Good afternoon. My name is Krista and I'll be your conference operator today. I would like to welcome everyone to Paramount's first quarter 2026 earnings conference call. At this time, all lines have been muted to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw your question, please press star one again. I would now like to turn the call over to Kevin Creighton, Paramount's EVP of Corporate Finance and Investor Relations. You may now begin your conference call. Good afternoon and thank you

for taking the time to join us for the Paramount Q1 2026 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 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. 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. Thanks, Kevin, and good afternoon, everyone. As you've seen in

our first quarter results and most recent shareholder letter, we're off to a strong start in our first full year at Peace Guy. The progress we've made in just nine months is a testament to the amazing team we've assembled that has worked tirelessly and with great conviction to deliver on all areas of our business. We are executing deliberately against our priorities and seeing tangible results, attracting top creative talent, nearly doubling our film slate, delivering shows audiences love, and greenlighting dozens of new and returning series while achieving our financial goals. At the same time, we are transforming how we operate, unifying platforms, data, and workflows, and embedding advanced technology to drive efficiency, better serve our partners, and elevate the overall consumer experience. Across the business, we are getting things done, and it's translating into real momentum. As a storytelling company, our top priority is, and always will be, delivering great films and television series from the world's leading creators that resonate with broad global audiences. Recent highlights include Scream 7, which became the highest-grossing installment in the franchise's 30-year history, Landman, now the most-watched series in Paramount Plus history, and the continued strength of CBS, which has 13 of the top 20 primetime series, including all four of the top new series, an achievement no broadcast network has matched since the early 1990s. On streaming and sports, engagement remains strong, with more than 10 million households watching over 100 million hours of USC programming on Paramount Plus, and CBS Sports delivering the most-watched final round of the Masters in over a decade. These are just a few examples of the progress and growth taking place company-wide. As I mentioned, we are also making meaningful strides improving our products to deliver more dynamic, personalized experiences and superior monetization. New features, such as enhanced mobile experiences, short-form video, and more advanced recommendations are helping us to better serve consumers. We're also leveraging AI-powered capabilities across the businesses, including our Agentic Data Warehouse and Precision Plus, our targeted and optimization platform, to move faster and operate with greater effectiveness and support of our advertising partners. While there is still significant work ahead, we remain confident in our strategy and the trajectory we are on. Finally, we continue to make steady progress towards completing the Warner Bros. Discovery transaction, which we believe will accelerate our transformation, strengthen our competitive position, and enhance our ability to help shape the next era of entertainment. To date, we have satisfied our U.S. HSR obligations, and there are no statutory impediments remaining, and we continue to advance through European and other international regulatory approvals, several of which have already been secured. Earlier in April, we announced a broad syndication of the PIPE equity commitment to strategic investors, underscoring continued investor confidence, secured $10 billion in permanent financing, and syndicated the remaining $49 billion of our bridge to a group of leading banks and institutional lenders. Additionally, on April 23rd, WBD shareholders voted to approve the transaction. We're pleased with the momentum and will continue to take the necessary steps to bring this deal to completion. At every stage, we remain guided by our strong conviction that the combination of these two iconic companies and their extraordinary teams will create a leading global media and entertainment company, powered by storytelling and accelerated by technology, that strengthens competition, better serves the creative community, and delivers even more compelling stories to audiences worldwide. We're excited for all that's ahead and look forward to the opportunities it will create. And with that, I'll turn it back over to Kevin for your questions.

Thanks, David. Just a quick note before we open the line. Given the pending transaction for WBD, we won't be taking questions on the deal today beyond what we wrote in the shareholder letter. With that, Krista, we'll go ahead and open up the line, please.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, again, press star 1. We do ask that you limit yourself to one question. For any additional questions, please re-queue. And your first question comes from Sean Diffley with Morgan Stanley. Please go ahead.

Great. Thanks very much. I was hoping you could comment on business transformation early learnings as you converge your tech stacks between Paramount Plus and Pluto and any things that you could apply to a larger asset base, and then broadly how you see AI transforming the business. You mentioned on the ad tech front, but anything else that you think is notable to call out?

Yeah, sure. No, absolutely. So what I would say in terms of early learnings is really our ability to execute and move quickly in regards to the transformation. We're on track, as we discussed previously, to really consolidate our three streaming services into one unified platform by really the middle of this year. Those learnings are going to be crucial as we get into basically the transaction with WBD. I think if you look at our ability to execute on our cost saves and efficiencies, we've had great learnings there. And I think we've been delivering on what we said we were going to do regarding plan. So I do believe that what we've been executing at Paramount will be a good kind of accelerant learning for everything we're doing at WBD. Getting more specific into that, as Kevin said, we're going to kind of stay a little bit away from the transaction today, given we're obviously still in the middle of the process. I'll turn it over to Andy if there's anything you want to add to that.

Yeah, I would just say what we're learning also is as we integrate BET+, Pluto, and Paramount into one tech stack, it's going to accelerate our ability to do the same when we close WBD. And in particular, when you see the consumer product that comes out this summer, I think you'll be pretty pleased about how they all function together and create a better experience both for the free consumers on the fast channel business of Pluto, but also on the paid subscription businesses of Paramount Plus, both ad and ad-free. So we're pretty excited about that.

