SEC Filing - Paramount

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-09553

Paramount Global

(Exact name of registrant as specified in its charter)

Delaware

04-2949533

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)

1515 Broadway

New York,

New York

10036

(Address of principal executive offices)

(Zip Code)

(212) 258-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Class A Common Stock, $0.001 par value

PARAA

The Nasdaq Stock Market LLC

Class B Common Stock, $0.001 par value

PARA

The Nasdaq Stock Market LLC

5.75% Series A Mandatory Convertible Preferred Stock, $0.001 par value

PARAP

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding at August 2, 2023:

Class A Common Stock, par value $.001 per share— 40,703,633

Class B Common Stock, par value $.001 per share— 610,398,716

PARAMOUNT GLOBAL

INDEX TO FORM 10-Q


		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30 , 2023 and June 30 , 2022	3

	Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30 , 2023 and June 30, 2022	4

	Consolidated Balance Sheets (Unaudited) at June 30 , 2023 and December 31, 2022	5

	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30 , 2023 and June 30 , 2022	6

	Consolidated Statements of Stockholders ’ Equity (Unaudited) for the Three and Six Months Ended June 30 , 2023 and June 30 , 2022	7

	Notes to Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition.	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	59

Item 4.	Controls and Procedures.	59

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	60

Item 1A.	Risk Factors.	60

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	60

Item 6.	Exhibits.	61

PART I – FINANCIAL INFORMATION


Item 1.			Financial Statements.

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenues	$	7,616	$	7,779	$	14,881	$	15,107
Costs and expenses:
Operating	5,227		5,106		10,191		9,902
Programming charges	697		—		2,371		—
Selling, general and administrative	1,783		1,710		3,536		3,329
Depreciation and amortization	105		94		205		190
Restructuring and other corporate matters	54		50		54		107
Total costs and expenses	7,866		6,960		16,357		13,528
Gain on dispositions	—		—		—		15
Operating income (loss)	(250)		819		(1,476)		1,594
Interest expense	(240)		(230)		(466)		(470)
Interest income	33		19		68		40
Gain from investment	168		—		168		—
Loss on extinguishment of debt	—		(47)		—		(120)
Other items, net	(60)		(42)		(106)		(55)
Earnings (loss) from continuing operations before income taxes and equity in loss of investee companies	(349)		519		(1,812)		989
Benefit from (provision for) income taxes	95		(129)		476		(163)
Equity in loss of investee companies, net of tax	(109)		(29)		(184)		(66)
Net earnings (loss) from continuing operations	(363)		361		(1,520)		760
Net earnings from discontinued operations, net of tax	73		61		118		103
Net earnings (loss) (Paramount and noncontrolling interests)	(290)		422		(1,402)		863
Net earnings attributable to noncontrolling interests	(9)		(3)		(15)		(11)
Net earnings (loss) attributable to Paramount	$	(299)	$	419	$	(1,417)	$	852

Amounts attributable to Paramount:
Net earnings (loss) from continuing operations	$	(372)	$	358	$	(1,535)	$	749
Net earnings from discontinued operations, net of tax	73		61		118		103
Net earnings (loss) attributable to Paramount	$	(299)	$	419	$	(1,417)	$	852

Basic net earnings (loss) per common share attributable to Paramount:
Net earnings (loss) from continuing operations	$	(.59)	$	.53	$	(2.40)	$	1.11
Net earnings from discontinued operations	$	.11	$	.09	$	.18	$	.16
Net earnings (loss)	$	(.48)	$	.62	$	(2.22)	$	1.27

Diluted net earnings (loss) per common share attributable to Paramount:
Net earnings (loss) from continuing operations	$	(.59)	$	.53	$	(2.40)	$	1.11
Net earnings from discontinued operations	$	.11	$	.09	$	.18	$	.16
Net earnings (loss)	$	(.48)	$	.62	$	(2.22)	$	1.27

Weighted average number of common shares outstanding:
Basic	651		649		651		649
Diluted	651		650		651		650

See notes to consolidated financial statements.

-3-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; in millions)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net earnings (loss) (Paramount and noncontrolling interests)	$	(290)	$	422	$	(1,402)	$	863
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments	90		(169)		143		(209)
Decrease to net actuarial loss and prior service costs	12		17		23		33
Other comprehensive income (loss) from continuing operations, net of tax (Paramount and noncontrolling interests)	102		(152)		166		(176)
Other comprehensive income (loss) from discontinued operations	2		(8)		4		(6)
Comprehensive income (loss)	(186)		262		(1,232)		681
Less: Comprehensive income (loss) attributable to noncontrolling interests	10		(1)		17		7
Comprehensive income (loss) attributable to Paramount	$	(196)	$	263	$	(1,249)	$	674

See notes to consolidated financial statements.

