Paramount's Strategic Crossroads: Can Streaming Offset the Decline of Traditional Media?

The media landscape is undergoing a seismic shift, and Paramount finds itself at the center of it. Recent layoffs, strategic pivots, and regulatory battles underscore the company's struggle to adapt to a world where streaming dominates and linear TV viewership continues to crumble. For investors, the question is whether Paramount's bets on its streaming platform, Paramount+, and its high-stakes merger with Skydance Media can justify its valuation—or if the company is overextending in an uncertain economy.

A Workforce Restructuring Reflects Industry Realities

Paramount's latest round of layoffs—a 3.5% reduction in its U.S. workforce—builds on a broader pattern of cost-cutting. Since 2024, the company has trimmed over 15% of its U.S. staff, aiming to save $500 million and return to profitability. These cuts are part of a larger industry-wide trend: Disney, Warner Bros. Discovery, and others have also slashed costs to realign with the rise of streaming.

The layoffs highlight Paramount's strategic priorities. Traditional TV, once the bedrock of its business, is in decline. Linear ad revenue has stagnated, and younger audiences are increasingly abandoning cable bundles for services like Paramount+, Netflix, and Disney+. In a memo to employees, Paramount's co-CEOs framed the cuts as necessary to “adapt to industry-wide declines in traditional TV and shifting consumer preferences.”

The Merger with Skydance: A Double-Edged Sword

Paramount's $8.4 billion merger with Skydance Media, a production powerhouse behind hits like Top Gun: Maverick, is central to its streaming ambitions. The deal aims to bolster Paramount+'s content library, critical for competing in a crowded space. Yet regulatory hurdles and a lawsuit by former President Donald Trump—alleging misleading editing in a 2020 CBS News interview—threaten to delay or complicate the merger.

Legal experts have dismissed Trump's lawsuit as “frivolous,” but it underscores a broader risk: Paramount's reliance on its broadcast division, CBS News, could become a liability in an era of heightened political scrutiny. Meanwhile, regulators in the U.S. and Europe are scrutinizing media consolidation, which could slow the merger's approval.

Financials: A Fragile Recovery

Paramount's financial performance offers a mixed picture. In early 2025, the company reported net earnings of $152 million on $7.1 billion in revenue—a stark rebound from a $563 million loss in the same period a year earlier. However, its stock has seen only modest gains over the past year, rising 14% in 2025 but flatlining since late 2023.

The disconnect between earnings growth and stagnant stock performance hints at investor skepticism. While Paramount's streaming efforts are gaining traction—driven by hits like Mission: Impossible — The Final Reckoning and NCAA Tournament coverage—traditional media divisions remain under pressure.

The Long-Term Value Debate: Streaming vs. Traditional Media

The core question for investors is whether Paramount's streaming pivot can create long-term value. On one hand, streaming is the future: global streaming revenue is projected to grow at a 7% CAGR through 2030, even as traditional TV continues to lose subscribers. Paramount+'s content library, bolstered by Skydance's assets, could position the platform as a must-have service.

But challenges loom. The streaming market is intensely competitive, with Disney+, Prime Video, and HBO Max all vying for dominance. Meanwhile, traditional media's decline poses risks: ad revenue from linear TV could drop further as audiences fragment.

Risks and Opportunities

• Upside: A successful merger with Skydance could accelerate Paramount+'s growth, while cost-cutting could improve margins.
• Downside: Regulatory delays, legal distractions, and a potential recession could stall progress. A prolonged slump in traditional media could also weigh on earnings.

Investment Considerations

Paramount's stock currently trades at 14x forward earnings, a discount to its peers (Disney: 18x, Warner Bros.: 16x). This suggests investors are pricing in execution risks. However, the merger's success—and the ability to grow Paramount+'s subscriber base—could unlock value.

For investors, this is a Hold recommendation. While the company's strategy aligns with industry trends, near-term risks—including regulatory hurdles and economic uncertainty—outweigh the potential rewards. A Buy rating might emerge if the merger closes smoothly and Paramount+'s growth accelerates beyond expectations.

Conclusion

Paramount's journey is a microcosm of the entire media sector: a race to adapt to streaming while managing the decline of legacy businesses. The company's moves are bold, but the path to long-term value remains fraught with obstacles. For now, investors should tread carefully, keeping an eye on regulatory developments and Paramount+'s performance. The verdict on whether streaming can save Paramount—and whether it's a worthwhile investment—hangs in the balance.