Paramount CFO on name change: 'An opportunity to combine out trade name with our consumer brand'

Paramount CFO Naveen Chopra joins Yahoo Finance Live to discuss the company's name change from ViacomCBS, Q4 earnings, the vision for streaming, competition, and more.

Video transcript

BRIAN SOZZI: All right, the company now formerly known as ViacomCBS left it all on the field at its investor day Tuesday night. First, the company is changing its name to Paramount. Second, the company sees 100 million streaming subscribers by 2024 versus 65 million to 75 million previously. And a new "Beavis and Butt-Head" series will hit Paramount+. But shares are under pressure as the company missed analyst profit forecasts for the fourth quarter, as it invests in its streaming future.

Joining us now is Paramount CFO Naveen Chopra. Naveen, always nice to get some time with you. Lots of things that you shared last night here. Let's start with the name change, though. Why are you changing the name of the company? And what signal are you trying to send to markets?

NAVEEN CHOPRA: Hey, Brian. It's good to be with you again. We're very excited about being able to rebrand ViacomCBS as Paramount. Paramount has always stood for being the best. And we are on a mission to build what we believe will be one of the best streaming services, not just in terms of the content that we offer, but quite frankly, also, what we ultimately deliver financially.

Paramount is also, obviously, a very well-known global brand. It signals that we are now truly one company, as opposed to ViacomCBS, which was obviously reflected the merger of two separate companies. And it gives us an opportunity to combine our trade name with our consumer brand, as Paramount+ is, as you well know, becoming the flagship of our streaming ambitions. We now have the ability to leverage that with everything that we do from a marketing perspective. So, very excited about where it's going to take us.

JULIE HYMAN: Naveen, it's Julie here. I want to pick up on one word that you said that you're ultimately going to deliver financial results related to Paramount+. You already have revenue, obviously, tied to it, but given what we're seeing from your stock today, is it fair to say that this is a transition period, not just with the name, but financially for the company in terms of the investment period that you all are entering? And what would be your message to investors then, given that and given what we're seeing in the stock today?

NAVEEN CHOPRA: Yeah, well, we are fundamentally focused on building long-term value creation. And we strongly believe that streaming is the opportunity to create immense value. We're obviously in investment mode today, but we believe it is a business that has a massive market opportunity. And our approach to pursuing that is different, and it's different in ways that we think do yield a better financial model.

Just to give you a few examples, we have the ability to leverage content across multiple platforms, which makes the investments we make in content much more efficient. We have built in promotional platforms. We have a different approach to distribution that combines the DTC model with a real embrace of bundles and partnerships.

We have global production capabilities that give us very direct and efficient access to local content to use in markets around the world, all of which means an economic model where we believe we can create long-term streaming margins that approach what we see in our traditional TV media business. Or said differently, we can make streaming more efficient and have better margins at comparable scale to a traditional pure ad slot business. So it's fundamentally a different playbook. And that's what we want investors to understand as we go down this path.

BRIAN SOZZI: Naveen, let's just stay on the stock price because I see your assets in terms of CBS News, I mean, just tremendous library of content. Of course, that extends to movies as well. But I see the stock is trading about nine times forward earnings. What else can you do to get that stock price up? Can you buy back more shares? You exited the quarter with about $6.3 billion in stock. You've also been selling off non-core assets. Do you see more opportunities to unload things that may not fit your vision?

NAVEEN CHOPRA: Yeah, I mean, what we want investors to focus on is that long-term opportunity. And we've done some things, particularly with our financial reporting starting this quarter, to try to make it easier for people to understand that we bring both a very large scale, very profitable traditional media business, and a high growth direct-to-consumer streaming business. And it's really the combination of those two things that translates to the overall value of the company. And we want people to look at it that way.

And then we also want them to understand what I described a minute ago, which is, we are building our streaming business using a different playbook. It's a playbook that we think is ultimately a better financial model. And, you know, look, it may take the Street a little while to understand that. But ultimately, it's just a massive opportunity and a great value creation opportunity as well.

