Paramount Streaming Losses Reach $511 Million as It Misses Q1 Earnings

The media giant slashed its dividend 79% as it posted adjusted earnings per share of 9 cents on revenue of $7.3 billion for the first quarter, below Wall Street estimates

Paramount Earnings
Photo illustration by TheWrap

Paramount slashed its dividend 79% as it reported first-quarter earnings Thursday that showed strong growth in its Paramount+ streaming service but also continuing losses.

Wall Street reacted sharply. Shares of Paramount fell over 26% as the markets opened following the earnings announcement.

Paramount+ added 4.1 million subscribers during the first three months of 2023 for a total of 60 million globally, Paramount Global said in its first-quarter earnings report. Losses in the streaming business increased to $511 million in the quarter compared to $456 million a year ago, but fell from $575 million in the December quarter. Meanwhile, Paramount’s free, ad-supported streaming service Pluto TV hit 80 million monthly active users during the first quarter.

The increase in subscribers came as Paramount reported an overall $1.1 billion loss, adjusted earnings per share of 9 cents and revenue of $7.3 billion. Analysts were expecting earnings per share of 12 cents on revenue of $7.42 billion.

The company also announced that it would reduce its quarterly dividend from 24 cents per share to 5 cents per share, which Paramount Global CEO Bob Bakish said would “further enhance our ability to deliver long-term value for our shareholders as we move toward streaming profitability.”

“Looking ahead, we are focused on continuing to drive market-leading streaming growth while navigating a dynamic macroeconomic environment,” Bakish added.

Revenue in the direct-to-consumer division grew 39% year over year to $1.5 billion. Paramount+ revenue grew 65% year-over-year driven by subscriber growth and increased advertising revenue. Subscription revenue grew 50% year-over-year to $1.1 billion, principally reflecting subscriber growth on Paramount+, including the benefit from previous launches in international markets. Advertising revenue rose 15% year-over-year to $398 million, driven by strong engagement on Paramount+.

Executives attributed the subscriber growth to a strong content slate including top originals like “1923,” “Tulsa King” and the returns of “Mayor of Kingstown” and “Star Trek: Picard,” hit film franchises in “Top Gun: Maverick” and “Teen Wolf: The Movie,” as well as the NFL Playoffs.

A previously announced integration of Showtime into Paramount+ will officially launch in the third quarter, the company confirmed. The combination, which is expected to generate approximately $700 million in future annual expense savings, resulted in a programming charge of $1.7 billion during the first quarter. As part of the move, the company is raising its prices for Paramount+ subscriptions. The top tier of Paramount+ will rise to $11.99 per month from $9.99 per month. The cheaper, ad-supported Essentials tier, which will not include Showtime, will increase to $5.99 from $4.99 per month. Consumers who already pay for the Paramount+/Showtime bundle will not be affected by this price increase.

Revenue in the TV Media segment fell 8% year over year to $5.19 billion. Advertising revenue declined 11% year over year to $2.26 billion, reflecting weakness in the global advertising market and fewer NFL games on CBS. Affiliate and subscription revenue declined 1% year-over-year to $2.07 billion, driven by foreign exchange and the previous restructuring of certain international affiliate agreements, which resulted in a shift of revenue from our pay television services to DTC services. Licensing and other revenue declined 15% year-over-year to $870 million, primarily reflecting a lower volume of licensed content.

CBS led broadcast networks with 8 of the top 10 and 14 of the top 20 series, including the #1 drama in “NCIS,” #1 comedy in “Young Sheldon” and the top three new shows in “Fire Country,” “East New York” and “So Help Me Todd.” Adult cable series on Paramount’s networks accounted for the top 4 among audiences ages 18 to 34. Nickelodeon had the top 3 and 7 of the top 10 kids cable series among
audiences ages 2 to 11, including the #1 new kids cable series “Rubble & Crew.”

Revenue in the Filmed Entertainment segment declined 6% year over year to $588 million. Theatrical revenue decreased by $4 million to $127 million, reflecting the timing and mix of releases. Licensing and other revenue decreased by $35 million to $456 million, driven primarily by lower consumer products licensing revenues. The segment posted an adjusted operating loss of $99 million, reflecting an adverse impact from the timing of the release of “Dungeons & Dragons: Honor Among Thieves” on the last day of the quarter, as well as costs from the release of Miramax’s “Operation Fortune: Ruse de Guerre,” and macro-driven softness in consumer products licensing.

Looking ahead, executives said the company remains on track for peak streaming investment in 2023 and would return to free cash flow in 2024. Management expects subscriber additions in the second quarter to be “seasonally a little softer” but noted that growth would pick up again in the back half of the year.