-4-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except per share amounts)


	At			At
	June 30, 2023			December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents		$	1,714		$	2,885
Receivables, net		7,186			7,412
Programming and other inventory		1,533			1,342
Prepaid expenses and other current assets		1,458			1,308
Current assets of discontinued operations		568			787
Total current assets		12,459			13,734
Property and equipment, net		1,689			1,762
Programming and other inventory		14,602			16,278
Goodwill		16,517			16,499
Intangible assets, net		2,682			2,694
Operating lease assets		1,302			1,391
Deferred income tax assets, net		1,282			1,242
Other assets		4,016			3,991
Assets of discontinued operations		812			802

Total Assets		$	55,361		$	58,393
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	1,210		$	1,403
Accrued expenses		1,948			2,071
Participants’ share and royalties payable		2,470			2,416
Accrued programming and production costs		2,159			2,063
Deferred revenues		921			973
Debt		180			239
Other current liabilities		1,343			1,477
Current liabilities of discontinued operations		439			549
Total current liabilities		10,670			11,191
Long-term debt		15,620			15,607
Participants’ share and royalties payable		1,616			1,744
Pension and postretirement benefit obligations		1,463			1,458
Deferred income tax liabilities, net		516			1,077
Operating lease liabilities		1,341			1,428
Program rights obligations		254			367
Other liabilities		1,520			1,715
Liabilities of discontinued operations		204			200


Commitments and contingencies (Note 13)

Paramount stockholders’ equity:
5.75% Series A Mandatory Convertible Preferred Stock, par value $.001 per share; 25 shares authorized; 10 (2023 and 2022) shares issued		—			—
Class A Common Stock, par value $.001 per share; 55 shares authorized; 41 (2023 and 2022) shares issued		—			—
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 1,113 (2023) and 1,112 (2022) shares issued		1			1
Additional paid-in capital		33,135			33,063
Treasury stock, at cost; 503 (2023 and 2022) shares of Class B Common Stock		(22,958)			(22,958)
Retained earnings		13,116			14,737
Accumulated other comprehensive loss		(1,639)			(1,807)
Total Paramount stockholders’ equity		21,655			23,036
Noncontrolling interests		502			570
Total Equity		22,157			23,606
Total Liabilities and Equity		$	55,361		$	58,393

See notes to consolidated financial statements.

-5-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


	Six Months Ended
	June 30,
	2023		2022
Operating Activities:
Net earnings (loss) (Paramount and noncontrolling interests)	$	(1,402)	$	863
Less: Net earnings from discontinued operations, net of tax	118		103
Net earnings (loss) from continuing operations	(1,520)		760
Adjustments to reconcile net earnings (loss) from continuing operations to net cash flow (used for) provided by operating activities from continuing operations:
Depreciation and amortization	205		190
Programming charges	2,371		—
Deferred tax benefit	(586)		(56)
Stock-based compensation	88		77
Gain on dispositions	—		(15)
Gain from investment	(168)		—
Loss on extinguishment of debt	—		120
Equity in loss of investee companies, net of tax	184		66
Change in assets and liabilities	(1,198)		(667)

Net cash flow (used for) provided by operating activities from continuing operations	(624)		475
Net cash flow provided by operating activities from discontinued operations	223		116
Net cash flow (used for) provided by operating activities	(401)		591
Investing Activities:
Investments	(124)		(141)
Capital expenditures	(140)		(151)


Other investing activities	39		35
Net cash flow used for investing activities from continuing operations	(225)		(257)
Net cash flow used for investing activities from discontinued operations	(2)		(1)
Net cash flow used for investing activities	(227)		(258)
Financing Activities:

Proceeds from issuance of notes and debentures	—		991
Repayment of notes and debentures	—		(3,010)


Dividends paid on preferred stock	(29)		(29)
Dividends paid on common stock	(317)		(315)

Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(19)		(13)

Payments to noncontrolling interests	(93)		(77)
Other financing activities	(89)		(45)
Net cash flow used for financing activities	(547)		(2,498)
Effect of exchange rate changes on cash and cash equivalents	4		(65)
Net decrease in cash and cash equivalents	(1,171)		(2,230)
Cash and cash equivalents at beginning of year	2,885		6,267
Cash and cash equivalents at end of period	$	1,714	$	4,037

See notes to consolidated financial statements.

