As streaming companies compete for the limited attention and budgets of consumers, some analysts have suggested that exclusive, original content is the key to attracting and retaining subscribers. But that’s not what many streaming platforms, including Paramount (PARA)+, seem to think.

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Licensing content to third parties “produces enduring value” for Paramount Global, the company that owns Paramount+, CEO Bob Bakish said during the company’s annual shareholder meeting today (May 8). It isn’t only fundamental to Paramount’s business, but it has been fundamental to the media business for decades, he said.

While Paramount’s licensing revenues are down, they are still contributing to a huge share of Paramount’s overall earnings and could be too big to neglect.

Paramount reports its licensing revenues under the title “licensing and other,” so while the numbers aren’t an exact measure of the company’s licensing earnings, they do indicate how the licensing business is doing. The category doesn’t include revenues tied to advertising, theatrical releases and subscriptions. In the first three months of 2023, its licensing and other revenues were down from the same period last year by 15 percent for television titles and 7 percent for films, totaling $1.33 billion. The figure represents 18 percent of the company’s total revenues during the period. Paramount attributed the decline to fewer licensed titles and consumer product sales. During the 2022 year, Paramount’s licensing and other revenues were $6.66 billion, accounting for 22 percent of the company’s yearly revenue.

What about hits like Yellowstone?

Licensing titles allows Paramount to earn more money from the same content, according to Bakish. But the strategy doesn’t always work. The company licensed Yellowstone—a drama starring Kevin Costner—to Peacock, in a move that Bakish called “unfortunate.” Yellowstone has gained popularity, earning 12.1 million viewers on the day its fifth and most recent season premiered. By comparison, Grey’s Anatomy earned 3.5 million same-day viewers for its episodes during the same time. Yellowstone is Peacock’s fifth most talked about show on social media, according to data shared with Observer by Diesel Labs, a company that measures content trends on social media. The buzz that Yellowstone generated could aid Peacock, rather than Paramount, in attracting new subscribers.

“We’re no longer licensing big, franchise IP to third parties,” Paramount’s chief financial officer Naveen Chopra said at MoffettNathanson’s Media and Communications Summit last year. “We’ll keep them for our owned and operated platform.”

What other companies are licensing their content?

Paramount+ isn’t the only streaming platform adopting this strategy. Disney has already sold the rights to many of its titles, including Grey’s Anatomy, New Girl and How to Get Away With Murder, all of which appear on Netflix. It also allows TNT and TBS, both owned by Warner Bros. Discovery, to show its Star Wars films. Disney is reportedly considering selling more of its original titles to curb its streaming business losses. In the three months ending December 31, the most recent data available, Disney’s streaming business lost $1.05 billion. Its losses are down from the previous three months, but nearly double what it lost in the same period the year prior.

Most major streaming platforms aren’t profitable, with the exception of Netflix. Selling the rights to content contributes an additional revenue stream to these platforms that must convince their shareholders that streaming is a worthwhile investment. HBO Max licenses content to Fox’s Tubi and Roku. Peacock and Starz, owned respectively by Comcast and Lionsgate, began sharing shows in 2020. Netflix does not license its original movies and television shows to other platforms.

Paramount CEO Bob Bakish Still Sees Value in Licensing Content to Rivals