Naveen Chopra: And Bob, if I could just add one thing to clarify. Jessica, with respect to the numbers you mentioned. Just keep in mind that the engagement growth that you saw there at 46%. That includes a significant amount of engagement growth in the premium ad-free tier of Paramount+. So you should not expect that to necessarily be a proxy for advertising growth.
Jaime Morris: Thanks Jessica. Operator, next question.
Operator: Thank you. Our next question goes to Rich Greenfield of LightShed Partners. Rich, please go ahead, your line is open.
Rich Greenfield: Question. Bob, Naveen, when you think about sports, I think there’s really no debating the direct link between the NFL and retrans, not just for Paramount, but for everyone in the industry. But I think what a lot of investors are trying to figure out is sort of what happens with all other sports. And just given what’s happening in the pay TV ecosystem, and you obviously talked pretty openly about the challenges facing the ad market. I’m just wondering, as you think about other sports, things like the NBA are coming up. Obviously, there’s been sort of live entertainment programming like WWE available. I’m just curious, as you think about sports licensing costs going forward, do you believe that they have to sort of be justified fully on advertising revenue alone? Or like how do you think about how you buy sports rights or licensed sports rights going forward? That would be really helpful. Thanks.
Bob Bakish: Yes. Sure, Rich. So, a couple of points. One, as you know, sports is integral to our strategy, but it’s not a stand-alone business. It’s a slice of the wheel, so to speak, both for our CBS network and for streaming. Second, as you point out, the NFL in that is clearly a Juggernaut and I can give you chapter and verse on how it’s driving our business, but you already know that, so I’ll skip that. But it’s not the only sport that matters. One of the great things about Paramount is our collection of sports is truly A caliber. And so if you look at other element, it’s college football, like now the Big 10, which is going to be the best college football league in the U.S., the NCAA and golf, like the Masters, I mean, the fact of the matter is — and I know this because Ray Hopkins, who runs Distribution regularly brings clients to them.
Those events matter from a distribution standpoint to, AKA retrans and reverse comp. It’s not strictly the NFL. And clearly, to your point, they’re also valuable in the ad business. The third point I’d make is, for us, remember, sports is a piece of the wheel. And we’re actually in excellent place where we don’t really — we don’t need nor are we active in looking at any more sports. Instead, what we’re focused on is kind of the conjoint use piece, getting people who come in for sports to consume other products, be that on linear or on streaming and because, again, we’re in a great place. We have the volume of A caliber sports that we need, and we’ve got stability too. Our deals are locked in the U.S., the vast majority of them and the ones that matter, through 2030 and beyond.
So, with respect to these other sort of auctions in the marketplace, we’ll watch them. But again, we’re in a very fortunate place that we got what we need and they’re working really great for us.
Jaime Morris: Thanks Rich. Operator, next question please.
Operator: Our next question goes to Brett Feldman of Goldman Sachs. Brett, please go ahead, your line is open.
Brett Feldman: Great. Thanks for taking the question. Naveen, when you were answering Jessica’s question, you made that point at the end about how a lot of that engagement growth was on the premium ad-free tier. So, the follow-up question would be maybe give us your updated thoughts on the merits of launching a premium ad supported tier in the U.S. And then just a housekeeping question. You identified two pay-per-view events in the quarter that helped out. I was hoping maybe you could just carve out what that revenue contribution was? Thank you.
Naveen Chopra: Yes. So maybe in reverse order, Brett, in terms of the impact of the pay-per-view events in the quarter. I think if you were to adjust for those, what you’d see is the linear affiliate revenue trend would look pretty similar to sort of the trends you’ve seen in the last couple of quarters where you’ve got some ecosystem decline being partially offset by rate increases. So, really no change the trend there. With respect to a premium ad-supported tier, that’s really not something that has been a major priority for us. We like the configuration that we have right now as between an ad-supported tier at six spots and then Paramount+ with Showtime at $12. I think, if anything, one of the places where you are seeing some traction in the market is even higher-priced tiers, which we’re going to continue to assess because those could be quite incremental from an ARPU perspective. So — but we’re really not focused on a more expensive ad-supported tier.
Bob Bakish: Yes. And Brett, it’s Bob. Just for the avoidance of doubt, I mean, when we launch Paramount+. We were a bit of an outlier. We launched it with an ad-supported version and a premium version. And other people have since followed us. So — and we’re super happy with how the ad-supported version, we call it Essentials works. But there’s not really an incremental thing to do there because we basically have the product lineup in the space.
Jaime Morris: Thanks, Brett. Operator, next question please.
Operator: Our next question goes to Phil Cusick of JPMorgan. Phil, please go ahead. Your line is open.
Phil Cusick: Hi, guys. Thank you. A couple of follow-ups. Nice move on the DTC ARPU growth and cost. Can you think about the further impact of pricing from here, both in the U.S. and international? How should we think that carry through in the fourth quarter, which you talked about a little bit? And then with this lower level of DTC drag, how do you think about the path to DTC EBITDA breakeven over time? And then just finally, Naveen, you had talked in the past about an improvement in free cash flow in ’24 outpacing the improvement in EBITDA. I wonder if that’s still the case or if the strikes are sort of going to move those things around. Thank you.
Naveen Chopra: Yes. Thanks, Phil. There’s several questions in there. I’ll try to tackle those. So first of all, in terms of the ARPU trajectory, we do expect that to continue to benefit Q4, as you heard in my comments. That really just has to do with the timing of when various subs convert to new pricing. Moreover, we see a very compelling pricing opportunity longer term, which is to say this won’t be the last price increase that we do. We think there is a continued opportunity for pricing to play a role in growing both revenue and earnings in our streaming business. I’d note a few things related to that. One, relative to competitors, Paramount+ is still positioned at a very compelling price point, and that’s true both on our ad-supported tier and our ad-free tiers.
