Paramount Closes TV Studio, Lays Off 15% of Staff

Unlike “The Brady Bunch,” one of Paramount Global’s iconic sitcoms, the company just couldn’t make its combined families work. Now it’s deep in cost-cutting mode.

As the entertainment giant prepares to move under the control of David Ellison’s Skydance Media, current leadership is undergoing an aggressive campaign to realize half a billion in savings. On Tuesday, the effort brought about two victims: some 2,000 employees, or around 15% of total staff, as well as the shuttering of Paramount Television Studios.

Peaks and Valleys

Paramount has long owned and operated CBS Studios, creating homegrown hits like “Star Trek,” “Survivor,” and “NCIS.” But, in 2013, company leaders saw an industrywide production boom on the horizon, and decided to launch a second studio — Paramount Television — to best position itself for the content explosion. And for most of the past 11 years, it’s proven a decent bet, with the studio producing hits for Paramount’s own properties and serving as a dealer to competitors. Some sales to rival companies include “13 Reasons Why” to Netflix, “Station Eleven” to Max, and “Reacher” to Amazon Prime Video. 

But Peak TV is now firmly in the rearview mirror, forcing the bulked-up company to start shedding layers on the tumble down:

• There is an industrywide expectation that there will be “less volume of content over the next couple of years versus the peak golden age of streaming,” Jamie Lumley, sector analyst at Third Bridge, told The Daily Upside, adding that third-party and competitor “demand for [high-budget series] might be at lower levels than previously anticipated.”
• For Paramount, that means going from two TV studios to just one. The company said Tuesday that CBS Studios will take over all of Paramount Teleision’s current shows. Skydance, which is expected to close its takeover of Paramount sometime next year, already has its own TV unit as well.

Write Down To It: Tuesday’s news shouldn’t be shocking. Last week, Paramount’s second-quarter earnings report brought both good news and bad news. The good news? Its streaming unit, just like Disney’s this past quarter, finally crossed into profitability. The bad news? Its linear TV business, which has anchored the company despite being long in decline, is seeing its bottom fall out. The company took a nearly $6 billion write-down on its cable assets as revenues plummeted at lower-tier assets like VH1 and MTV 2. Across town, Warner Bros. Discovery took a write-down on its own cable TV assets. Ellison sure has his work cut out for him.