And look, to dive into more specifics, in terms of what we're seeing on the platforms we're operating, as we said, we remain on track for convergence. That obviously has significant benefits across personalizations and recommendations. you know on the front end we're modernizing the consumer consumer facing technology to create more dynamic personalized experiences as of April you're able to see obviously short form video clips servicing trailers sports highlights and library content and a curated more personalized feed we're working on you know enhanced personalization across discovery including AI driven artwork we're also focusing on building other mobile optimized experience like live stats for live sports. All of these are, you know, really designed to deepen engagement and, you know, across the platform. For Pluto, basically this summer, Pluto is going to get the most significant update really since the inception of the platform. Other areas you're really seeing us, you know, really utilize technology is across our tech and product org. Approximately 80% of our engineering organization is using code-assisted technology, which is driving meaningful production gains and really cutting approval times by more than in half. So again, it's really accelerating how we work across the business. And these investments all support our long-term DTC growth and are foundational to where we're taking the business. And again, these are all great learnings that will prepare us for the transaction at the

end of the third quarter. And John, the only thing I'd add around AI transformation is we're spinning up pods to go after AI-based workflows in the back office. So think finance, HR, operational functions. And we're really enabling both on the Paramount side, and we think this sets us up for the combination, to be able to go after AI-based workflows and efficiency in the back office. And we see that's going to be a real benefit. And so we're doing that today with the teams that David talked about. And that'll set us up well in the future as well.

Yeah, one more thing to add is on Oracle and Fusion, our ERP system, We made a major milestone in the first quarter with the remainder of that transformation to the Oracle Fusion System for Paramount standalone by early 27. So, again, that puts us in a much better spot as part of the closing of Warner Brothers Discovery as well.

Great. Thanks, Sean. Appreciate the question. Krista, next question, please.

Your next question comes from the line of Jessica Reeve-Ehrlich with Bank of America Securities. Please go ahead.

Thank you. With WBD, you will undoubtedly have some of the best industry assets and, of course, library or libraries, plural. But you really do need to integrate and execute. So, any changes in how you're thinking about allocating capital or management attention as you integrate for the second time or about to integrate for the second time in two years? And then one specific question, you really do seem committed to having 30 films once you combine. And just, you know, maybe you could talk about, it just seems like such a daunting task given the marketing and distribution needs. And maybe I'm like the only person on this call that might remember this, but in the early Disney days with Michael Eisner and Jeffrey Katzenberg, they tried this and it was just too much. So I'm just wondering how you're thinking about 30 movies and why that many? Like, what will it do to elevate Paramount Skydance and whatever the new company will be called?

Yeah, sure. Thanks, Jessica. And before we jump in, I just want to be clear. We've had a couple of questions on WBD now. We want to focus most of the call on our results for the quarter and the outlook for the business. But with that, I'll go ahead and take it over to David.

Yeah, no, Jessica, I really appreciate the question. So, look, zooming out to 30,000 feet, we really view our pending acquisition of Warner Brothers Discovery as a powerful accelerant to our strategy, right? It expands reach and enhances our ability to create the world's most compelling stories and experiences. And it positions us really well to build a next generation media and technology company. And if you look at that across basically three core pillars, on the production side, we'll become the premier destination for the industry's leading creative voices. We are firmly committed to 30 theatrical films per year. If you look at the schedule, we have 15 films on the calendar to release this year, up from eight last year. So we've come close to basically doubling the output of our film studio, Paramount. If you look at the great job that the team at WBD has done, they have 15 films on the release calendar for this year. So the two companies are actually making 30 films to date, which I think is important to note and accelerating. And under those studios will be some of the most beloved franchises of all times, including Harry Potter, Top Gun, Star Trek, Looney Tunes, Game of Thrones, Yellowstone. we really do think it's an incredibly exciting and powerful creative content engine. By bringing these two businesses together, we really do build a scaled D2C competitor, and it accelerates our goals there. It gives you over 200 million D2C subscribers across more than 100 countries, which really does basically position us well to compete with the leading streaming services in the space. And, you know, across our linear businesses, you know, it's a presence in over 200 countries, a portfolio of cable and free-to-air networks, such as, you know, CBS, CNN, TBS, TNT, Food Network, all of which we think positions us really well across every single vertical in the business. And as we've talked about in regards to operational efficiencies, we're pleased with the way we've been executing at Paramount and believe we'll be able to deliver on exactly what we said we're going to do at Warner Brothers Discovery. So from a strategic standpoint, we could not be more excited about the transaction. We are also on track to get this done by September of this year. So those are all the reasons that we're excited and have a high degree of confidence around our ability to execute. And with that, in the most respectful way, we really have to kind of stay away at this point in time from stuff on WBD and really focus on the company that we're operating today.

Your next question comes from the line of Robert Fishman with Moffitt Nathanson. Please go ahead.