-6-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; in millions)


	Three Months Ended June 30, 2023
	Preferred Stock			Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total Paramount Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)			(Shares)
March 31, 2023	10	$	—	651	$	1		$	33,087	$	(22,958)		$	13,463		$	(1,742)		$	21,851		$	492	$	22,343
Stock-based compensation activity	—	—		—	—			48		—			—			—			48			—		48
Preferred stock dividends	—	—		—	—			—		—			(14)			—			(14)			—		(14)
Common stock dividends	—	—		—	—			—		—			(34)			—			(34)			—		(34)
Noncontrolling interests	—	—		—	—			—		—			—			—			—			—		—
Net earnings (loss)	—	—		—	—			—		—			(299)			—			(299)			9		(290)
Other comprehensive income	—	—		—	—			—		—			—			103			103			1		104
June 30, 2023	10	$	—	651	$	1		$	33,135	$	(22,958)		$	13,116		$	(1,639)		$	21,655		$	502	$	22,157


	Six Months Ended June 30, 2023
	Preferred Stock			Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total Paramount Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)			(Shares)
December 31, 2022	10	$	—	650	$	1		$	33,063	$	(22,958)		$	14,737		$	(1,807)		$	23,036		$	570	$	23,606
Stock-based compensation activity and other	—	—		1	—			72		—			19			—			91			—		91
Preferred stock dividends	—	—		—	—			—		—			(29)			—			(29)			—		(29)
Common stock dividends	—	—		—	—			—		—			(194)			—			(194)			—		(194)
Noncontrolling interests	—	—		—	—			—		—			—			—			—			(85)		(85)
Net earnings (loss)	—	—		—	—			—		—			(1,417)			—			(1,417)			15		(1,402)
Other comprehensive income	—	—		—	—			—		—			—			168			168			2		170
June 30, 2023	10	$	—	651	$	1		$	33,135	$	(22,958)		$	13,116		$	(1,639)		$	21,655		$	502	$	22,157

See notes to consolidated financial statements.

-7-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(Unaudited; in millions)


	Three Months Ended June 30, 2022
	Preferred Stock			Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total Paramount Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)			(Shares)
March 31, 2022	10	$	—	649	$	1		$	32,946	$	(22,958)		$	14,599		$	(1,924)		$	22,664		$	493	$	23,157
Stock-based compensation activity	—	—		—	—			38		—			—			—			38			—		38
Preferred stock dividends	—	—		—	—			—		—			(14)			—			(14)			—		(14)
Common stock dividends	—	—		—	—			—		—			(160)			—			(160)			—		(160)
Noncontrolling interests	—	—		—	—			—		—			(15)			—			(15)			12		(3)
Net earnings	—	—		—	—			—		—			419			—			419			3		422
Other comprehensive loss	—	—		—	—			—		—			—			(156)			(156)			(4)		(160)
June 30, 2022	10	$	—	649	$	1		$	32,984	$	(22,958)		$	14,829		$	(2,080)		$	22,776		$	504	$	23,280


	Six Months Ended June 30, 2022
	Preferred Stock			Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total Paramount Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)			(Shares)
December 31, 2021	10	$	—	648	$	1		$	32,918	$	(22,958)		$	14,343		$	(1,902)		$	22,402		$	568	$	22,970
Stock-based compensation activity	—	—		1	—			66		—			—			—			66			—		66
Preferred stock dividends	—	—		—	—			—		—			(29)			—			(29)			—		(29)
Common stock dividends	—	—		—	—			—		—			(318)			—			(318)			—		(318)
Noncontrolling interests	—	—		—	—			—		—			(19)			—			(19)			(71)		(90)
Net earnings	—	—		—	—			—		—			852			—			852			11		863
Other comprehensive loss	—	—		—	—			—		—			—			(178)			(178)			(4)		(182)
June 30, 2022	10	$	—	649	$	1		$	32,984	$	(22,958)		$	14,829		$	(2,080)		$	22,776		$	504	$	23,280

See notes to consolidated financial statements.

-8-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollars in millions, except per share amounts)

1) BASIS OF PRESENTATION

Description of Business—Paramount Global, a global media, streaming and entertainment company that creates premium content and experiences for audiences worldwide, is comprised of the following segments:

•TV Media—Our TV Media segment consists of our (1) broadcast operations—the CBS Television Network, our domestic broadcast television network; CBS Stations, our owned television stations; and our international free-to-air networks, Network 10, Channel 5, Telefe, and Chilevisión; (2) premium and basic cable networks, including Showtime (to be rebranded to Paramount+ with Showtime in the future), MTV, Comedy Central, Paramount Network, The Smithsonian Channel, Nickelodeon, BET Media Group, CBS Sports Network, and international extensions of certain of these brands; (3) domestic and international television studio operations, including CBS Studios, Paramount Television Studios and MTV Entertainment Studios, as well as CBS Media Ventures, which produces and distributes first-run syndicated programming. TV Media also includes a number of digital properties such as CBS News Streaming and CBS Sports HQ.

