SEC Info - Paramount Global - ‘10-Q’ for 3/31/22

2022

2021

Revenues

i 7,328

i 7,412

Costs and expenses:

Operating

i 4,796

i 4,363

Selling, general and administrative

i 1,619

i 1,422

Depreciation and amortization

i 96

i 99

Restructuring and other corporate matters

i 57

i —

Total costs and expenses

i 6,568

i 5,884

Gain on sales

i 15

i —

Operating income

i 775

i 1,528

Interest expense

( i 240)

( i 259)

Interest income

i 21

i 13

Loss on extinguishment of debt

( i 73)

( i 128)

Other items, net

( i 13)

i 1

Earnings from continuing operations before income taxes and equity in loss of
investee companies

i 470

i 1,155

Provision for income taxes

( i 34)

( i 226)

Equity in loss of investee companies, net of tax

( i 37)

( i 18)

Net earnings from continuing operations

i 399

i 911

Net earnings from discontinued operations, net of tax

i 42

i 12

Net earnings (Paramount and noncontrolling interests)

i 441

i 923

Net earnings attributable to noncontrolling interests

( i 8)

( i 12)

Net earnings attributable to Paramount

i 433

i 911

Amounts attributable to Paramount:

Net earnings from continuing operations

i 391

i 899

Net earnings from discontinued operations, net of tax

i 42

i 12

Net earnings attributable to Paramount

i 433

i 911

Basic net earnings per common share attributable to Paramount:

Net earnings from continuing operations

i .58

i 1.44

Net earnings from discontinued operations

i .06

i .02

Net earnings

i .65

i 1.46

Diluted net earnings per common share attributable to Paramount:

Net earnings from continuing operations

i .58

i 1.42

Net earnings from discontinued operations

i .06

i .02

Net earnings

i .64

i 1.44

Weighted average number of common shares outstanding:

Basic

i 649

i 622

Diluted

i 651

i 631

See notes to consolidated financial statements.

-3-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; in millions)

Three Months Ended

2022

2021

Net earnings (Paramount and noncontrolling interests)

i 441

i 923

Other comprehensive income (loss), net of tax:

Cumulative translation adjustments

( i 40)

( i 66)

Recognition of net actuarial loss and prior service costs

i 16

i 13

Other comprehensive loss from continuing operations,
net of tax (Paramount and noncontrolling interests)

( i 24)

( i 53)

Other comprehensive income from discontinued operations

i 2

Comprehensive income

i 419

i 872

Less: Comprehensive income attributable to noncontrolling interests

i 8

i 11

Comprehensive income attributable to Paramount

i 411

i 861

See notes to consolidated financial statements.

-4-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except per share amounts)

ASSETS

Current Assets:

Cash and cash equivalents

i 5,302

i 6,267

Receivables, net

i 7,263

i 6,984

Programming and other inventory

i 950

i 1,504

Prepaid expenses and other current assets

i 1,245

i 1,176

Current assets of discontinued operations

i 594

i 745

Total current assets

i 15,354

i 16,676

Property and equipment, net

i 1,706

i 1,736

Programming and other inventory

i 14,180

i 13,358

Goodwill

i 16,561

i 16,584

Intangible assets, net

i 2,760

i 2,772

Operating lease assets

i 1,614

i 1,630

Deferred income tax assets, net

i 1,280

i 1,206

Other assets

i 3,771

i 3,824

Assets held for sale

i —

i 19

Assets of discontinued operations

i 817

i 815

Total Assets

i 58,043

i 58,620

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

i 977

i 800

Accrued expenses

i 1,960

i 2,323

Participants’ share and royalties payable

i 2,172

i 2,159

Accrued programming and production costs

i 1,687

i 1,342

Deferred revenues

i 1,055

i 1,091

Debt

i 15

i 11

Other current liabilities

i 1,374

i 1,182

Current liabilities of discontinued operations

i 483

i 571

Total current liabilities

i 9,723

i 9,479

Long-term debt

i 16,797

i 17,698

Participants’ share and royalties payable

i 1,310

i 1,244

Pension and postretirement benefit obligations

i 1,914

i 1,946

Deferred income tax liabilities, net

i 1,067

i 1,063

Operating lease liabilities

i 1,579

i 1,598

Program rights obligations

i 429

i 404

Other liabilities

i 1,753

i 1,898

Liabilities of discontinued operations

i 209

i 213

Redeemable noncontrolling interest

i 105

i 107

Commitments and contingencies (Note 14)

Paramount stockholders’ equity:

i i 5.75 / % Series A Mandatory Convertible Preferred Stock, par value $ i i .001 / per share;

i i 25 / shares authorized and i i 10 / shares issued (2022 and 2021)

i —

Class A Common Stock, par value $ i i .001 / per share; i i 55 / shares authorized;

i i 41 / shares issued (2022 and 2021)

i —

Class B Common Stock, par value $ i i .001 / per share; i i 5,000 / shares authorized;

i 1,111 (2022) and i 1,110 (2021) shares issued

i 1

Additional paid-in capital

i 32,946

i 32,918

Treasury stock, at cost; i i 503 / (2022 and 2021) Class B shares

( i 22,958)

Retained earnings

i 14,599

i 14,343

Accumulated other comprehensive loss

( i 1,924)

( i 1,902)

Total Paramount stockholders’ equity

i 22,664

i 22,402

Noncontrolling interests

i 493

i 568

Total Equity

i 23,157

i 22,970

Total Liabilities and Equity

i 58,043

i 58,620

See notes to consolidated financial statements.

