Paramount Skydance Corporation (PSKY) Earnings Call Transcript & Summary

So one opportunity you took and you mentioned earlier was buying The Free Press. The track record of big media companies like Paramount buying digital media companies like The Free Press is abysmal, at least over the last several years. So why are you buying this company? And what was the thought behind it?

Absolutely. So one, what our goal is in news is we want to become the most trusted destination in news media. That is our goal. And I don't think it's a controversial thing to say right now that the civil discourse that currently exists is not in a great place. And we basically believe in all the things that The Free Press believed in, which is the -- we want to speak to the 70% of the audience that identifies themselves the center left to center right. We believe in the open exchange of ideas and then fundamentally presenting both sides and allowing the audience to ultimately make their determination about how they feel about it, but they're presented with the facts. And we think that The Free Press recognized some of the issues that have been occurring and built a company as part of the solution to...

What issues are you referring to there?

The notion of really just saying we want to get back into the trust business, we want to get back into the truth business. And then in addition to that, when you look at news, right, we have -- I cannot properly express how much respect and admiration I have for the legacy of CBS News in 60 minutes. It's remarkable. And -- but also the company does not have a digital strategy. And one of -- which is why The Free Press was a critical part of that acquisition because you need to be able to meet people where they are...

Isn't it -- I'm just curious, though, isn't it remaining independent-ish?

So basically, the free press will obviously stay in the digital landscape in which they're going towards. But I also think when you talk about meeting people where they are, that's in broadcast news. That's obviously on The Free Press' website. That's in podcast. But that's also eventually going to be in direct-to-consumer. And we do want to actually build a home in the DTC platform, which, to my knowledge, our competitors are not doing, where you can actually go get all of that in a digital environment to direct-to-consumer and The Free Press is an accelerant to be able to accomplish that goal.

Doesn't CBS already have a digital news network?

They do, but we think that this basically accelerates and supercharges it.

Based on what you said, you have a lot of respect to CBS News, but in bringing in someone to completely overhaul it would suggest that you thought that things weren't operating as well as they could have been. How would you -- how would you assess it not just from a business standpoint, but from a content standpoint? Do you feel like the news that they were putting out there was where you want it to be? Do you think there are things they could be doing better or worse?

So as I've kind of said this before, I'm not going to be in the position of ever making political statements like we're an entertainment company first. And we have the viewpoint of if you're breathing, you're audience. And we basically -- and so from that standpoint, we want to entertain our audiences first. What I will say, and I have said this, and I said this in the letter I sent out to the team earlier this week, is that I do believe that this is an opportunity when you look at where things sit that we want to be able to get back to a place where everyone can have dialogue. We believe in civil discourse. We believe in the open exchange and debate of ideas is how you get to the right answer. And we think that there is a responsibility with news to make sure that you are promoting that. But at the end of the day, it's always up to the viewer and the audience to decide, and we're in the business of, first and foremost, earning their trust. And that has done over time, and we hope that we're going to work really hard to earn our audience trust every day.

You can understand, though, why when you're talking about restoring trust and speaking to everyone, you put someone in -- Bari's background is primarily as an opinion columnist, right? She's not a kind of dyed in the wool news reporter. And there are going to be people at CBS News, and there have been a lot of people outside of -- journalists outside of CBS News already who are seem very concerned because opinion and news are typically kept separate. And now you have kind of the editorial leader of this news group whose background is an opinion.

Yes. I mean, look, I'll continue to say the same thing, like I'm not going to make a political statement. I'm really not going to do it.

I'm not asking a political statement, but you can understand maybe why some of the staff is nervous or I'm sure you've got -- you and your team are already ready for there to be a bunch of leaks over the next few weeks of people who don't like whatever direction it's being -- it's going in.