•Direct-to-Consumer—Our Direct-to-Consumer segment consists of our portfolio of domestic and international pay and free streaming services, including Paramount+, Pluto TV, Showtime Networks’ domestic premium subscription streaming service (Showtime OTT), BET+ and Noggin. Effective June 27, 2023, we launched the Paramount+ with Showtime plan in the United States, which replaced the Paramount+ Premium plan. Effective July 6, 2023, Showtime OTT was no longer offered as a standalone subscription service for new subscribers.

•Filmed Entertainment—Our Filmed Entertainment segment consists of Paramount Pictures, Paramount Players, Paramount Animation, Nickelodeon Studio, Awesomeness and Miramax.

References to “Paramount,” the “Company,” “we,” “us” and “our” refer to Paramount Global and its consolidated subsidiaries, unless the context otherwise requires.

Basis of Presentation—The accompanying unaudited consolidated financial statements have been prepared on a basis consistent with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules of the Securities and Exchange Commission (SEC). These financial statements should be read in conjunction with the more detailed financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022.

In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. Certain previously reported amounts have been reclassified to conform to the current presentation.

Discontinued Operations—In the fourth quarter of 2020, we entered into an agreement to sell our publishing business, Simon & Schuster, which was previously reported as the Publishing segment and as a result, we began presenting Simon and Schuster as a discontinued operation (see Note 2). In the fourth quarter of 2022, we terminated the agreement after the U.S. Department of Justice prevailed in its suit to block the sale. On August 7, 2023, we entered into an agreement to sell Simon & Schuster to affiliates of Kohlberg Kravis & Roberts for $1.62 billion, subject to closing conditions, including regulatory approvals.

Use of Estimates—The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and

-9-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may vary from these estimates under different assumptions or conditions.

Net Earnings (Loss) per Common Share—Basic net earnings (loss) per share (“EPS”) is based upon net earnings (loss) available to common stockholders divided by the weighted average number of common shares outstanding during the period. Net earnings (loss) available to common stockholders is calculated as net earnings (loss) from continuing operations or net earnings (loss), as applicable, adjusted to include a reduction for dividends recorded during the applicable period on our 5.75% Series A Mandatory Convertible Preferred Stock (“Mandatory Convertible Preferred Stock”).

Weighted average shares for diluted EPS reflects the effect of the assumed exercise of stock options and vesting of restricted share units (“RSUs”) or performance share units (“PSUs”) only in the periods in which such effect would have been dilutive. Diluted EPS also reflects the effect of the assumed conversion of preferred stock, if dilutive, which includes the issuance of common shares in the weighted average number of shares and excludes the above-mentioned preferred stock dividend adjustment to net earnings (loss) available to common stockholders.

All of our stock options and RSUs, which total 19 million and 20 million for the three and six months ended June 30, 2023, respectively, were excluded from the calculations of diluted EPS because their inclusion would have been antidilutive since we reported a net loss. Stock options and RSUs totaling 11 million and 9 million for the three and six months ended June 30, 2022, respectively, were excluded from the calculations of diluted EPS because their inclusion would have been antidilutive. Also excluded from the calculation of diluted EPS for each period was the effect of the assumed conversion of 10 million shares of Mandatory Convertible Preferred Stock into shares of common stock because the impact would have been antidilutive. The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.


	Three Months Ended		Six Months Ended
	June 30,		June 30,
(in millions)	2023	2022	2023	2022
Weighted average shares for basic EPS	651	649	651	649
Dilutive effect of shares issuable under stock-based compensation plans	—	1	—	1

Weighted average shares for diluted EPS	651	650	651	650

-10-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Additionally, because the impact of the assumed conversion of the Mandatory Convertible Preferred Stock would have been antidilutive, net earnings (loss) from continuing operations and net earnings (loss) used in our calculation of diluted EPS for the three and six months ended June 30, 2023 and 2022 include a reduction for the preferred stock dividends recorded during each period. The table below presents a reconciliation of net earnings (loss) from continuing operations and net earnings (loss) to the amounts used in the calculations of basic and diluted EPS.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Amounts attributable to Paramount:
Net earnings (loss) from continuing operations	$	(372)	$	358	$	(1,535)	$	749
Preferred stock dividends	(14)		(14)		(29)		(29)
Net earnings (loss) from continuing operations for basic and diluted EPS calculation	$	(386)	$	344	$	(1,564)	$	720