-5-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


	Three Months Ended
	March 31,
	2022		2021
Operating Activities:
Net earnings (Paramount and noncontrolling interests)	$	i 441	$	i 923
Less: Net earnings from discontinued operations, net of tax	i 42		i 12
Net earnings from continuing operations	i 399		i 911
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities from continuing operations:
Depreciation and amortization	i 96		i 99
Deferred tax (benefit) provision	( i 62)		i 95
Stock-based compensation	i 36		i 52
Gain on sales	( i 15)		i —

Loss on extinguishment of debt	i 73		i 128
Equity in loss of investee companies, net of tax	i 37		i 18
Change in assets and liabilities	( i 269)		i 348

Net cash flow provided by operating activities from continuing operations	i 295		i 1,651
Net cash flow provided by operating activities from discontinued operations	i 102		i 72
Net cash flow provided by operating activities	i 397		i 1,723
Investing Activities:
Investments	( i 59)		( i 40)
Capital expenditures	( i 52)		( i 62)

Proceeds from dispositions	i 31		i 213
Other investing activities	i —		( i 25)


Net cash flow (used for) provided by investing activities	( i 80)		i 86
Financing Activities:

Proceeds from issuance of long-term debt	i 1,028		i 25
Repayment of long-term debt	( i 2,009)		( i 2,117)


Dividends paid on preferred stock	( i 14)		i —
Dividends paid on common stock	( i 158)		( i 151)
Proceeds from issuance of preferred stock	i —		i 983
Proceeds from issuance of common stock	i —		i 1,672

Payment of payroll taxes in lieu of issuing shares for stock-based compensation	( i 9)		( i 35)
Proceeds from exercise of stock options	i —		i 408
Payments to noncontrolling interests	( i 77)		( i 27)
Other financing activities	( i 32)		( i 35)
Net cash flow (used for) provided by financing activities	( i 1,271)		i 723
Effect of exchange rate changes on cash and cash equivalents	( i 11)		( i 19)
Net (decrease) increase in cash, cash equivalents and restricted cash	( i 965)		i 2,513
Cash, cash equivalents and restricted cash at beginning of year (includes $ i 135 (2021) of restricted cash)	i 6,267		i 3,119
Cash, cash equivalents and restricted cash at end of period (includes $ i 133 (2021) of restricted cash)	$	i 5,302	$	i 5,632

See notes to consolidated financial statements.

-6-

PARAMOUNT GLOBAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; in millions)

Three Months Ended March 31, 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)

i 10

i —

i 648

i 1

i 32,918

( i 22,958)

i 14,343

( i 1,902)

i 22,402

i 568

i 22,970

Stock-based
compensation
activity

—

i 1

—

i 28

—

i 28

—

i 28

Preferred stock
dividends

—

( i 14)

—

( i 14)

—

( i 14)

Common stock
dividends

—

( i 159)

—

( i 159)

—

( i 159)

Noncontrolling
interests

—

( i 4)

—

( i 4)

( i 83)

( i 87)

Net earnings

—

i 433

—

i 433

i 8

i 441

Other comprehensive

loss

—

( i 22)

—

( i 22)

i 10

i —

i 649

i 1

i 32,946

( i 22,958)

i 14,599

( i 1,924)

i 22,664

i 493

i 23,157

Three Months Ended March 31, 2021

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)

December 31, 2020

i —

i 617

i 1

i 29,785

( i 22,958)

i 10,375

( i 1,832)

i 15,371

i 685

i 16,056

Stock-based

compensation

activity

—

i 9

—

i 426

—

i 426

—

i 426

Stock issuances

i 10

—

i 20

—

i 2,655

—

i 2,655

—

i 2,655

Preferred stock
dividends

—

( i 1)

—

( i 1)

—

( i 1)

Common stock
dividends

—

( i 152)

—

( i 152)

—

( i 152)

Noncontrolling
interests

—

i 11

—

i 11

( i 24)

( i 13)

Net earnings

—

i 911

—

i 911

i 12

i 923

Other comprehensive
loss

—

( i 50)

( i 1)

( i 51)

March 31, 2021

i 10

i —

i 646

i 1

i 32,866

( i 22,958)

i 11,144

( i 1,882)

i 19,171

i 672

i 19,843

See notes to consolidated financial statements.

-7-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollars in millions, except per share amounts)

1) i BASIS OF PRESENTATION

Description of Business—Effective February 16, 2022, we changed our name from ViacomCBS Inc. to Paramount Global, and effective at the open of market trading on February 17, 2022, our Class A Common Stock, Class B Common Stock and i i 5.75 / % Series A Mandatory Convertible Preferred Stock (“Mandatory Convertible Preferred Stock”) ceased trading under the ticker symbols “VIACA,” “VIAC” and “VIACP” and began trading under the ticker symbols “PARAA,” “PARA” and “PARAP,” respectively, on The Nasdaq Stock Market LLC. References to “Paramount,” the “Company,” “we,” “us” and “our” refer to Paramount Global and its consolidated subsidiaries, unless the context otherwise requires.

