Paramount Global reported a 57% drop in third-quarter earnings as it invests to try to compete in direct-to-consumer streaming and as revenues fell in its traditional TV business.
Paramount said it added 4.6 million subscribers to Paramount Plus, which now counts 46 million subscribers. Overall, the company added 4.7 million DTC subscribers, giving it 67 million total globally.
Ad-supported streaming platform Pluto TV had 72 million monthly active viewers globally and increased total viewing hours year over year.
Paramount’s direct-to-consumer business had an adjusted operating loss of $343 million, up from last year’s $198 million loss, as the company invested in streaming.
DTC revenues rose 38% to $1.226 billion, with subscription revenue rising 59% to $863 million and advertising revenue up 4% to $363 million.
Adjusted operating income at Paramount’s traditional television business fell 11% to $1.231 billion. Revenue fell 5% to $4.948 billion, with advertising revenue down 3% to $1.974 billion and affiliate and subscriber revenue down 5% to $2 billion.
Overall, net earnings fell to $231 million, or 33 cents a share, compared to $538 million, or 80 cents a share, a year ago. Revenue rose 5% to $6.916 billion
The results were below Wall Street forecasts.
“This is a tough quarter for Paramount as linear pressures appear to be worsening while DTC revenue growth is slowing,” Wells Fargo Securities media analyst Steven Cahall said. “Expenses are running hot, both P&L and cash, with earnings significantly down year over year. On [this morning's earnings] call, we think management will be looking to provide efficacy of the pivot to streaming, though as our recent downgrade to underweight explained, we think alternative strategies are needed (though not currently expected).”
Paramount shares were down more than 9% in pre-market trading Wednesday following the earnings release.
Also Read: Wells Fargo Downgrades Paramount Again, Says It Should Become an 'Arms Dealer'
“In the third quarter, Paramount continued to execute on our differentiated strategy anchored by our broad range of popular content, our diverse portfolio of platforms, and our truly global operating reach,” CEO Bob Bakish said.
“That strategy continued to drive growth in subscriptions across our streaming platforms with Paramount Plus adding 4.6 million subscribers,” Bakish said. ”Paramount Pictures also extended its stellar run with its sixth No. 1 film in 2022. Looking forward, we couldn’t be more excited about the array of sensational content coming to Paramount Plus in the fourth quarter, as well as the launch of the service in France, Germany, Austria and Switzerland.” ■
