“Paramount Global reported its third-quarter financial results — including a swing to a streaming profit from a year-ago loss — on Friday in the Hollywood conglomerate’s second earnings report since its sale to Skydance Media was unveiled. That marked the second quarter of streaming unit profitability in a row, though CFO Naveen Chopra during a morning”, — write: www.hollywoodreporter.com
That marked the second quarter of streaming unit profitability in a row, though CFO Naveen Chopra during a morning analyst conference call forecast the timing of content and marketing expenditures would produce a loss for the streaming business during the current fourth quarter, even as domestic profitability for its Paramount+ streaming platform in full-year 2025 was expected.
Paramount, currently controlled by National Amusements, led by Shari Redstone, said Paramount+ added 3.5 million subscribers compared with the second quarter in June to end September with around 72 million subscribers.
The subscriber growth at Paramount+ during the latest quarter stemmed both internationally from a new hard bundle agreement, or a hybrid carriage deal typical of foreign markets where the cost of entry is lowered, and domestically from the new multi-year distribution agreement with Charter Communications that makes the ad-supported tier available.
Adjusted operating income before depreciation and amortization (OIBDA) in Paramount’s streaming unit, known as its direct-to-consumer (DTC) segment, amounted to $49 million in the third quarter, compared with a year-ago loss of $238 million. DTC segment revenue rose 10 percent to $1.86 billion, driven by an 18 percent advertising gain and a 7 percent subscriber revenue increase. Paramount+ revenue even jumped 25 percent, “driven by year-over-year subscriber growth and average revenue per user (ARPU) expansion” of 11 percent.
Paramount’s latest results included a $104 million charge related to the value of FCC licenses and a $321 million severance charge related to layoffs and the departure of former CEO Bob Bakish.
“Sports, including the return of the NFL and UEFA, originals like Tulsa King, which saw the biggest global debut in platform history for season 2, and Mayor of Kingstown, as well as post-theatrical releases, such as A Quiet Place: Day One and IF, all drove acquisition in the quarter,” the company said.
The transactions with Skydance are expected close in the first half of 2025, co-CEO Chris McCarthy reiterated during a morning analysts call following the earnings update. Fellow co-CEO Brian Robbins added Paramount continued to work to transform its streaming businesses and streamline the studio to reduce costs.
“As we said before, we are evaluating potential partnerships and streaming through a lens of creating value for the business and our shareholders over the long term,” Robbins argued. He added the studio continued to eye possible asset sales after reaching a deal to sell its 13 percent stake in Indian media company Viacom18 to Reliance Industries.
Paramount also posted the latest quarterly results for its Filmed Entertainment unit, whose biggest new release in the period was Transformers One, while its biggest third-quarter box office performer was A Quiet Place: Day One, released at the end of the second quarter on June 28. Filmed Entertainment unit adjusted OIBDA came in at $3 million, a $52 million turnaround from the loss of $49 million in the year-ago period hit by the dual Hollywood strikes. The key driver of the bottom line was the fact that expenses declined from $940 million to $587 million.
“Taken together, all of our content reinforces that we have so much to be excited about in this period of evolution and transformation of our business and the industry. It is what continues to create value for our partners, investors and the broader media landscape, both now and well into the future” Robbins told analysts.
Filmed Entertainment revenue in the third quarter fell 34 percent to $590 million as theatrical revenue decreased 71 percent, “reflecting the number and timing of releases in the quarter compared to the prior year,” and licensing and other revenue dropped 6 percent as “lower revenue from home entertainment and the licensing of film library titles were partially offset by higher studio facility revenue compared to last year, which was impacted by the labor strikes.”
TV Media unit adjusted OIBDA fell 19 percent to $936 million in the third quarter as revenue declined 6 percent to $4.3 billion, “primarily driven by lower affiliate revenue and fluctuations in licensing revenue.” Affiliate and subscription revenue was down 7 percent, “driven by subscriber declines and a two-percentage-point decrease from the absence of pay-per-view boxing events, partially offset by price increases,” the company said. Advertising revenue fell 2 percent on “declines in the linear advertising market, partially offset by higher political advertising and the recognition of revenue underreported by an international sales partner in prior periods.”
Co-CEO George Cheeks addressed the current contract impasse with Nielsen. “This is not about affordability. This is about getting the value for what we pay,” he argued. Cheeks added Paramount hadn’t seen any impact from not having Nielsen data to sell advertising against, or expected any for the current fourth quarter.
“But I do want to be clear we do recognize that Nielsen can be a valuable resource. It says that the economics have to make sense for the business,” Cheeks added, discounting any speculation Paramount would drop the Nielsen contract down the road, rather than attempt to reach a new deal.
Paramount’s total third-quarter revenue declined by 6 percent to $6.73 billion, operating income fell by 46 percent to $337 million, while adjusted OIBDA rose 20 percent to $858 million.
In August, Paramount emphasized its focus on a $500 million cost-savings plan and goal of reaching sustained profitability in streaming by 2025. Back then, the company said its cost-savings plan would include reducing its U.S.-based workforce by around 15 percent. The areas hit will be redundant functions within marketing and communications and in 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 performance in the third quarter where Paramount+ added 3.5 million new subscribers, solidifying our position as the number 4 global SVOD service,” the executives said in Friday’s earnings report. “Our DTC segment successfully delivered profitability for the second quarter in a row, improving by more than $1 billion over the past four quarters, and, across the company, we continue to successfully execute non-content cost reductions that will result in $500 million in annual run-rate savings.”