Beginning in 2022, primarily as a result of our increased strategic focus on our direct-to-consumer businesses, we made certain changes to how we manage our businesses and allocate resources that resulted in a change to our operating segments. Our management structure has been reorganized to focus on managing our business as the combination of three parts: a traditional media business, a portfolio of global direct-to-consumer streaming services, and a film studio. Accordingly, beginning in the first quarter of 2022 and for all periods presented we are reporting results based on the following segments:

•TV Media—Our TV Media segment consists of our domestic and international broadcast networks, including the CBS Television Network, Network 10, Channel 5, Telefe, and Chilevisión; our premium and basic cable networks, including Showtime, BET, Nickelodeon, MTV, Comedy Central, Paramount Network, Smithsonian Channel, international extensions of these brands, and CBS Sports Network; our television production operations, including CBS Studios, Paramount Television Studios and CBS Media Ventures, which primarily produces or distributes first-run syndicated programming; and our owned broadcast television stations, CBS Stations.

•Direct-to-Consumer—Our Direct-to-Consumer segment consists of our portfolio of pay, free and premium global direct-to-consumer streaming services (“DTC services”), including Paramount+, Pluto TV, Showtime Networks’ premium subscription streaming service (Showtime OTT), BET+ and Noggin.

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

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, 2021.

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—On November 25, 2020, we entered into an agreement to sell our publishing business, Simon & Schuster, which was previously reported as the Publishing segment, to Penguin Random House LLC (“Penguin Random House”), a wholly owned subsidiary of Bertelsmann SE & Co. KGaA, for $ i 2.175 billion in cash. As a result, Simon & Schuster has been presented as a discontinued operation in our consolidated financial statements for all periods presented (see Note 2).

-8-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

i 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 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.

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

Weighted average shares for diluted EPS reflects the effect of the assumed exercise of stock options and vesting of restricted stock units (“RSUs”) or performance stock 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 available to common stockholders.

Excluded from the calculation of diluted EPS because their inclusion would have been antidilutive were stock options and RSUs of i 6 million for the three months ended March 31, 2022 and stock options of i 3 million for the three months ended March 31, 2021. Also excluded from the calculation of diluted EPS for the three months ended March 31, 2022 was the effect of the assumed conversion of i 10 million shares of Mandatory Convertible Preferred Stock into shares of common stock because the impact would have been antidilutive. i The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.

Three Months Ended

March 31,

(in millions)

2022

2021

Weighted average shares for basic EPS

i 649

i 622

Dilutive effect of shares issuable under stock-based

compensation plans

i 2

i 8

Assumed conversion of Mandatory Convertible
Preferred Stock

i —

i 1

Weighted average shares for diluted EPS

i 651

i 631

-9-

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 from continuing operations and net earnings used in our diluted EPS calculations for the three months ended March 31, 2022 were adjusted to include the preferred stock dividends recorded during the period. i The table below presents a reconciliation of net earnings from continuing operations and net earnings to the amounts used in the calculations of basic and diluted EPS.

Three Months Ended

Amounts attributable to Paramount:

Net earnings from continuing operations

i 391

Preferred stock dividends

( i 14)

Net earnings from continuing operations for basic and diluted
EPS calculation

i i 377 /

Amounts attributable to Paramount:

Net earnings

i 433

Preferred stock dividends

( i 14)

Net earnings for basic and diluted EPS calculation

i i 419 /

Recently Adopted Accounting Pronouncements

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

On January 1, 2022, we adopted Financial Accounting Standards Board (“FASB”) amended guidance to reduce complexity associated with the accounting for convertible instruments with characteristics of liabilities and equity. Under this guidance, embedded conversion features associated with convertible instruments no longer need to be separated from the host contracts unless they are required to be accounted for as derivatives or have been issued at a substantial premium. For contracts in an entity’s own equity, this guidance removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exceptions. The adoption of this guidance did not have a material impact on our consolidated financial statements.

2) i DISPOSITIONS

During the first quarter of 2022, we recorded gains on sales totaling $ i 15 million, comprised of a gain from the sale of international intangible assets and a working capital adjustment to the gain from the fourth quarter 2021 sale of CBS Studio Center.

During the fourth quarter of 2020, we entered into an agreement to sell our publishing business, Simon & Schuster, to Penguin Random House for $ i 2.175 billion in cash. Simon & Schuster is presented as a discontinued operation in our consolidated financial statements for all periods presented. On November 2, 2021, the U.S. Department of Justice filed suit to block the sale. The purchase agreement contains commitments on the part of the purchaser to take all necessary steps to obtain any required regulatory approvals and to defend any litigation that would delay or prevent consummation, and also provides for a $ i 200 million termination fee payable to us in certain circumstances in the event the transaction does not close for regulatory reasons (see Note 14).

-10-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The following table sets forth details of net earnings from discontinued operations for the three months ended March 31, 2022 and 2021, which primarily reflects the results of Simon & Schuster.

Three Months Ended

2022

2021

Revenues

i 217

i 185

Costs and expenses:

Operating

i 124

i 120

Selling, general and administrative

i 38

Total costs and expenses (a)

i 162

i 158

Operating income

i 55

i 27

Other items, net

( i 1)

( i 2)

Earnings from discontinued operations

i 54

i 25

Income tax provision (b)

( i 12)

( i 13)

Net earnings from discontinued operations, net of tax

i 42

i 12

(a) Included in total costs and expenses for the three months ended March 31, 2022 is $ i 5 million for the release of indemnification obligations for leases relating to a previously disposed business.

