Paramount sinks 20% on streamer losses
May 4, 2023
Paramount’s Q1 disappointed Wall Street and paid the price with a 20 per cent stock drop. Ongoing losses in streaming added to soft advertising at its TV group last quarter and a dip in movies all contributed.
Revenue was flat at $7.26 billion (€6.59), and the company swung to a loss of $1.1 billion for the first three months, from a profit of $433 million in the quarter last time.
Sales in TV (CBS and bundled cable networks) fell 8 per cent, with an 11 per cent drop in advertising reflecting weakness in the global ad market and fewer NFL games on CBS. Licensing and other revenue declined 15 per cent YoY primarily reflecting a lower volume of licensed content. Operating income fell 15 per cent.
Paramount+ reached 60 million total subscribers, adding 4.1 million in the quarter, less than half the number it added in the previous quarter. Operating losses for streaming widened to $511 million from $456 million. AVoD streamer Pluto TV hit 80 million monthly active users in the quarter.
Revenue from DTC increased 39 per cent YoY with subscription revenue up 50 per cent to $1.1 billion, reflecting subscriber growth on Paramount+, including launches in international markets. Advertising revenue rose 15 per cent year-over-year driven by strong engagement on Paramount+, where revenue grew 65 per cent year-over-year driven by subscriber growth and increased advertising revenue.
The advertising market, visibility on the timing of streaming profits and the impact of the WGA strike are all weighing on the stock.
“Paramount continues to demonstrate the strength of its content engine, driving momentum across streaming, television and theatrical. This resulted in Paramount+ and Pluto TV reaching significant milestones with 60 million subscribers and 80 million MAUs, respectively, while CBS is poised to claim the #1 spot in broadcast for the 15th straight season,” said CEO Bob Bakish. “Looking ahead, we are focused on continuing to drive market-leading streaming growth while navigating a dynamic macroeconomic environment. In addition, the updated dividend policy we have announced today will further enhance our ability to deliver long-term value for our shareholders as we move toward streaming profitability.”