Paramount Narrows Streaming Loss 44% to $286 Million, Tops 71 Million Subscribers

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The media conglomerate declined to take analyst questions following the departure of CEO Bob Bakish

Paramount Global earnings
Paramount Global (Photo illustration by TheWrap)

Paramount Global continued to make progress towards streaming profitability in the first quarter of 2024, narrowing losses in its direct-to-consumer division by 44% to $286 million. The media conglomerate added 3.7 million subscribers during the quarter for a total of 71.2 million.

Here are the top-line results:

Net Loss: $554 million, compared to $1.1 billion a year ago.

Adjusted Earnings Per Share: 62 cents per share, compared to 34 cents per share expected by analysts surveyed by Zacks Investment Research.

Revenue: $7.68 billion, up 6% year over year and in line with expectations from analysts surveyed by Zacks Investment Research.

Streaming Subscribers: Added 3.7 million subscribers for a total of 71.2 million.

The beleaguered entertainment company released its earnings while announcing that CEO Bob Bakish was leaving the company and would be replaced by an Office of the CEO consisting of three executives. The earnings presentation, in which Paramount said it would not take any questions, lasted nine minutes.

“The team delivered another quarter of strong operational and financial performance — including significant growth in total company earnings and free cash flow — despite the dynamic environment we continue to operate in,” chief financial officer Naveen Chopra said in a statement.

Chopra added that Paramount+ and the direct-to-consumer segment had a “record-setting quarter” in engagement and revenue as the company made progress in narrowing its streaming losses. He also highlighted the performance of CBS in the quarter, which benefitted from sport programming and return of a delayed fall slate.

“As we look ahead, we remain focused on execution and transforming our cost base to best position Paramount for the future,” Chopra said.

Bob Bakish out

Along with the results, Paramount announced that Bakish would step down from his position. The Office of the CEO replacing him consists of CBS CEO and President George Cheeks, Showtime/MTV Entertainment Studios and Paramount Media Networks CEO Chris McCarthy and Paramount Pictures CEO Brian Robbins.

“The creation of the Office of the CEO will enable the company to accelerate growth and strengthen operations,” Paramount’s board said in a statement. “We look forward to working with George, Chris and Brian as they execute on key initiatives to enhance performance and value creation at Paramount Global.”

“The Board and I thank Bob for his many contributions over his long career, including in the formation of the combined company as well as his successful efforts to rebuild the great culture Paramount has long been known for,” Paramount’s non-executive chair and controlling shareholder Shari Redstone added. “We wish him all the best.”

In the DTC segment, revenue climbed 24% year over year to $1.87 billion. Subscription revenue grew 22% to $1.35 billion, driven by subscriber growth and
pricing increases for Paramount+. Advertising revenue grew 31% to $521 million, driven by growth from Pluto TV and Paramount+, including the benefit of Super Bowl LVIII. Paramount+ revenue grew 51% to $1.46 billion, reflecting subscriber growth and ARPU (average revenue per user) expansion. Paramount has previously said it would hit domestic profitability in the streaming business in 2025.

In the TV media segment, revenue climbed 1% to $5.2 billion. Adjusted OIBDA (operating income before depreciation and amortization) climbed 11% to $1.4 billion and advertising revenue jumped 14% to $2.58 billion, driven by the benefit from CBS’ broadcast of Super Bowl LVIII. Affiliate and subscription revenue fell 3% to $1.99 billion, driven by subscriber declines, partially offset by pricing increases. Licensing and other revenues fell 25% to $651 million, which included the impact from last year’s Hollywood strikes on content available for licensing.

In the Filmed Entertainment segment, revenue grew 3% year over year to $605 million and adjusted OIBDA losses narrowed 97% year over year to a loss of $3 million, reflecting the timing and mix of theatrical releases in each year. Theatrical revenue grew 20% to $153 million, driven by the strong performances of “Mean Girls” and “Bob Marley: One Love,” as well as Miramax’s release of “The Beekeeper.” Advertising revenue fell 80% year over year to $1 million, while licensing and other revenue fell 1% to $451 million.

In a memo to staff in January, Bakish said Paramount would prioritize driving earnings growth in 2024 and laid out a three-pronged strategy to drive revenue while managing costs. Efforts the company has taken thus far include producing fewer local originals, leveraging content licensing, consolidating some of its operations and laying off 800 employees.

Executives declined to take Q&A or provide guidance during the earnings call, though McCarthy said the trio is finalizing a long-term strategic plan to position the company based on three pillars: making the most of hit content, strengthening its balance sheet and optimizing its streaming strategy.

During the quarter, Paramount generated $209 million in free cash flow, a $750 million improvement over the prior year period. The company reported long-term debt of $14.6 billion during the quarter. It also recorded $8.1 billion in costs and expenses, including restructuring charges of $186 million and a programming charge of $1.1 billion, comprised of “$909 million for the impairment of content to its estimated fair value, as well as $209 million for development cost write-offs and contract termination costs.”

“We may incur an additional programming charge of approximately $250 million later in 2024 related to the termination of an international programming agreement,” the company wrote in its 10-Q filing.

In March, Paramount said it would sell its 13% equity stake in India’s Viacom18 to majority shareholder Reliance Industries for $517 million. The transaction is expected to close at the end of 2024 or in early 2025, subject to regulatory approval. The after tax proceeds from the sale will be used to reduce debt, Chopra said.

Skydance merger talks inch closer

The latest quarterly results come as Paramount continues to make progress with David Ellison’s Skydance Media about a potential merger as exclusive talks are set to expire on May 3. It is unclear if that window will be extended. Skydance, which is valued at over $4 billion, has been a coproducer with Paramount on projects such as “Top Gun: Maverick” and the “Mission: Impossible” franchise.

The two-step deal would see Ellison and Skydance acquire Redstone’s majority stake through National Amusements, which owns 77.3% of Paramount Global’s Class A (voting) common stock and 5.2% of its Class B common stock. The two studios would then be merged together to create a combined company valued at around $5 billion.

The deal for Paramount must be approved by the board’s independent special committee. Earlier this month, Paramount revealed four board members would not seek reelection at the company’s June 4 annual meeting — including three who were on the special committee.

Multiple shareholders have expressed opposition to the Skydance deal, including Matrix Asset AdvisorsAriel InvestmentsAspen Sky Trust and Blackwood Capital Management. They have called on the company to pursue competitive bidding negotiations, arguing that Skydance’s offer prioritizes Redstone’s interests at the expense of the rest of Paramount’s shareholders and would be “detrimental” to the company’s market value.

Ariel’s founder and chairman John Rogers Jr. and GAMCO Investors Inc. chairman and CEO Mario Gabelli have both previously warned that they could pursue litigation if the Skydance deal or any other bid does not appropriately benefit their clients. Ariel owned a 1.8% stake as of December, while Gabelli owns 5 million shares of Paramount’s voting stock.

To assuage investors’ concerns, Skydance has submitted a revised offer that would include a cash infusion of $3 billion, as well as premium sweetener for a percentage of non-voting Class B shares. Redstone, who is already set to get a premium for her shares, could take less cash and keep more equity in Paramount under one scenario being discussed. She and National Amusements also agreed to give non-voting, minority shareholders say in the approval of any transaction.

In addition to Skydance, Apollo Global Management made a $26 billion bid for Paramount, which was reportedly rebuffed due to concerns around the financing of its bid. The private equity firm has since entered talks with Sony about potentially making a new joint bid, though no offer has formally been made. 

Paramount shares traded up 0.4% in after-hours trading on Monday following the results.


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