(b) The tax provision includes amounts relating to previously disposed businesses of $ i 1 million and $ i 7 million for the three months ended March 31, 2022 and 2021, respectively.

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

Receivables, net

i 381

i 536

Other current assets

i 213

i 209

Goodwill

i 435

Property and equipment, net

i 46

Operating lease assets

i 203

Other assets

i 133

i 131

Total Assets

i 1,411

i 1,560

Royalties payable

i 126

i 155

Other current liabilities

i 357

i 416

Operating lease liabilities

i 191

i 194

Other liabilities

i 18

i 19

Total Liabilities

i 692

i 784

-11-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

3) i PROGRAMMING AND OTHER INVENTORY

i i

The following table presents our programming and other inventory at March 31, 2022 and December 31, 2021, grouped by type and predominant monetization strategy. During the first quarter of 2022, in connection with our increased strategic focus on our direct-to-consumer businesses, we reassessed our predominant monetization strategy for certain of our internally-produced content, and determined that it had shifted from individual to film group as a result of expected increased monetization of the content on our DTC services.

Film Group Monetization:

Acquired program rights, including prepaid sports rights

i 3,054

i 3,432

Internally-produced television and film programming:

Released

i 5,132

i 3,808

In process and other

i 2,807

i 2,609

Individual Monetization:

Acquired libraries

i 427

i 441

Film inventory:

Released

i 691

i 606

Completed, not yet released

i 322

i 253

In process and other

i 1,212

i 1,303

Internally-produced television programming:

Released

i 786

i 1,604

In process and other

i 663

i 769

Home entertainment

i 36

i 37

Total programming and other inventory

i 15,130

i 14,862

Less current portion

i 950

i 1,504

Total noncurrent programming and other inventory

i 14,180

i 13,358

/ / i

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


	Three Months Ended
	March 31,
		2022		2021
Programming costs, acquired programming		$	i 1,496	$	i 1,502

Production costs, internally-produced television and film programming:
Individual monetization		$	i 491	$	i 760
Film group monetization		$	i 1,147	$	i 650

4) i RELATED PARTIES

National Amusements, Inc.

National Amusements, Inc. (“NAI”) is the controlling stockholder of the Company. At March 31, 2022, NAI directly or indirectly owned approximately i 77.4% of our voting Class A Common Stock and approximately i 9.7% 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 i 80% of the voting interest of NAI and acts by majority vote of i 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

-12-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

President of NAI and non-executive Chair of our Board of Directors, is one of the i seven voting trustees for the General Trust and is one of i 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.

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. i The following tables present the amounts recorded in our consolidated financial statements related to these transactions.


	Three Months Ended
	March 31,
		2022		2021
Revenues		$	i 54	$	i 65
Operating expenses		$	i 5	$	i 4

Accounts receivable

i 62

i 50

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

5) i REVENUES

The table below presents our revenues disaggregated into categories based on the nature of such revenues. See Note 13 for revenues by segment disaggregated into these categories.

Three Months Ended

2022

2021

Revenues by Type:

Advertising

i 2,864

i 3,109

Affiliate and subscription

i 2,840

i 2,463

Theatrical

i 131

i 1

Licensing and other

i 1,493

i 1,839

Total Revenues

i 7,328

i 7,412

Receivables

Reserves for accounts receivable reflect our expected credit losses based on historical experience as well as current and expected economic conditions. During the first quarter of 2022, following Russia’s invasion of Ukraine, we recorded a charge of $ i 39 million, principally to reserve against amounts due from counterparties in Russia, Belarus and Ukraine. The charge was recorded within “Restructuring and other corporate matters” on the Consolidated Statement of Operations. At March 31, 2022 and December 31, 2021, our allowance for credit losses was $ i 113 million and $ i 80 million, respectively.

Included in “Other assets” on the Consolidated Balance Sheets are noncurrent receivables of $ i 1.67 billion and $ i 1.84 billion at March 31, 2022 and December 31, 2021, 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.

-13-

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 totaled $ i 1.15 billion and $ i 1.20 billion at March 31, 2022 and December 31, 2021, respectively. For the three months ended March 31, 2022, we recognized revenues of $ i 446 million that were included in deferred revenues at December 31, 2021. For the three months ended March 31, 2021, we recognized revenues of $ i 465 million that were included in deferred revenues at December 31, 2020.

Unrecognized Revenues Under Contract

At March 31, 2022, unrecognized revenues attributable to unsatisfied performance obligations under our long-term contracts were $ i 6.8 billion, of which $ i 3.0 billion is expected to be recognized for the remainder of 2022, $ i 2.1 billion in 2023, $ i 0.9 billion in 2024, and $ i 0.8 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. 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 the three months ended March 31, 2022 and 2021, we recognized revenues of $ i 151 million and $ i 150 million, respectively, for licensing to distributors of transactional video-on-demand and electronic sell-through services and other arrangements for licensing of our content for which our performance obligation was satisfied in a prior period.

