Also, the price increase that we did in June has actually performed better than we expected. And what I mean by that is that the impact to churn and starts has not been as large as we forecast such that on a net basis. The price increase is actually more accretive to earnings than we originally anticipated. So that gives us some confidence. And Paramount+ is all about Cornerstone, high-value content. I mean, historically, Consumers have paid significantly more than $6 or $12 a month to watch live NFL games, live Big Ten football, big Hollywood movies, not to mention this incredible universe of very high-quality entertainment franchises, both for kids and adults. So there’s no question that, that continues to be a very strong value proposition and the data we’ve seen coming out of our first price increase suggests that, that value proposition and the stickiness of the content does give us additional room for growing price over time.
In terms of the — your question on the path to streaming profitability, I just very briefly reiterate some of the things I mentioned earlier. We do anticipate significant improvement in the D2C P&L next year. There’s both top line as well as cost elements to that, subs, ARPU, engagement, churn reduction, content efficiency, et cetera. So I think you’re familiar with the drivers there, and that is something that we expect to be material in 2024. And then I think the last part of your question related to free cash flow trends relative to EBITDA. And I think the short answer, as you sort of hinted at in the short term, that trend is, I’ll say, a little bit noisy just because of the impact of the strike. But longer-term, we expect to see healthy free cash flow growth.
I mentioned that in — when we look at this on a two-year basis, we feel very good about free cash flow being higher than we had previously expected. And that’s really a function of the fact that we’re going to deliver consolidated OIBDA growth next year. That obviously contributes to free cash flow. And importantly, only a portion of the cash benefit that we are capturing in 2023 from the strike, is going to be spent back in 2024. So that’s also helpful from a free cash flow perspective.
Jaime Morris: Thank, Phil. Operator, we’ll take the next question, please.
Operator: Thank you. The next question goes to John Hodulik of UBS. John, please go ahead. Your line is open.
John Hodulik: Great. Maybe a quick follow-up and then another question. First on the cost side, you are making a lot of progress, obviously, on both media and in D2C. On the D2C side, is the full $700 million in synergies that you guys laid out from the combination of Showtime and Paramount+ already in the numbers at this point. And then, Bob, in your prepared remarks, you guys seem to talk a little bit about sort of leaning more into licensing. Just maybe update us on your view on further licensing and maybe how that should progress, especially coming out of the strike, just given the sort of softness in the market today. Thanks.
Bob Bakish: Yes. Well, maybe we’ll do them in the reverse order, John. So really two related points. In my remarks, I more characterize it as leaning more into partners in streaming at Paramount+. And obviously, we are scaling rapidly. You saw that in our numbers. We have today a run rate business of over $6.5 billion in D2C. And we are advancing quickly on the path to profitability. We are ahead of plan. Losses narrowed 30% in the quarter. That’s really through focused execution. Obviously, peak losses now, we think were in 2022, not 2023. So we feel great about that. But we continue to look at streaming expansion. And in that regard, we think there is an opportunity to lean more into licensing. We talked about that in — again, in my remarks, but that’s really about going after incremental markets, focusing our contribution on, call it Hollywood content, content that we’re already creating for Paramount Plus in our O&O markets and doing deals with partners where they take that content, ingest it on their platforms.
So that is really the principal extent of our participation. We also provide them value through the Paramount+ brand. They set up a branded area, and then they do the local content, local marketing, local infrastructure, local organization. And we think leaning in incrementally to partners in that way really is quite compelling from an expansion standpoint. And I was at MIPCOM transitioning to your — the second part of licensing, at MIPCOM a couple of weeks ago, and there is clear demand for that and recognition of the value of that content and the interest in having Paramount+ as an international global supplier in that regard. Related to licensing in general, we continue to feel good about that market for — particularly for high-quality content, feature film, signature series, kids franchises really our wheelhouse.
Again, at MIPCOM, our stand was very busy a couple of weeks ago, and we do see content licensing revenue continuing to grow both in the U.S. and internationally, and it does continue to be an important component of our model. Naveen?
Naveen Chopra: Yes. Just briefly on your question regarding the $700 million synergies related to the Showtime, P+ integration. Short answer, we’re not done capturing the benefits of that. Those synergies are important ingredient in the earnings improvement that we expect to deliver next year in the D2C segment. And in fact, — as I think I’ve said recently, I believe we will exceed the $700 million in future expense savings.
Jaime Morris: Thanks, John. Operator, we have time for one more question.
Operator: Thank you. The final question goes to Bryan Kraft of Deutsche Bank. Bryan, please go ahead. your line is open.
Bryan Kraft: Hi. Good afternoon. I wanted to ask a little bit about the Paramount+ subscriber outlook. How are you thinking about the pace of Paramount+ subscriber growth in 4Q and next year given the content pipeline as well as the international ad-supported launches. And are you starting to plan or to think about your own account sharing crack down along the lines of what Netflix has done and Disney started to do? And if so, any thoughts on timing or scope of that effort? Thank you.
Bob Bakish: So start, Bryan, with — we’re feeling great about Paramount+ in general. As you can see in the quarter, again, real momentum. We continue to grow. The Paramount+ with Showtime integration is clearly working for us. We see value from that Showtime content being added to Paramount+ and we see usage kind of in both directions, Showtime users using Paramount+ content and vice versa. So that’s totally working. And as we look forward, including into Q4, we definitely see continued growth of Paramount+, both at the Essentials and the premium level. So we’re feeling great about growth. Again, as we look at it on a year-to-year basis, also churn continues to improve. And that’s a good thing for our sub base. And as we look at the content slate, yes, there’s a bit of uncertainty given the strength, but our fourth quarter content slate is very strong.