Amounts attributable to Paramount:
Net earnings (loss)	$	(299)	$	419	$	(1,417)	$	852
Preferred stock dividends	(14)		(14)		(29)		(29)
Net earnings (loss) for basic and diluted EPS calculation	$	(313)	$	405	$	(1,446)	$	823

2) DISCONTINUED OPERATIONS

The following table sets forth details of net earnings from discontinued operations for the three and six months ended June 30, 2023 and 2022, which primarily reflects the results of Simon & Schuster (See Note 1).


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenues	$	292	$	293	$	550	$	510
Costs and expenses:
Operating	155		161		306		285
Selling, general and administrative	44		47		89		85


Total costs and expenses (a)	199		208		395		370
Operating income	93		85		155		140
Other items, net	(4)		(5)		(7)		(6)
Earnings from discontinued operations	89		80		148		134
Provision for income taxes (b)	(16)		(19)		(30)		(31)
Net earnings from discontinued operations, net of tax	$	73	$	61	$	118	$	103

(a) Included in total costs and expenses are amounts associated with the release of indemnification obligations for leases relating to a previously disposed business of $2 million and $6 million for the three and six months ended June 30, 2023, respectively, and $5 million and $10 million for the three and six months ended June 30, 2022, respectively.

(b) The tax provision includes amounts relating to previously disposed businesses of $1 million for the six months ended June 30, 2023, and $1 million and $2 million for the three and six months ended June 30, 2022, respectively.

-11-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The following table presents the major classes of assets and liabilities of our discontinued operations.


	At			At
	June 30, 2023			December 31, 2022
Receivables, net		$	347		$	558
Other current assets		221			229
Goodwill		435			434
Property and equipment, net		55			53
Operating lease assets		216			204
Other assets		106			111
Total Assets		$	1,380		$	1,589
Royalties payable		$	179		$	161
Other current liabilities		260			388
Operating lease liabilities		187			182
Other liabilities		17			18
Total Liabilities		$	643		$	749

3) PROGRAMMING AND OTHER INVENTORY

The following table presents our programming and other inventory at June 30, 2023 and December 31, 2022, grouped by type and predominant monetization strategy.


	At			At
	June 30, 2023			December 31, 2022
Film Group Monetization:
Acquired program rights, including prepaid sports rights		$	3,148		$	3,238
Internally-produced television and film programming:
Released		6,572			7,154
In process and other		2,679			3,299

Individual Monetization:
Acquired libraries		372			394
Film inventory:
Released		701			694
Completed, not yet released		175			129
In process and other		1,300			1,317
Internally-produced television programming:
Released		567			624
In process and other		583			726
Home entertainment		38			45
Total programming and other inventory		16,135			17,620
Less current portion		1,533			1,342
Total noncurrent programming and other inventory		$	14,602		$	16,278

-12-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The following table presents amortization of our television and film programming and production costs, which is included within “Operating expenses” on the Consolidated Statements of Operations.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Programming costs, acquired programming	$	1,234	$	1,149	$	2,648	$	2,645

Production costs, internally-produced television and film programming:
Individual monetization	$	734	$	671	$	1,130	$	1,162
Film group monetization	$	1,358	$	1,297	$	2,726	$	2,444

Programming Charges

During the six months ended June 30, 2023, in connection with the integration of Showtime into Paramount+ across both streaming and linear platforms, we performed a comprehensive strategic review of the combined content portfolio of Showtime and Paramount+. Additionally, during the first quarter, we reviewed our international content portfolio in connection with initiatives to rationalize and right-size our international operations to align with our streaming strategy, and close or globalize certain of our international channels. As a result, we changed the strategy for certain content, which led to content being removed from our platforms or abandoned, the write-off of development costs, distribution changes, and termination of programming agreements. Accordingly, we recorded programming charges on the Consolidated Statements of Operations relating to these actions in each quarter. These charges, which totaled $697 million and $2.37 billion for the three and six months ended June 30, 2023, respectively, are comprised of $520 million and $1.97 billion for the impairment of content to its estimated fair value, as well as $177 million and $402 million for development cost write-offs and contract termination costs. For content that was removed from our platforms or abandoned, the estimated fair value was determined using assumptions for secondary market licensing revenues, if any.