-14-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

6) i DEBT

Our debt consists of the following:

i 7.875% Debentures due 2023

i 139

i 7.125% Senior Notes due 2023

i 35

i 3.875% Senior Notes due 2024

i —

i 490

i 3.70% Senior Notes due 2024

i —

i 599

i 3.50% Senior Notes due 2025

i 274

i 597

i 4.75% Senior Notes due 2025

i 1,242

i 4.0% Senior Notes due 2026

i 793

i 3.45% Senior Notes due 2026

i 123

i 2.90% Senior Notes due 2027

i 693

i 692

i 3.375% Senior Notes due 2028

i 496

i 3.70% Senior Notes due 2028

i 493

i 4.20% Senior Notes due 2029

i 494

i 7.875% Senior Debentures due 2030

i 830

i 4.95% Senior Notes due 2031

i 1,224

i 1,223

i 4.20% Senior Notes due 2032

i 973

i 972

i 5.50% Senior Debentures due 2033

i 427

i 4.85% Senior Debentures due 2034

i 87

i 6.875% Senior Debentures due 2036

i 1,070

i 6.75% Senior Debentures due 2037

i 75

i 5.90% Senior Notes due 2040

i 298

i 4.50% Senior Debentures due 2042

i 45

i 4.85% Senior Notes due 2042

i 488

i 4.375% Senior Debentures due 2043

i 1,125

i 1,123

i 4.875% Senior Debentures due 2043

i 18

i 5.85% Senior Debentures due 2043

i 1,233

i 5.25% Senior Debentures due 2044

i 345

i 4.90% Senior Notes due 2044

i 540

i 4.60% Senior Notes due 2045

i 590

i 4.95% Senior Notes due 2050

i 945

i 944

i 5.875% Junior Subordinated Debentures due 2057

i —

i 514

i 6.25% Junior Subordinated Debentures due 2057

i 643

i 6.375% Junior Subordinated Debentures due 2062

i 989

i —

Other bank borrowings

i 65

i 35

Obligations under finance leases

i 20

i 16

Total debt (a)

i 16,812

i 17,709

Less current portion of long-term debt

i 15

i 11

Total long-term debt, net of current portion

i 16,797

i 17,698

(a) At March 31, 2022 and December 31, 2021, the senior and junior subordinated debt balances included (i) a net unamortized discount of $ i 459 million and $ i 466 million, respectively, and (ii) unamortized deferred financing costs of $ i 97 million and $ i 95 million, respectively. The face value of our total debt was $ i 17.37 billion and $ i 18.27 billion at March 31, 2022 and December 31, 2021, respectively.

During the three months ended March 31, 2022, we redeemed all of our notes due in 2024, which were comprised of $ i 492 million of i 3.875% senior notes and $ i 600 million of i 3.70% senior notes, and also redeemed $ i 325 million of our i 3.50% senior notes due 2025, for an aggregate redemption price of $ i 1.48 billion. We also redeemed our $ i 520 million of i 5.875% junior subordinated debentures due February 2057 at par. These redemptions resulted in a total pre-tax loss on extinguishment of debt of $ i 73 million.

-15-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

During the three months ended March 31, 2022, we issued $ i 1.00 billion of i 6.375% junior subordinated debentures due 2062. The interest rate on these debentures will reset on March 30, 2027, and every i five years thereafter to a fixed rate equal to the 5-year Treasury Rate (as defined pursuant to the terms of the debentures) plus a spread of i 3.999% from March 30, 2027, i 4.249% from March 30, 2032 and i 4.999% from March 30, 2047. These debentures can be called by us at par plus a make whole premium any time before March 30, 2027, or at par on March 30, 2027, or at any interest payment date thereafter.

In April 2022, we redeemed the remaining $ i 275 million of our i 3.50% senior notes due 2025, and $ i 695 million of our i 4.75% senior notes due 2025, for an aggregate redemption price of $ i 1.01 billion.

During the three months ended March 31, 2021, we redeemed senior notes totaling $ i 1.99 billion, prior to maturity, for an aggregate redemption price of $ i 2.11 billion resulting in a pre-tax loss on extinguishment of debt of $ i 128 million.

Our i 6.25% junior subordinated debentures due February 2057 accrue interest at the stated fixed rates until February 28, 2027, on which date the rate will switch to a floating rate. Under the terms of the debentures the floating rate is based on three-month LIBOR plus i 3.899%, reset quarterly. These debentures can be called by us at par at any time after the expiration of the fixed-rate period.

Commercial Paper

At both March 31, 2022 and December 31, 2021, we had i i no / outstanding commercial paper borrowings.

Credit Facility

At March 31, 2022, we had a $ i 3.50 billion revolving credit facility with a maturity in January 2025 (the “Credit Facility”). 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. The benchmark rate for loans denominated in euros, sterling and yen is based on EURIBOR, SONIA and TIBOR rates, respectively. The Credit Facility has one principal financial covenant that requires our Consolidated Total Leverage Ratio to be less than i 4.5x (which we may elect to increase to i 5.0x for up to four consecutive quarters following a qualified acquisition) at the end of each quarter. The Consolidated Total Leverage Ratio reflects the ratio of our Consolidated Indebtedness at the end of a quarter, to our Consolidated EBITDA (each as defined in the amended credit agreement) for the trailing twelve-month period. On February 14, 2022, we amended our Credit Facility to modify the definition of the Consolidated Total Leverage Ratio in the amended credit agreement to allow unrestricted cash and cash equivalents to be netted against Consolidated Indebtedness through June 2024. We met the covenant as of March 31, 2022.

At March 31, 2022, we had i no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $ i 3.50 billion.

