Paramount takes $6bn write-down; job cuts
August 9, 2024
Paramount Global’s shares jumped 6 per cent as investors were upbeat at the media group’s streaming business, even as the company joined rival Warner Bros Discovery in writing down the value of its TV assets. Paramount took a Q2 impairment charge of $5.98 billion on its cable networks. Full year revenue dropped 11 per cent to $6.81 billion.
Paramount additionally revealed it will cut 2,000 jobs, around 15 per cent of its work force, in a bid to reduce costs ahead of an agreed merger with film studio Skydance.
Q2 results breakdown
DTC
DTC revenue increased 13 per cent year-over-year. Subscription revenue grew 12 per cent , driven by year-over-year subscriber growth and pricing increases for Paramount+. Revenue for the SVoD service grew 46 per cent, driven by year-over-year subscriber growth and ARPU (up 26 per cent YoY) expansion. However, Paramount+ subscribers decreased 2.8 million in the quarter to 68 million, principally reflecting the planned exit from a hard bundle agreement in South Korea.
Advertising revenue rose 16 per cent, reflecting growth from Paramount+ and AVoD service Pluto TV.
TV Media
In its TV Media segment, Paramout’s revenue decreased 17 per cent to $4.3 billion, primarily attributed to fluctuations in licensing revenues.
Advertising revenue decreased 11 per cent, reflecting declines in the linear advertising market. Affiliate and subscription revenue decreased 5 per cent, driven by subscriber declines and a 1-percentage point decrease from the absence of pay- per-view boxing events, partially offset by pricing increases.
CBS finished the 2023-2024 season #1 in primetime for the sixteenth year in a row in the US, including eight of the top 10 broadcast series.
Film Division
Filmed Entertainment continued to deliver strong results at the box office, with IF debuting at #1 domestically and A Quiet Place: Day One recording a franchise best performance, grossing over $250 million at the global box office to date. Revenue, however, decreased 18 per cent to $679 million due to timing of releases in the quarter. Theatrical revenues decreased 40 per cent, reflecting the comparison to the release of Transformers: Rise of the Beasts in the prior year.
A joint statement from co-CEOs George Cheeks, Brian Robbins and Chris McCarthy said: “Our strong performance in Q2 demonstrates that we are delivering on our strategic priorities. We are proud of our results, including significant earnings growth largely driven by our DTC segment. In fact, for the fourth year in a row, Paramount+ is leading the industry in domestic sign-ups driven by our big broad hit TV series and blockbuster films. DTC profit growth for the past four quarters has totaled nearly $900 million and we are on track to reach domestic profitability for Paramount+ in 2025.”
“Looking ahead, we will continue to aggressively execute on our Strategic Plan which focuses on transforming streaming to accelerate profitability, streamlining our organisation — including at least $500 million in annualised cost savings — and improving the balance sheet by growing free cash flow and optimising our asset mix. We are confident that our Plan will drive long-term value by leveraging our broad hit content as we continue to transform Paramount for the future,” the statement added.