Paramount Global reached 60 million
Paramount+ streaming subscribers worldwide as of the end of March, a gain of 4.1 million from nearly 56 million as of the end of 2022. But the Hollywood conglomerate on Thursday posted a swing to a first-quarter loss amid a wider streaming loss and an 11 percent TV advertising revenue drop as the latest results missed Wall Street expectations.
Management also unveiled a dividend cut, preserving cash amid economic and other challenges as the industry pushes towards turning its streaming businesses profitable. Paramount’s stock was down 14 percent in pre-market trading, a fall that gathered pace as shares fell by $5.73, or 25 percent, to $17.17 in early morning trading.
Paramount’s advertising-supported streamer Pluto TV grew its monthly active users (MAUs) to 80 million as of March 31 from 78.5 million as of the end of the fourth quarter. The company didn’t immediately detail its total global streaming subscriber count, which had stood at more than 77 million as of the end of December.
However, higher streaming investments were again a drag on the entertainment company’s bottom line, as the quarterly adjusted operating loss before depreciation and amortization in its streaming unit widened to $511 million, compared with $456 million in the first quarter of 2022. The company cited “higher costs to support growth of Paramount+” as the key driver.
Paramount, led by CEO Bob Bakish, also took impairment charges of $1.67 billion in the first quarter, driven by its upcoming combination of Paramount+ with Showtime into a single U.S. streaming platform later this year. Earlier this year, it had said the integration would lead to a content impairment charge of between $1.3 billion and $1.5 billion in the first quarter, while forecasting $700 million in annual expense savings.
“We’re going to focus on driving market-leading streaming growth, while navigating this dynamic macroeconomic environment. And know that the decisions we’re making will position us well for a path of streaming profitability, significant earnings growth and a return to positive cash flow,” Bakish told analysts on a morning call.
Paramount’s TV unit advertising sales continued to fall in the January-March period. The 11 percent decrease in the latest quarter followed a 7 percent drop in the fourth quarter of 2022.
“We are seeing signs of stabilization in the ad market. But perhaps more importantly, we are seeing the unquestionable and growing value of our content and platforms to both the consumer and business community, as exemplified by growing usage, as well as a broadening range of deals and partnerships,” Bakish told analysts, while adding the studio’s content like Mayor of Kingstown, 1923 and Tulsa King was underpinning growth in its streaming platforms as legacy cable channels continue under pressure.
“Yes, this takes investment,” Bakish conceded as Wall Street concerns rise over the studio getting to streaming profitability as TV ad revenues slump and costs rise while Paramount+ combines with Showtime.
He reiterated that 2023 will be a peak investment year for streaming. “But there is no question that our investment is producing results. And as we scale, we are very much on a related path to streaming profitability,” Bakish argued, without putting a timeline on breaking even.
“The levers are in place to continue to drive Paramount+ subscriber revenue and ultimately continue down this path to profitability,” Bakish added in response to a question about continuing momentum in streaming subscriber growth. He argued Paramount+’s content offerings and the coming combination with Showtime will help underpin growth.