JULIE HYMAN: And you guys are still, obviously, as we've been talking about, early on in that journey. I'm just looking at the last quarter, and I think about 16% or so of your revenue was from the streaming business specifically. It's been growing quickly. How important-- is there sort of a goal you want to get to when it comes to the streaming business in terms of the financials?

NAVEEN CHOPRA: Absolutely. I mean, we spoke extensively about this in our investor event yesterday. We have very big growth plans for streaming. You pointed out that both 2021 in Q4 were-- we posted some phenomenal growth, added 9.4 million streaming subscribers in Q4, which makes us, by the way, the fastest growing global streaming service. So we're very proud of that, but we're not stopping there.

We talked yesterday about the fact that we now expect to exceed 100 million subscribers in our DTC business by 2024. We expect revenue to grow from a little over $3 billion today to over $9 billion in 2024. So we see ourselves being a very big player on the streaming stage, which, as I said, is an exciting growth opportunity for investors.

BRIAN SOZZI: Naveen, is the streaming platform at 100 million subs by 2024, is it profitable on those levels?

NAVEEN CHOPRA: Well, one of the things that we talked about yesterday was that, you know, in addition to the growth that we expect to deliver by 2024, we think the DTC business hits its peak losses in 2023. And then earnings start to improve from that point forward on the path to a business that, as I said earlier, ultimately delivers margins that look comparable to what we see on the traditional TV media side today.

That doesn't happen overnight, but building great large scale businesses does take a little while. And we're going to continue to invest behind the growth, which we're seeing. This is not, you know, just a hope. We've seen tremendous growth in 2021. And we're pushing the pedal down even more aggressively to capture that.

BRIAN SOZZI: There was a line in the release, Naveen, that caught my attention-- I think a lot of other folks in the Street-- that in 2024, the new theatrical releases, after you release them in theaters, you're going to put them on, I believe, Paramount+. Does that mean you're walking away from Netflix? How does that relationship look? Does anything change there?

NAVEEN CHOPRA: Well, we don't have a relationship with Netflix specifically with respect to theatrical movies today, but we do have a relationship with Epix. And so today when those movies go into the pay one window, some of them go to Epix, some of them come to Paramount+. Once that deal comes to an end in 2024, you'll see those movies coming to Paramount+.

JULIE HYMAN: And Naveen, finally, listen, I know you're the balance sheet guy, you're the financial guy, but I got to ask you about content also. And if there's-- I mean, Brian and I have been talking this morning how we're excited about the "Beavis and Butt-Head" reboot--

BRIAN SOZZI: So excited.

JULIE HYMAN: --which is a nostalgia play for people in our demo, I think, and maybe our kids, too, although, oh, god, my kids watching "Beavis and Butt-Head." But in any case, what are you particularly excited about that's on the docket?

NAVEEN CHOPRA: You know, to be honest, it's hard to choose. I don't know if we probably have enough time for me to tell you everything I'm excited about. But the whole point of Paramount+ is we got something for everyone. Whether you're a "Beavis and Butt-Head" fan, which, by the way, is just pure comedy genius, or whether you're excited for new shows-- "Halo's" coming in March. It's an incredible show, you know, big, high end action.

We've also got other very exciting content, more coming from the Taylor Sheridan universe. I recently saw some of the early episodes of a program called "The Offer," which is the history of how the "Godfather" movies came to be made. That's an incredible show. We've got all sorts of things coming down the pipe, so a lot to keep you busy.

BRIAN SOZZI: Naveen, real quickly, you're the guy that signed off on bringing "Beavis and Butt-Head" back, right? I can give you full credit?

NAVEEN CHOPRA: I'm happy to take the credit.

BRIAN SOZZI: Fair enough.

NAVEEN CHOPRA: But the reality is there's a lot of very-- a lot of creative geniuses around this company who really make that stuff happen.

BRIAN SOZZI: All right, that's news you can use. We'll leave it there. Paramount CFO, Naveen Chopra, always good to see you. We'll talk to you soon.