Paramount late on Thursday comfortably beat market expectations for earnings. This increased earnings of Paramount was propelled by its streaming unit posting its first quarterly profit in three years. The company, The media group, Paramount also said 15% job cuts are to be expected of its U.S. workforce.
Paramount Global’s stock surge was as much as 6% in early trade on Friday as investors cheered strong growth at the media group’s streaming business. This was even as the company joined rival Warner Bros Discovery in writing down the value of its TV assets.
Paramount job cut for cost saving
Paramount Global is cutting 15% of its U.S. workforce, or about 2,000 jobs, part of a broader cost-cutting plan as it prepares for a merger with Skydance Media.
The media company, Paramount has identified $500 million in cost savings, which include job cuts, as part of $2 billion in synergies related to its transaction with Skydance. The job cuts, which will begin in the coming weeks and largely conclude by year end.
Paramount agreed to a merger with Skydance Media last month. That deal includes a 45-day go-shop period in which a special committee of Paramount’s board could find another buyer that concludes later this month.
Paramount earnings result
Meanwhile, earnings surged as the company’s streaming division swung to an unexpected profit. This is the first time Paramount has announced a profitable quarter for its direct-to-consumer business.
Here’s how Paramount performed in the quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
Paramount earnings per share: 54 cents adjusted vs. 12 cents expected
Paramount revenue: $6.81 billion vs. $7.21 billion expected
Q2 revenue dropped 11% and missed analyst estimates as licensing, TV advertising and cable subscription sales dropped.
The revenue drop was the largest miss compared to analyst estimates since February 2020, according to LSEG data. The media company attributed the miss to a decline in TV licensing revenue, which can be difficult for analysts to model given their start and end dates.
Paramount streaming growth
Paramount+ revenue grew 46% on year-over-year subscriber growth and higher prices. It’s customers decreased 2.8 million from last quarter to 68 million as the company unwound a Korean partnership deal with entertainment company CJ ENM’s Tving streaming platform.
Paramount’s streaming division turned a profit for the quarter of $26 million after losing $424 million a year ago. Analysts had estimated a loss of $265 million this quarter.
Paramount reaffirmed it’s on track to reach U.S. profitability for Paramount+ in 2025. The streaming service has raised prices and cut content spend.
Write down from WBD
Paramount took a $6 billion one-time impairment charge associated with the decline in its cable networks. It comes on the heels of a $9.1 billion write-down from peer Warner Bros. Discovery on Wednesday.
“Results in the rest of Paramount’s business were unsurprisingly weak, but at Paramount’s current market value, it shouldn’t take much good news to generate enthusiasm,” Morningstar analyst Matthew Dolgin said.
The company had to take the charge as an adjustment forced by its transaction with Skydance.
Paramount stock update
Paramount’s shares have slid more than 30% this year, giving the company a market capitalisation of $7.33 billion, through last close. The stock has lost about 75% of its value since the company was formed through the CBS-Viacom reunion in 2019.
Paramount share price climbed more than 5% in after-hours trading Thursday.
