Paramount Global on Friday reported third-quarter financial results that included a significant turnaround from a year-ago loss to a sharp profit in the Hollywood conglomerate’s second earnings report since its sale to Skydance Media was revealed. reported.
This marks the second consecutive quarter of rising margins for the streaming segment, but Chief Financial Officer Naveen Chopra said on a morning analyst conference call that the timing of content and marketing spend has increased. As a result, the company expected its streaming business to incur losses during the fourth quarter, even if domestic profitability declines. The Paramount+ streaming platform was expected to arrive in 2025.
Paramount is now managed by National Amusements, led by Shari Redstone, and said Paramount+ subscribers increased by 3.5 million from the second quarter of June to the end of September, compared to about 72 million. Announced.
Paramount+’s subscriber growth in recent quarters was driven internationally by new hard-bundle deals, hybrid vehicle deals unique to foreign markets that lower the cost of entry, and domestically by a new multi-bundle agreement with Charter Communications. This is based on an annual sales contract. An ad-supported tier will be available.
Paramount’s streaming division, known as its direct-to-consumer (DTC) division, reported adjusted operating income before depreciation and amortization (OIBDA) of $49 million in the third quarter, compared with a loss of $238 million in the year-ago period. . DTC segment revenue increased 10% to $1.86 billion, driven by 18% advertising revenue and 7% subscriber revenue growth. Paramount+’s revenue increased by 25 percent, “driven by year-over-year subscriber growth and 11 percent expansion in average revenue per user (ARPU).”
Paramount’s latest financial results include a $104 million charge related to the value of its FCC license and a $321 million severance charge related to layoffs and the departure of former CEO Bob Bakish. There is.
“Sports including the return of the NFL and UEFA, originals like “The Tulsa King” and “The Mayor of Kingstown,” which had the biggest global debut in the platform’s history in Season 2, and theatrical releases like “A Quiet Place: Day.” Later works, “One and IF, all drove acquisitions in the quarter,” the company said.
The Skydance deal is expected to close in the first half of 2025, co-CEO Chris McCarthy reiterated on a morning conference call with analysts following the earnings report. Co-CEO Brian Robbins added that Paramount remains committed to transforming its streaming business and streamlining its studios to reduce costs.
“As we have previously stated, we evaluate potential partnerships and streaming through the lens of creating value for our business and shareholders over the long term,” Robbins asserted. He added that the studio remains focused on potential asset sales after reaching an agreement to sell a 13% stake in Indian media company Viacom18 to Reliance Industries.
Paramount also announced the latest quarterly results for its Filmed Entertainment division. The biggest new release during this period was Transformers One, and the third quarter’s biggest box office hit was A Quiet Place: Day One, released at the end of the second quarter of 2019. June 28th. Adjusted OIBDA for the Motion Picture Entertainment segment was $3 million, a profit of $52 million, compared to a loss of $49 million in the same period last year, which was affected by the Hollywood double strike. The main driver of the gain was the fact that expenses decreased from $940 million to $587 million.
“Taken together, all of our content confirms what we are very excited about at this time of evolution and transformation for our business and industry. It continues to create value for our partners, investors and the broader media environment,” Robbins told analysts.
Third-quarter movie entertainment revenue was down 71 percent in theatrical revenue “reflecting the number and timing of releases in the quarter compared to the same period last year,” and a decline in licensing and other revenue due to “lower revenue.” 6 percent, resulting in a 34 percent decline to $590 million. Revenues from licensing home entertainment and movie library titles were partially offset by higher studio property revenues compared to last year, which was impacted by labor strikes. ”
TV Media’s adjusted OIBDA decreased 19% to $936 million in the third quarter, with revenue down 6% to $4.3 billion. This is “primarily due to lower affiliate revenue and fluctuations in licensing revenue.” Affiliate and subscription revenue decreased 7%. The company said this was “driven by a 2-point decline due to subscriber declines and the loss of pay-per-view boxing events, partially offset by price increases.” Advertising revenue decreased 2% due to “linear advertising market declines, partially offset by higher political advertising and prior-period revenue underreporting by international sales partners.”
Co-CEO George Cheeks addressed the current contract impasse with Nielsen. “This is not a question of affordability. This is about getting value for the money you pay,” he argued. Cheeks added that Paramount has not seen or does not expect an impact in the current fourth quarter from not having Nielsen data to sell advertising.
“But we want to be clear that we recognize that Nielsen can be a valuable resource. We are saying that economics has to make sense for business.” Cheeks he added, dismissing speculation that Paramount would terminate its contract with Nielsen in the future rather than seek a new deal.
Paramount’s third quarter total revenue fell 6% to $6.73 billion, operating income fell 46% to $337 million, and adjusted OIBDA rose 20% to $858 million. .
In August, Paramount highlighted its $500 million cost-cutting plan and its focus on achieving sustainable profitability in streaming by 2025. At the time, the company said its cost-cutting plans included cutting its U.S.-based workforce by about 15%. Those affected include overlapping marketing and communications, finance, legal, technology and other support functions. The cuts are expected to be completed by the end of the year.
“Our hit content drove strong results in the third quarter, with Paramount+ adding 3.5 million new subscribers and solidifying our position as the world’s No. 4 SVOD service,” executives said. said in Friday’s earnings report. “Our DTC division has successfully delivered two consecutive quarters of profitability, improving by more than $1 billion over the past four quarters, and we continue to implement non-content cost reductions across the company. The result is $500 million in annual run rate savings. ”
