Paramount Global Inc. witnessed a surge in its shares during after-hours trading on Wednesday, spurred by the unexpected announcement of an adjusted quarterly profit. The media and entertainment powerhouse, overseeing notable brands such as CBS, Comedy Central, and Pluto TV, disclosed a per-share profit of 4 cents after adjusting for impairments and restructuring.
This figure exceeded FactSet’s projected loss of 1 cent per share. The upturn in profit was credited to increased subscription prices, driving up sales for its Paramount+ streaming service.
Despite the encouraging adjusted profit, the company experienced a 6% decrease in revenue, totaling $7.64 billion, falling short of the expected $7.83 billion. Paramount’s Chief Executive, Bob Bakish, expressed confidence in the company’s future trajectory, emphasizing their aim to achieve domestic profitability for Paramount+ by 2025, which would mark a significant milestone.
Bakish delineated the company’s strategic priorities, placing particular emphasis on optimizing returns on content investments and expanding streaming services, all while transforming the business’s cost structure. In response to this optimistic vision, shares saw a 1.2% increase in after-hours trading on Wednesday.
Paramount’s financial report release aligns with a broader trend within the streaming industry, where companies are consolidating operations, adjusting subscription prices, and streamlining costs related to film and series production. After years of aggressive subscriber acquisition tactics, investors are now urging streaming services to showcase improved profitability.
Against the backdrop of its financial report, Paramount has purportedly been exploring potential mergers or acquisitions. CNBC reported on Tuesday that discussions regarding an acquisition with Warner Bros. Discovery Inc. had ceased, while Skydance Media was reportedly still deliberating its options for a potential deal. However, during the earnings call on Wednesday, Paramount refrained from commenting on any ongoing deal-making discussions or divulging details about related timelines.
Within Paramount’s direct-to-consumer segment, which encompasses streaming services like Paramount+, Pluto TV, and BET+, there was a noticeable surge in revenue, soaring by 34% during the quarter. Subscription sales experienced robust growth of 43%, propelled by both subscriber expansion and pricing adjustments for Paramount+. Additionally, ad sales within this segment saw a 14% increase.
Despite the positive trends, Paramount faced challenges in its TV business. Factors such as Hollywood strikes from last year and a subdued global advertising market had a detrimental effect on the TV segment, resulting in a 12% decline in revenue. Ad revenue within this segment experienced a particularly sharp drop of 15%.
While Paramount recognized the positive impact of robust NFL viewership on its overall performance, it also acknowledged the hurdles faced by the TV business due to external factors.