Other Bank Borrowings

At March 31, 2022 and December 31, 2021, we had bank borrowings under Miramax’s $ i i 300 / million credit facility, which matures in April 2023, of $ i 65 million and $ i 35 million, respectively, each with a weighted average interest rate of i i 3.50 / %.

-16-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

7) i FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The carrying value of our financial instruments approximates fair value, except for notes and debentures. At March 31, 2022 and December 31, 2021, the carrying value of our notes and debentures was $ i 16.73 billion and $ i 17.66 billion, respectively, and the fair value, which is determined based on quoted prices in active markets (Level 1 in the fair value hierarchy) was $ i 18.2 billion and $ i 21.5 billion, respectively.

The carrying value of our investments without a readily determinable fair value for which we have no significant influence was $ i 58 million and $ i 59 million at March 31, 2022 and December 31, 2021, respectively. These investments are included in “Other assets” on the Consolidated Balance Sheets.

Foreign Exchange Contracts

We use derivative financial instruments primarily to modify 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 i 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 March 31, 2022 and December 31, 2021, the notional amount of all foreign exchange contracts was $ i 2.37 billion and $ i 1.94 billion, respectively. At March 31, 2022, $ i 1.67 billion related to future production costs and $ i 695 million related to our foreign currency balances and other expected foreign currency cash flows. At December 31, 2021, $ i 1.38 billion related to future production costs and $ i 564 million related to our foreign currency balances and other expected foreign currency cash flows.

Gains recognized on derivative financial instruments were as follows:

Three Months Ended

2022

2021

Financial Statement Account

Non-designated foreign exchange contracts

i 2

i 1

Other items, net

The fair value of our derivative instruments was not material to the Consolidated Balance Sheets for any of the periods presented.

-17-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Fair Value Measurements

Certain of our assets and liabilities are measured at fair value on a recurring basis. i The table below presents our assets and liabilities measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021. These assets and liabilities have been categorized according to the three-level fair value hierarchy established by the 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.

Assets:

Foreign currency hedges

i 27

i 23

Total Assets

i 27

i 23

Liabilities:

Deferred compensation

i 383

i 435

Foreign currency hedges

i 27

i 29

Total Liabilities

i 410

i 464

8) i VARIABLE INTEREST ENTITIES

In the normal course of business, we enter into joint ventures or make investments with business partners that support our underlying business strategy and provide us the ability to enter new markets to expand the reach of our brands, develop new programming and/or distribute our existing content. In certain instances, an entity in which we make an investment may qualify as a variable interest entity (“VIE”). In determining whether we are the primary beneficiary of a VIE, we assess whether we have the power to direct matters that most significantly impact the activities of the VIE, and have the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The following tables present the amounts recorded in our consolidated financial statements related to our consolidated VIEs.

Total assets

i 1,606

i 1,578

Total liabilities

i 285

i 184


	Three Months Ended
	March 31,
		2022		2021
Revenues		$	i 103	$	i 71

Operating income (loss)		$	( i 28)	$	i 5

-18-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

9) i STOCKHOLDERS’ EQUITY

Stock Offerings

On March 26, 2021, we completed offerings of i 20 million shares of our Class B Common Stock at a price to the public of $ i 85 per share and i 10 million shares of i i 5.75 / % Series A Mandatory Convertible Preferred Stock at a price to the public and liquidation preference of $ i 100 per share. The net proceeds from the Class B Common Stock offering and the Mandatory Convertible Preferred Stock offering were approximately $ i 1.67 billion and $ i 983 million, respectively, in each case after deducting underwriting discounts, commissions and estimated offering expenses.

Mandatory Convertible Preferred Stock

Unless earlier converted, each share of Mandatory Convertible Preferred Stock will automatically and mandatorily convert on the mandatory conversion date, expected to be April 1, 2024, into between i 1.0013 and i 1.1765 shares of our Class B Common Stock, subject to customary antidilution adjustments. The number of shares of Class B Common Stock issuable upon conversion will be determined based on the average of the volume-weighted average price per share of our Class B Common Stock over the i 20 consecutive trading day period commencing on, and including, the i 21st scheduled trading day immediately preceding April 1, 2024. Holders of the Mandatory Convertible Preferred Stock (“Holders”) have the right to convert all or any portion of their shares of Mandatory Convertible Preferred Stock at any time prior to April 1, 2024 at the minimum conversion rate of i 1.0013 shares of our Class B Common Stock. In addition, the conversion rate applicable to such an early conversion may, in certain circumstances, be increased to compensate Holders for certain unpaid accumulated dividends. However, if a fundamental change (as defined in the Certificate of Designations governing the Mandatory Convertible Preferred Stock) occurs on or prior to April 1, 2024, then Holders will, in certain circumstances, be entitled to convert all or a portion of their shares of Mandatory Convertible Preferred Stock at an increased conversion rate for a specified period of time and receive an amount to compensate them for unpaid accumulated dividends and any remaining future scheduled dividend payments.

The Mandatory Convertible Preferred Stock is not redeemable. However, at our option, we may purchase or otherwise acquire (including in an exchange transaction) the Mandatory Convertible Preferred Stock from time to time in the open market, by tender or exchange offer or otherwise, without the consent of, or notice to, Holders. Holders have no voting rights, with certain exceptions.