Hi, good afternoon. Is the current plan to allocate more of your overall company programming budget towards the higher quality content like NFL, UFC, obviously, and these blockbuster Paramount movies? Or do you prefer to spread your budget out to more of a volume-based approach going forward? And then on a related note, just following up on the first question, And after launching those short videos and clips in Paramount+, is the ultimate goal to better compete with YouTube and TikTok for those short-form ad dollars, or is it just to drive more engagement and extend the premium ad dollars that you're already getting from your networks? Thank you.

Yeah, so look, I'll take the first half,

and then Andy and Dennis, if you guys want to obviously jump in the back end around monetization. So look, I'll say kind of a core thematic for us has always been quality is the best business plan, really making sure you aim high and you don't stop working until you get there. And in the competitive landscape that we find ourselves in today, we think that's essential from a creative standpoint. And that's a philosophy that we're going to continue to deploy across our film and television studios as well as our streaming services. CBS across the sports side has really focused, we think, quite well on big events that matter, delivering a record-setting, you know, NFL season. You know, we just delivered one of the most successful, obviously, Masters finals. So we do think that emphasis on quality and aiming high in terms of a storytelling standpoint is really critical. But at the same point in time, we've also increased our investment in content this year. As we said, we've doubled the output roughly of the film studio. And in the DTC space, you know, we've effectively come close to doubling the output in terms of our original series that we've obviously greenlit since we've been at the company. And so we do believe that we can maintain that quality bar while scaling, and we think that's essential towards accomplishing our growth goals. Dennis, anything you want to dive, you know, I'd turn it over to you around monetization. Yeah, I mean, I think you should

think about the content portfolio across our segments, right? So you know, in TV media, the CBS team has been executing to execute, you know, with a balanced portfolio of both the NFL and other sports, as well as a really solid primetime lineup. And you've seen them there with 13 of the top in primetime. Overall, on D2C, we very much are building, we've talked about this, this is a multi-year journey to build a portfolio that drives growth and engagement. And you're seeing that start to come through. In Q1, our parent plus revenue is up 17% through a combination of both delivery on price increase, as well as our healthy underlying growth in the business from subscribers. We added nearly 2 million subscribers in a quarter on an underlying basis. And then, you know, David talked about in the studio, right, we will continue to see, you know, the studio rebuild in Q1. Our overall studio revenue was up 11%, a combination of both the delivery on films like Scream, as well as continuing to build our third-party TV studio. and we'll continue to monitor the content performance. We're spending a lot of time internally around building out appropriate content ROI analysis, making sure that every investment is underwritten with the appropriate level of rigor, and you're going to continue to see us do that as we build a portfolio.

And then, Robert, look, on clips, we obviously know where people want to watch our content. Typically, it's on more than one screen. If it's not two, it's kind of three. And so the ability to have a vertical short-form product that we can then deepen engagement across our user base, keep people more involved, and want to spend more time with our content is critical to our future. So this is just the beginning. I would view it as a beta test, but I would say right now we're seeing high engagement of people looking at clips and then coming into our various forms of content, whether it be news, sports, or entertainment. And so we're pretty excited about sort of what that means for the future.

And the last thing I would say is you look at how fast the team has been able to roll out these level of innovations. There is incredible momentum building across the company as we basically take a test and learn fast iteration approach. And we're really pleased with the early metrics. But again, it's early innings right now. Great. Thanks, Robert.

Your next question comes from the line of Rich Greenfield with LightShed Partners. Please go ahead.

this. Hi, thanks for taking the question. David, you've got, you know, very large G2C ambitions, if I go back to your original manifesto letter that you wrote when the transaction closed. I'm curious, as you think about your engagement goals for Paramount Plus in 2026 and 2027, given sort of the size of the investments you've made since taking control, I guess, how should we think about how fast you think you can move the goalposts on engagement, And how does the tech or UI tech stack rebuild this summer play into that engagement change or the step function you're hoping in engagement? And then just quickly on sort of the same topic, but Paramount Plus has used channel stores pretty aggressively since its launch, even going back to the CBS All Access days. What is your view on channel stores, and should you be using them, or should you not long-term?

uh uh rich great uh great question to kind of uh look to to summarize basically the first part it's it's a combination of increased content investments and increased tech investments when you when you look at it right like it really is to to achieve our goals that we're working towards in streaming uh we need to invest in obviously more content uh on platform uh you You know, I think if you, you know, take a look at what's obviously coming in, you know, in 2026, you know, we have new seasons of the agency, Star Trek, Lioness, Mobland, Tulsa We have Dutton Ranch obviously coming this, you know, obviously this summer, you know, Frisco's King from Taylor Sheridan. On sports, you're seeing us, you know, obviously continue to invest. You know, UFC is obviously year round. We have the NFL, March Madness, UEFA Champions League, you know, new partnership with the WNBA. And we've also greenlit a significant amount of new series from third-party studios, such as Discretion with Nicole Kidman and Elle Fanning, 9-12 with Jeremy Strong, and Fear Not with Anne Hathaway.