Paramount Earnings: Awaiting Warner Decision, Streaming Shows Promise, and 2026 Outlook Looks Good

Key Morningstar Metrics for Paramount Skydance

• Fair Value Estimate: $20
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of Paramount Skydance’s Earnings

Fourth-quarter Paramount+ PSKY sales rose 18% year over year, and management expects growth to accelerate in 2026 following January price increases and growing subscriber gains. Direct-to-consumer EBITDA went negative after being positive the past two quarters, but 2026 EBITDA guidance was very strong.

Why it matters: Making Paramount+ a top-tier streaming service is critical to Paramount’s long-term success, and it is on the right track. We’re unconcerned about profit slippage, as the firm is wisely investing in streaming content to drive viewership, and fourth quarter is the seasonally weakest quarter.

• Paramount+ added 1 million net subscribers in the quarter, while average revenue per user rose 11% year over year. We expect a boost in subscriptions in 2026 from the Ultimate Fighting Championship schedule and an influx of original series. Price increases and a mix shift should boost ARPU.
• Enhanced programming comes with additional cost, but we don’t see it disrupting the path toward drastically improving DTC profitability, where EBITDA was $230 million in 2025, up from a $500 million loss in 2024. Even the fourth-quarter loss of $158 million was nearly cut in half from the year before.

The bottom line: We maintain our $20 fair value estimate, as operating results are meaningfully improving. Management forecasts $30 billion in 2026 sales—up 4% after dropping each year since 2022—and nearly $3 billion in cost savings, good for two percentage points of margin expansion.

• We don’t think the inclusion of Skydance (part of Filmed Entertainment) for seven additional months in 2026 is responsible for the sales growth, as it generated only about $1 billion in annual sales prior to the merger. Rather, we believe DTC is now offsetting TV declines.
• TV sales fell 9% in 2025 to $17 billion, but the decline was exacerbated by Super Bowl rights and the 2024 presidential election. We expect mid-single-digit TV declines to be the norm, yet DTC revenue was half TV revenue in 2025.