4) RELATED PARTIES

National Amusements, Inc.

National Amusements, Inc. (“NAI”) is the controlling stockholder of the Company. At June 30, 2023, NAI directly or indirectly owned approximately 77.4% of our voting Class A Common Stock and approximately 9.8% of our Class A Common Stock and non-voting Class B Common Stock on a combined basis. NAI is controlled by the Sumner M. Redstone National Amusements Part B General Trust (the “General Trust”), which owns 80% of the voting interest of NAI and acts by majority vote of seven voting trustees (subject to certain exceptions), including with respect to the NAI shares held by the General Trust. Shari E. Redstone, Chairperson, CEO and President of NAI and non-executive Chair of our Board of Directors, is one of the seven voting trustees for the General Trust and is one of two voting trustees who are beneficiaries of the General Trust. No member of our management or other member of our Board of Directors is a trustee of the General Trust.

-13-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Other Related Parties

In the ordinary course of business, we are involved in transactions with our equity-method investees, primarily for the licensing of television and film programming. The following tables present the amounts recorded in our consolidated financial statements related to these transactions.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023 (a)		2022		2023 (a)		2022
Revenues	$	87	$	74	$	195	$	128
Operating expenses	$	9	$	1	$	13	$	6

(a) The increase in revenues for the three and six months ended June 30, 2023 relates to the SkyShowtime streaming service, which launched in September 2022.


	At			At
	June 30, 2023			December 31, 2022

Accounts receivable		$	277		$	198

Through the normal course of business, we are involved in other transactions with related parties that have not been material in any of the periods presented.

5) REVENUES

The table below presents our revenues disaggregated into categories based on the nature of such revenues. See Note 12 for revenues by segment disaggregated into these categories.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenues by Type:
Advertising	$	2,395	$	2,545	$	5,046	$	5,409
Affiliate and subscription	3,235		2,888		6,414		5,728
Theatrical	231		764		358		895
Licensing and other	1,755		1,582		3,063		3,075
Total Revenues	$	7,616	$	7,779	$	14,881	$	15,107

Receivables

Reserves for accounts receivable reflect our expected credit losses based on historical experience as well as current and expected economic conditions. At June 30, 2023 and December 31, 2022, our allowance for credit losses was $99 million and $111 million, respectively.

Included in “Other assets” on the Consolidated Balance Sheets are noncurrent receivables of $1.46 billion and $1.61 billion at June 30, 2023 and December 31, 2022, respectively. Noncurrent receivables primarily relate to revenues recognized under long-term content licensing arrangements. Revenues from the licensing of content are recognized at the beginning of the license period in which programs are made available to the licensee for exhibition, while the related cash is generally collected over the term of the license period.

-14-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Contract Liabilities

Contract liabilities are included within “Deferred revenues” and “Other liabilities” on the Consolidated Balance Sheets and were $990 million and $1.06 billion at June 30, 2023 and December 31, 2022, respectively. We recognized revenues of $0.6 billion and $0.7 billion for the six months ended June 30, 2023 and 2022, respectively, that were included in the opening balance of deferred revenues for the respective year.

Unrecognized Revenues Under Contract

At June 30, 2023, unrecognized revenues attributable to unsatisfied performance obligations under our long-term contracts were approximately $9 billion, of which $2 billion is expected to be recognized during the remainder of 2023, $3 billion in 2024, $2 billion in 2025, and $2 billion thereafter. These amounts only include contracts subject to a guaranteed fixed amount or the guaranteed minimum under variable contracts, primarily consisting of television and film licensing contracts and affiliate agreements that are subject to a fixed or guaranteed minimum fee. Such amounts change on a regular basis as we renew existing agreements or enter into new agreements. In addition, the timing of satisfying certain of the performance obligations under these long-term contracts is uncertain and, therefore, is also subject to change. Unrecognized revenues under contracts disclosed above do not include (i) contracts with an original expected term of one year or less, mainly consisting of advertising contracts, (ii) contracts for which variable consideration is determined based on the customer’s subsequent sale or usage, mainly consisting of affiliate agreements and (iii) long-term licensing agreements for multiple programs for which variable consideration is determined based on the value of the programs delivered to the customer and our right to invoice corresponds with the value delivered.