Yes. Lucas, I think I said is like, again, I'll keep going back to it. I think if you look at the value system that basically The Free Press has been operated under really does align with the value system that we believe in, which I also believe is in line with the legacy of CBS News. And if you actually go to that, I do believe there are areas where we collectively can and will do better. but I also have the utmost respect for the team that exists there. And again, I wouldn't judge us based on what I sit here and say today, judge us basically over time as we basically prove to that. I mean, again, like this is going to be one where we're going to need to demonstrate every single day that we're obviously earning people's trust. I obviously deeply believe in the free press. I believe in the team at CBS News, and I believe we're going to accomplish the goal of building that trusted destination news and media.

You and Bari, I don't know if this counts as politics for you, but you have a lot of common ground on the big issue, which is Israel. And you have spoken publicly about it. Your company issued a statement expressing concern about how some artists were speaking about it. Why did you feel the need to speak out on that issue? And how has the blowback been?

Yes. So look, just to go back to the statement that we made, right, was very simply, we made a statement that was effectively discriminating based on where somebody is from is wrong. And I stand by that statement. In addition to that, when you look at what's going on in the world, the fact that we are effectively at a historic piece deal with hostages being returned home as early as this weekend or Monday, I think that is a historic accomplishment and one that we should all be happy so that those hostages can get home with their families.

I believe that there was a piece about sort of some employees of yours who are upset about the statement that you put out. And I'm just curious, have you heard from -- and I know just from kind of day-to-day life that there are a lot of people in the talent community who feel a little bit differently about this subject than you do. Have you heard from any of them? Has there...

So obviously, I saw that piece. And look, we believe in the first amendment. They are 100% entitled to their opinion. We're entitled to ours. And then no, we haven't heard from anybody else directly.

Got it. We haven't talked about your dad at all, who is the biggest shareholder in your company, I believe, or one of.

Absolutely.

The deal that you don't want to talk about that you might do would also be thanks in part to his largest. What advice has he given you about running a big company? And what is the relationship between the 2 of you like?

So look, we -- my father and I couldn't have a better relationship. We talk just about every day or every other day. Look, he's a pretty phenomenal mentor. And I think, especially when you look at it from a shareholder capacity, I think he has about as good of a track record as you can get for actually creating value. If you look at the growth of Oracle this year across everything he's done in our businesses and as well as our stock has obviously also performed since we closed. And so from that standpoint, he is focused on how do we maximize value for our shareholders. I think it's one of the best in the world at doing that. And I think that's a voice that everyone should be really happy about the fact that, that's obviously helping to guide and steer the company. So from that standpoint -- and look, the other thing I would say is I've had phenomenal mentors that I'm grateful to, including Steve Jobs and David Geffin. And honestly, I'm grateful for everything I've been able to learn from them, and we couldn't have a better relationship.

And when you say guidance, so are you -- like how often is -- you talk to your dad every day. Are you talking about the company every day? Like is he -- I think a lot of people who work there ought to know, right? Like is ultimately -- how involved is Larry Ellison going to be in Paramount?

So look, I run the company day-to-day. Make no mistake about that. He is the largest shareholder in the business. And I think what's important for everybody to know is the way he approaches this is how do we maximize value for our shareholders, and he's exceptional at that.

Given the amount of money that you guys have at your disposal, you mentioned shareholders, like why not just take the company private?

So great question. One, we actually think it's really simple. It goes back to that question of value. We think there is actually more value and more opportunity in being a public company and being a private company.

And given -- so your dad's -- you've got Paramount, your dad seems to be involved in the new ownership consortium for TikTok in the U.S. You maybe have the Warner Bros. Discovery deal. What do you say to people...

You got range of questions I can't actually answer.

No, no, no. But this is -- I think you can answer this one. What do you say to people who seem -- who are concerned that there's just like an Ellison/Ellison Trump plot to just like corner the media business. You've got Elon with Twitter. There...