If declared, dividends on the Mandatory Convertible Preferred Stock are payable quarterly through April 1, 2024. Dividends on the Mandatory Convertible Preferred Stock accumulate from the most recent dividend payment date, and will be payable on a cumulative basis when, as and if declared by our Board of Directors, or an authorized committee thereof, at an annual rate of i i 5.75 / % of the liquidation preference of $ i 100 per share, payable in cash or, subject to certain limitations, by delivery of shares of Class B Common Stock or through any combination of cash and shares of Class B Common Stock, at our election. If we have not declared any portion of the accumulated and unpaid dividends by April 1, 2024, the conversion rate will be adjusted so that Holders receive an additional number of shares of our Class B Common Stock, with certain limitations.

Dividends

We declared cash dividends of $ i i .24 / per share on our Class A and Class B Common Stock, during the three months ended March 31, 2022 and 2021, resulting in total dividends of $ i 159 million and $ i 152 million, respectively.

During the first quarter of 2022 we declared a quarterly cash dividend of $ i 1.4375 per share on our Mandatory Convertible Preferred Stock, resulting in total dividends of $ i 14.4 million. During the three months ended

-19-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

March 31, 2021, we recorded dividends of $ i 1 million on our Mandatory Convertible Preferred Stock, representing dividends accumulated from the issuance on March 26 through March 31, 2021.

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in the components of accumulated other comprehensive loss.

Continuing Operations

Discontinued Operations

Cumulative
Translation
Adjustments

Net Actuarial
Loss and Prior
Service Cost

Other Comprehensive Income (Loss) (a)

Accumulated
Other
Comprehensive Loss

At December 31, 2021

( i 445)

( i 1,434)

( i 23)

( i 1,902)

Other comprehensive income (loss)
before reclassifications

( i 40)

i —

i 2

( i 38)

Reclassifications to net earnings

i —

i 16

(b)

i —

i 16

Other comprehensive income (loss)

( i 40)

i 16

i 2

( i 22)

At March 31, 2022

( i 485)

( i 1,418)

( i 21)

( i 1,924)

Continuing Operations

Discontinued Operations

Cumulative
Translation
Adjustments

Net Actuarial
Loss and Prior
Service Cost

Other Comprehensive Income (Loss) (a)

Accumulated
Other
Comprehensive Loss

At December 31, 2020

( i 303)

( i 1,509)

( i 20)

( i 1,832)

Other comprehensive income (loss)
before reclassifications

( i 65)

i —

i 2

( i 63)

Reclassifications to net earnings

i —

i 13

(b)

i —

i 13

Other comprehensive income (loss)

( i 65)

i 13

i 2

( i 50)

At March 31, 2021

( i 368)

( i 1,496)

( i 18)

( i 1,882)

(a) Reflects cumulative translation adjustments.

(b) Reflects amortization of net actuarial losses (see Note 11).

The net actuarial loss and prior service cost related to pension and other postretirement benefit plans included in other comprehensive income (loss) is net of a tax benefit of $ i i 5 / million for each of the three-month periods ended March 31, 2022 and 2021.

10) i INCOME TAXES

The provision for income taxes represents federal, state and local, and foreign taxes on earnings from continuing operations before income taxes and equity in loss of investee companies. For the three months ended March 31, 2022, we recorded a provision for income taxes of $ i 34 million, reflecting an effective income tax rate of i 7.2%. Included in the provision for income taxes is a net discrete tax benefit of $ i 78 million primarily resulting from the transfer of intangible assets between our subsidiaries in connection with a reorganization of our international operations. This item, together with a net tax benefit of $ i 25 million on other items identified as affecting the comparability of our results during the period, which include a loss on extinguishment of debt, restructuring and other corporate matters, and gains on sales, decreased our effective income tax rate by i 16.2 percentage points.

For the three months ended March 31, 2021, we recorded a provision for income taxes of $ i 226 million, reflecting an effective income tax rate of i 19.6%. Included in the provision for income taxes is a discrete tax benefit of $ i 21 million primarily consisting of tax benefits from the resolution of certain state income tax matters and excess tax

-20-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

benefits from the vesting or exercise of stock-based compensation awards. This item, together with a net tax benefit of $ i 25 million on other items identified as affecting the comparability of our results during the period, which include a loss on the extinguishment of debt and a gain from an investment, reduced our effective income tax rate by i 1.9 percentage points.

The Company and its subsidiaries file income tax returns with the Internal Revenue Service (“IRS”) and various state and local and foreign jurisdictions. For periods prior to the merger of Viacom Inc. (“Viacom”) with and into CBS Corporation (“CBS”) (the “Merger”), Viacom and CBS filed separate tax returns. For CBS, we are currently under examination by the IRS for the 2017 and 2018 tax years. For Viacom, we are currently under examination by the IRS for the 2016 through 2019 tax years. Various tax years are also currently under examination by state and local and foreign tax authorities. With respect to open tax years in all jurisdictions, we currently do not believe that it is reasonably possible that the reserve for uncertain tax positions will significantly change within the next 12 months; however, it is difficult to predict the final outcome or timing of resolution of any particular tax matter and events could cause our current expectation to change in the future.

11) i PENSION AND OTHER POSTRETIREMENT BENEFITS

The following table presents the components of net periodic cost for our pension and postretirement benefit plans.

Pension Benefits

Postretirement Benefits

Three Months Ended March 31,

2022

2021

2022

2021

Components of net periodic cost (a):

Interest cost

i 38

i 36

i 2

Expected return on plan assets

( i 43)

( i 47)

i —

Amortization of actuarial loss (gain) (b)

i 24

( i 3)

Net periodic cost

i 19

i 13

( i 1)

(a) Amounts reflect our domestic plans only.