Performance Obligations Satisfied in Previous Periods

Under certain licensing arrangements, the amount and timing of our revenue recognition is determined based on our licensees’ subsequent sale to its end customers. As a result, under such arrangements we often satisfy our performance obligation of delivery of our content in advance of revenue recognition. For each of the three months ended June 30, 2023 and 2022, we recognized revenues of $0.2 billion, and for the six months ended June 30, 2023 and 2022, we recognized revenues of $0.2 billion and $0.3 billion, respectively, from arrangements for the licensing of our content, including from distributors of transactional video-on-demand and electronic sell-through services and other licensing arrangements, as well as from the theatrical distribution of our films, for which our performance obligation was satisfied in a prior period.

-15-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

6) DEBT

Our debt consists of the following:


	At			At
	June 30, 2023			December 31, 2022
7.875% Debentures due 2023		$	139		$	139
7.125% Senior Notes due 2023		35			35
4.75% Senior Notes due 2025		553			552
4.0% Senior Notes due 2026		795			795
3.45% Senior Notes due 2026		124			124
2.90% Senior Notes due 2027		695			694
3.375% Senior Notes due 2028		497			496
3.70% Senior Notes due 2028		495			494
4.20% Senior Notes due 2029		495			495
7.875% Senior Debentures due 2030		830			830
4.95% Senior Notes due 2031		1,227			1,226
4.20% Senior Notes due 2032		976			975
5.50% Senior Debentures due 2033		427			427
4.85% Senior Debentures due 2034		87			87
6.875% Senior Debentures due 2036		1,071			1,071
6.75% Senior Debentures due 2037		75			75
5.90% Senior Notes due 2040		298			298
4.50% Senior Debentures due 2042		45			45
4.85% Senior Notes due 2042		489			488
4.375% Senior Debentures due 2043		1,134			1,130
4.875% Senior Debentures due 2043		18			18
5.85% Senior Debentures due 2043		1,234			1,233
5.25% Senior Debentures due 2044		345			345
4.90% Senior Notes due 2044		541			541
4.60% Senior Notes due 2045		590			590
4.95% Senior Notes due 2050		947			946
6.25% Junior Subordinated Debentures due 2057		643			643
6.375% Junior Subordinated Debentures due 2062		989			989
Other bank borrowings		—			55
Obligations under finance leases		6			10
Total debt (a)		15,800			15,846
Less current portion		180			239
Total long-term debt, net of current portion		$	15,620		$	15,607

(a) At June 30, 2023 and December 31, 2022, the senior and junior subordinated debt balances included (i) a net unamortized discount of $432 million and $442 million, respectively, and (ii) unamortized deferred financing costs of $86 million and $89 million, respectively. The face value of our total debt was $16.32 billion and $16.38 billion at June 30, 2023 and December 31, 2022, respectively.

During the six months ended June 30, 2022, we redeemed $2.39 billion of senior notes, prior to maturity, for an aggregate redemption price of $2.49 billion, which included second quarter redemptions of $970 million for a redemption price of $1.01 billion. Also in the six-month period, we redeemed $520 million of 5.875% junior subordinated debentures due February 2057 at par. These redemptions resulted in a total pre-tax loss on extinguishment of debt of $47 million and $120 million for the three and six months ended June 30, 2022, respectively.

During the six months ended June 30, 2022, we also issued $1.00 billion of 6.375% junior subordinated debentures due 2062.

-16-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Commercial Paper

At both June 30, 2023 and December 31, 2022, we had no outstanding commercial paper borrowings.

Credit Facility

During the first quarter of 2023, we amended and extended our $3.50 billion revolving credit facility (the “Credit Facility”), which now matures in January 2027 (the “2023 Amendment”). The Credit Facility is used for general corporate purposes and to support commercial paper borrowings, if any. We may, at our option, also borrow in certain foreign currencies up to specified limits under the Credit Facility. Borrowing rates under the Credit Facility are determined at the time of each borrowing and are generally based on either the prime rate in the U.S. or an applicable benchmark rate plus a margin (based on our senior unsecured debt rating), depending on the type and tenor of the loans entered into. Under the 2023 Amendment, we replaced LIBOR as the benchmark rate for loans denominated in U.S. dollars with Term SOFR. The benchmark rate for loans denominated in euros, sterling and yen is based on EURIBOR, SONIA and TIBOR, respectively. The Credit Facility was also amended to include a provision that the occurrence of a Change of Control (as defined in the amended credit agreement) of Paramount will be an event of default that would give the lenders the right to accelerate any outstanding loans and terminate their commitments. At June 30, 2023, we had no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $3.50 billion.

