Paramount Posts Q3 Streaming Profit of $49 Million and Adds 3.5 Million Subs, but Film and TV Revenue Fall
Paramount’s direct to consumer division swung to a profit of $49 million during the third quarter of 2024 – its second quarterly profit in a row – after adding 3.5 million subscribers for a total of 72 million.
But the company’s overall results were mixed, with total revenue falling 6% year over year, weighed down by a 71% decrease in theatrical revenue and 6% drop in TV Media revenue.
Here are the top-line results:
Net income: $1 million, compared to $295 million a year ago.
Adjusted Earnings Per Share: 49 cents per share, up 63% year over year, compared to 24 cents per share expected by analysts surveyed by Zacks Investment Research.
Revenue: $6.73 billion, down 6% year over year, compared to $6.92 billion expected by analysts surveyed by Zacks Investment Research.
Operating income: $337 million, down 46% year over year. On an adjusted basis, operating income rose 20% to $858 million.
Subscribers: Added 3.5 million subscribers during the quarter for a total of 72 million
“Our hit content drove strong performance in Q3 where Paramount+ added 3.5 million new subscribers, solidifying our position as the number four global SVOD service,” Paramount Global co-CEOs Brian Robbins, George Cheeks and Chris McCarthy are said in a statement. “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. With two very strong quarters under our belt, it’s evident that we have clear momentum and that our plan is working thanks to our very talented teams and creative partners.”
Paramount shares are down 0.26% in pre-marketing trading on Friday following the quarterly results.
The latest quarterly results comes as the media giant’s pending $8 billion merger with Skydance Media is on track to close in the first half of 2025, subject to regulatory approval and customary closing conditions. Until then, Paramount continues to operate in the normal course of business.
Ahead of the deal’s closing, Paramount is in the midst of cutting its U.S. workforce by 15%, or around 2,000 employees, in an effort to generate $500 million in annual run rate cost savings. The cuts, which are focused on redundant functions and streamlining corporate teams and expected to be completed by the end of the year, have impacted areas including marketing and communications, advertising, finance, legal and technology and other support functions. The company also shuttered Paramount Television Studios in August as part of the broader restructuring. Skydance has said it is eyeing a total of $2 billion in cost savings from the merger.
In addition, Paramount has hired bankers to help the company with possible asset sales. TheWrap exclusively reported that Paramount sold the ComicBook and PopCulture websites to Nashville-based Savage Ventures for an undisclosed amount. In March, Paramount sold its 13% equity stake in Viacom18 to Reliance Industries for $517 million, with the sale expected to close in the fourth quarter of 2024. Four individuals familiar with the co-CEOs’ plans previously told TheWrap that other possible assets that could be put up for sale include Pluto TV, BET, VH1 and the Paramount lot, which would be leased back for the studio’s use.
“We remain diligent as we optimize our asset mix,” Robbins told analysts on Friday. “The sale of our equity interest in Viacom 18 is a great example, which will result in an attractive financial return on our investment.”
The company is also in “active discussions” about potential strategic partnerships or joint ventures with other streamers.
“We are evaluating potential partnerships in streaming through a lens of creating value for the business and our shareholders over the long term,” Robbins added. “Given the complexity, we are being deliberate and thoughtful in our approach and assessment.”
Robbins added that Paramount remains engaged with Nielsen during its ongoing contract renewal dispute and are hopeful for a resolution.
“So far, we’re encouraged by our partners willingness to lean into innovation and adopt alternative measurement solutions,” he said. “Bottom line, our brand and agency partners are the number one priority, and we’re proving every day that content, scale and value are what matters most to advertisers.”
Cheeks added that there’s been no adverse impact on revenue to date and that there’s no material impact expected in the fourth quarter. While acknowledging that Nielsen is a valuable resource, he argued that the terms of the economics “have to make sense for the business.”
Paramount streaming a bright spot
Paramount’s direct-to-consumer division swung to a profit of $49 million, compared to a loss of $238 million a year ago, reflecting revenue growth and cost efficiencies.
Total DTC revenue grew 10% to $1.86 billion, including an 18% increase in advertising revenue to $507 million, reflecting growth from Paramount+ and Pluto, a 7% increase in subscription revenue to $1.34 billion and a 150% increase in licensing revenue to $10 million.
Paramount+ revenue grew 25% to $1.43 billion, driven by year-over-year subscriber growth and an 11% year over year increase in average revenue per user. The company does not disclose its quarterly ARPU figure. Paramount+ remains on track to reach domestic profitability in 2025.
Pluto delivered its highest consumption ever of 5% to 5.6 billion viewing hours, with growth fueled by increased use of video on demand as a result of more available content and the platform’s enhanced discoverability and user experience.
Paramount’s TV/media segment posted a profit of $936 million, down 19% from $1.15 billion a year ago. Total revenue for the segment fell 6% to $4.3 billion, primarily driven by lower affiliate revenue and fluctuations in licensing revenue.
Advertising revenue fell 2% to $1.67 billion, reflecting 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. Affiliate and subscriptions revenue fell 7% to $1.87 billion, 7%, driven by
subscriber declines and a 2-percentage point decrease from the absence of pay-per-view boxing events, partially offset by price increases. Licensing and other revenue decreased 12% to $760 million, reflecting a lower volume of licensing in the secondary market.
In August, Paramount took a $5.98 billion write-down for its cable networks due to a downward adjustment to the unit’s expected cash flows from linear TV affiliates.
Filmed Entertainment swings to a profit, but revenue tumbles on lower theatrical, advertising and licensing
Paramount’s Filmed Entertainment segment swung to a profit of $3 million, compared to a loss of $49 million in the prior year period due to the Hollywood strikes. Total revenue fell 34% to $590 million.
Advertising revenue fell 60% to $2 million. Theatrical revenue plunged 71% to $108 million, reflecting the number and timing of releases in the quarter compared to the prior year. Licensing and other revenue slipped 6% to $480 million, 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.
More to come…