No, I know where you're going. Look, it's under the headline of doing better, I can only speak to -- look, I think I can speak to my personal state of mind, right? Is that fair? Am I committed to do that? So what I can tell you is that conversation has never once been discussed or brought up. When we basically approach things, it is going back to always how do we create basically value for shareholders. And look, go back to what I've been doing like the last 15 years of my life, right? I mean, like this is -- it's -- sorry, I kind of look at this and I'm like, can we -- does the last 20-plus years of my life not equate. And what I mean by that is I went to film school at USC, right? I started -- I literally started in this business when I was 18 years old. I fell in love with movies when I was literally a little kid. And my mom and I would go to the movies every single weekend. That's literally what we do without fail. We went 52 weeks a year and just saw anything that was playing. And we had a VHS collection of at home where like me and my sister's idea of like the greatest day on a Sunday was let's go watch all the Rocky movies back to back in one day or let's go watch the Star Wars Trilogy. So I literally loved this business and love storytelling since I was a kid. I went to school for it. I built Skydance and launched it in 2010, really with the understanding that the disruption between the bridge that has been built between Silicon Valley and Hollywood was going to happen. We saw that over 15 years ago. We built a company that was the tip of the spear for that disruption on the content creation side with one of our guiding thematics always being where entertainment is heading, right? The slate deal we did where we got all of the crown jewels and Paramount franchises without taking things that are normally put into those kind of deals was revolutionary at the time. Our second series, Grace and Frankie, we took to Netflix before House of Cards was released because we believed in anything, anywhere, anytime in any device before it had been proven. We've taken early bets into interactive and virtual reality, and we took tentpole movies direct-to-consumer during a time period where we thought that, that was the right thing to do. So from that standpoint, I have always loved and believed in this business. I love storytelling. I believe in the value of basically entertainment and media and what these stories mean, and it's a privilege to get to tell them in our culture. And as it relates to news, which is the other part of the question you're asking, we really do want to be in the trust business first and foremost. We really do want to talk to that 70% of the audience, and we want to get back to having that level of civil discourse. So none of those things that have been talked about have ever been discussed inside of my relationship with my dad.

On the tech front, because you talk about that kind of seeing the friction between Hollywood and Silicon Valley, the other sort of big bogeyman in the news right now is AI. What is your perception of Sora? Are you guys opting out of your product being in there? How are you thinking about using AI?

Yes. So look, I'd say 2 things to that, right? Like fundamentally, we are in the business of building, creating and protecting value of intellectual property. So we have been in that business. We always continue to be in that business. Look, there's a really healthy debate around inputs that I don't really want to get into because we don't have enough time. But I think when you look at the outputs, those need to be protected. Copyright basically needs to be protected on the outputs of those businesses. But what I would also say is, as an industry, we do need to embrace technology. And I think if you look at artificial intelligence, there are several areas to where AI is going to impact our business. And I actually think it's important to do it in a way that is responsible, that is fundamentally a tool for artists. So I'll go back to The Pixar Story and forgive the [ semi long ] answer to this, but I just -- I'll go to this is one that I happen to be able to live through. I remember basically in the -- when Steve and John Laster basically built Pixar, the attack on them at the time was that they didn't like animators and they didn't like the medium of animation, which when you talk to either John or Steve, John, who was a classically trained Walt Disney animator, they love storytelling. They loved animation. What they said was we are just giving the artist a new pencil to actually enable them to draw and create something they've never been able to create before. And I think the reality is, is much like when James Cameron in 1992, basically started doing digital comps as opposed to optical comps, and that was a controversial thing at the time as well. I do think you're in one of these inflection point moments where the software CPU pipelines are going to start to be augmented or replaced by model-driven GPU pipelines. And there's a responsible way to do that and there's an irresponsible way to do that. We're going to err on the side of basically partnering with that technology to do it in a way that we think is good for artists.

My last question was a short one so that the folks in the back don't kill me. Who's a better pilot. You or Tom Cruise. Plead the fifth on that one?

I'll plead the fifth on it. It's -- no, look, what I will say is Tom is an exceptional pilot, like I actually was -- I started flying when I was 13 years old. By the time I was 20, I was one of the top 10 aerobatic pilots in the country. So literally like flying air shows like 300 miles an hour, 15 feet off the ground. So that was a wonderful chapter in my life. But I think the training that he did to be able to do the sequences in Mission Impossible. The fact that he captured all of that filming in camera on Top Gun: Maverick, for me, he's just the gold standard and nothing but the utmost admiration and respect for him.