The Credit Facility has one principal financial covenant which sets a maximum Consolidated Total Leverage Ratio (“Leverage Ratio”) at the end of each quarter, which prior to the 2023 Amendment was 4.5x. Under the 2023 Amendment, the maximum Leverage Ratio was increased to 5.75x for each quarter through and including the quarter ending September 30, 2024, and will then decrease to 5.5x for the quarters ending December 31, 2024 and March 31, 2025, with decreases of 0.25x for each subsequent quarter until it reaches 4.5x for the quarter ending March 31, 2026. The Leverage Ratio reflects the ratio of our Consolidated Indebtedness, net of unrestricted cash and cash equivalents at the end of a quarter, to our Consolidated EBITDA (each as defined in the amended credit agreement) for the trailing twelve-month period. Under the 2023 Amendment, the definition of the Leverage Ratio was also modified to set the maximum amount of unrestricted cash and cash equivalents that can be netted against Consolidated Indebtedness to $1.50 billion for quarters ending on or after September 30, 2024. In addition, under the 2023 Amendment, Simon & Schuster shall be treated as a continuing operation for the purposes of calculating Consolidated EBITDA until its disposition. We met the covenant as of June 30, 2023.

Other Bank Borrowings

At June 30, 2023, we had no outstanding bank borrowings under Miramax’s $50 million credit facility, which matures in November 2023. This facility replaced the previous $300 million credit facility that matured in April 2023. At December 31, 2022, we had $55 million of bank borrowings under the previous facility with a weighted average interest rate of 7.09%.

7) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The carrying value of our financial instruments approximates fair value, except for notes and debentures. At June 30, 2023 and December 31, 2022, the carrying value of our outstanding notes and debentures was $15.79 billion and $15.78 billion, respectively, and the fair value, which is determined based on quoted prices in active markets (Level 1 in the fair value hierarchy) was $13.9 billion in each period.

-17-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Investments

In April 2023, our ownership of Viacom18 was diluted from 49% to 13% following investment by other parties. Accordingly, we no longer account for it under the equity method. The difference between the carrying value of our 49% interest and the fair value of our 13% interest, as indicated by the additional investments, resulted in a noncash gain of $168 million during the second quarter of 2023.

The carrying value of our investments without a readily determinable fair value for which we have no significant influence, which include Viacom18 subsequent to the dilution of our investment, was $593 million and $70 million at June 30, 2023 and December 31, 2022, respectively. These investments are included in “Other assets” on the Consolidated Balance Sheets.

Foreign Exchange Contracts

We use derivative financial instruments primarily to manage our exposure to market risks from fluctuations in foreign currency exchange rates. We do not use derivative instruments unless there is an underlying exposure and, therefore, we do not hold or enter into derivative financial instruments for speculative trading purposes.

Foreign exchange forward contracts have principally been used to hedge projected cash flows, in currencies such as the British pound, the euro, the Canadian dollar and the Australian dollar, generally for periods up to 24 months. We designate foreign exchange forward contracts used to hedge committed and forecasted foreign currency transactions as cash flow hedges. Additionally, we enter into non-designated forward contracts to hedge non-U.S. dollar denominated cash flows.

At June 30, 2023 and December 31, 2022, the notional amount of all foreign exchange contracts was $3.11 billion and $3.06 billion, respectively. At June 30, 2023, $2.48 billion related to future production costs and $626 million related to our foreign currency balances and other expected foreign currency cash flows. At December 31, 2022, $2.40 billion related to future production costs and $655 million related to our foreign currency balances and other expected foreign currency cash flows.

Gains (losses) recognized on derivative financial instruments were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022		Financial Statement Account
Non-designated foreign exchange contracts	$	(7)	$	38	$	(6)	$	40	Other items, net

-18-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Fair Value Measurements

The table below presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022. These assets and liabilities have been categorized according to the three-level fair value hierarchy established by the Financial Accounting Standards Board (“FASB”), which prioritizes the inputs used in measuring fair value. Level 1 is based on publicly quoted prices for the asset or liability in active markets. Level 2 is based on inputs that are observable other than quoted market prices in active markets, such as quoted prices for the asset or liability in inactive markets or quoted prices for similar assets or liabilities. Level 3 is based on unobservable inputs reflecting our own assumptions about the assumptions that market participants would use in pricing the asset or liability. All of our assets and liabilities that are measured at fair value on a recurring basis use level 2 inputs. The fair value of foreign currency hedges is determined based on the present value of future cash flows using observable inputs including foreign currency exchange rates. The fair value of deferred compensation liabilities is determined based on the fair value of the investments elected by employees.


		At			At
	June 30, 2023			December 31, 2022
Assets:

Foreign currency hedges		$	38		$	39
Total Assets		$	38		<