(b) Reflects amounts reclassified from accumulated other comprehensive loss to net earnings.

12) i REDEEMABLE NONCONTROLLING INTERESTS

We are subject to a redeemable put option, payable in a foreign currency, with respect to an international subsidiary. The put option expires in December 2022 and is classified as “Redeemable noncontrolling interest” on the Consolidated Balance Sheets. i The activity reflected within redeemable noncontrolling interest for the three months ended March 31, 2022 and 2021 is presented below.


	Three Months Ended
	March 31,
	2022		2021
Beginning balance	$	i 107	$	i 197
Net earnings	i 2		i 2
Distributions	( i 3)		( i 1)
Translation adjustment	( i 5)		i 2
Redemption value adjustment	i 4		( i 11)
Ending balance	$	i 105	$	i 189

-21-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

13) i SEGMENT INFORMATION

The tables below set forth our financial information by reportable segment. Our operating segments, which are the same as our reportable segments, have been determined in accordance with our internal management structure, which is organized based upon products and services. Beginning in 2022, primarily as a result of our increased strategic focus on our direct-to-consumer businesses, we made certain changes to how we manage our businesses and allocate resources that resulted in the changes described below. Prior period results have been recast to conform to these presentation changes.

Management Structure Change

Our management structure has been reorganized to focus on managing our business as the combination of three parts: a traditional media business, a portfolio of global direct-to-consumer streaming services, and a film studio. As a result, we realigned our operating segments and accordingly, beginning in the first quarter of 2022, and for all periods presented we are reporting results based on the segments in the tables below (see Note 1 for a description of each operating segment). In connection with the management structure change, we also reassessed our reporting units and reallocated goodwill from the reporting units that existed prior to the change, to the new reporting units, using a relative fair value approach. We performed goodwill impairment tests as of January 1, 2022 on both the reporting units in place prior to the change and the new reporting units and concluded that the estimated fair values of each of the reporting units exceeded their respective carrying values and therefore no impairment charge was necessary.

Intercompany License Fees

Concurrent with the change to our operating segments, we changed the way we record intersegment content licensing. Under our previous segment structure, management evaluated the results of our segments including intersegment content licensing at market value as if the sales were to third parties. Therefore, the licensor segment recorded intercompany license fee revenues and profits and the licensee segment recorded production costs in the amount of the license fee charged by the licensor, which generally reflected the cost to the Company plus a margin. The intercompany revenues and the margin embedded in the cost to the licensee were eliminated in consolidation.

Under our new segment structure, management evaluates the results of the segments using an allocation of the total cost of content from the licensor segment to each licensee segment utilizing the content. As a result, content costs are allocated across segments based on the relative value of the distribution windows within each segment. The allocation is recorded by the licensor segment as a reduction of content cost and no intersegment licensing revenues or profits are recorded.

-22-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Three Months Ended

2022

2021

Revenues:

Advertising

i 2,521

i 2,888

Affiliate and subscription

i 2,098

i 2,083

Licensing and other

i 1,026

i 1,022

TV Media

i 5,645

i 5,993

Advertising

i 347

i 218

Subscription

i 742

i 380

Direct-to-Consumer

i 1,089

i 598

Advertising

i 2

i 6

Theatrical

i 131

i 1

Licensing and other

i 491

i 853

Filmed Entertainment

i 624

i 860

Eliminations

( i 30)

( i 39)

Total Revenues

i 7,328

i 7,412

Revenues generated between segments are principally from intersegment arrangements for the distribution of content, rental of studio space, and advertising, as well as licensing revenues earned from third parties who license our content to our internal platforms either through a sub-license or co-production arrangement. These transactions are recorded at market value as if the sales were to third parties and are eliminated in consolidation.

Three Months Ended

2022

2021

Intercompany Revenues:

TV Media

i 11

i 14

Filmed Entertainment

i 19

i 25

Total Intercompany Revenues

i 30

i 39

-23-

PARAMOUNT GLOBAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Three Months Ended

2022

2021

Adjusted OIBDA:

TV Media

i 1,544

i 1,765

Direct-to-Consumer

( i 456)

( i 149)

Filmed Entertainment

( i 37)

i 179

Corporate/Eliminations

( i 104)

( i 116)

Stock-based compensation

( i 34)

( i 52)

Depreciation and amortization

( i 96)

( i 99)

Restructuring and other corporate matters

( i 57)

i —

Gain on sales

i 15

i —

Operating income

i 775

i 1,528

Interest expense

( i 240)

( i 259)

Interest income

i 21

i 13

Loss on extinguishment of debt

( i 73)

( i 128)

Other items, net

( i 13)

i 1

Earnings from continuing operations before income taxes and
equity in loss of investee companies

i 470

i 1,155

Provision for income taxes

( i 34)

( i 226)

Equity in loss of investee companies, net of tax

( i 37)

( i 18)

Net earnings from continuing operations

i 399

i 911

Net earnings from discontinued operations, net of tax

i 42

i 12

Net earnings (Paramount and noncontrolling interests)

i 441

i 923

Net earnings attributable to noncontrolling interests

( i 8)

( i 12)

Net earnings attributable to Paramount

i 433

i 911