Paramount shares dive 28% as streaming losses grow, despite subs gains

Star Trek: Picard

Paramount Global has seen its share price drop more than 28% after the US media giant posted a $1.12bn revenue decline in the first quarter, with streaming losses growing.

The downturn in overall revenue contrasts sharply with the $441m gain reported in the same quarter in 2022 and comes after the company was hit by a $1.67bn charge for its restructuring of Showtime. Those changes saw 120 staff let go as the brand is merged with the Paramount+ streaming service.

Overall company revenue was $7.3bn, which fell short of Wall Street expectations, while DTC losses stood at $511m, having grown above the $456m reported in the same quarter last year.

Tulsa King

The losses came despite DTC revenue, coming in from services such as Paramount+, Pluto TV and Showtime, rising 39% year on year, with subscriptions generating $1.11bn.

Paramount’s valuation has slumped over the past year, with shares now standing at $16.40, down from $28 a year ago and almost $40 in May 2021.

Pluto grows but advertising hit

Paramount focused on Paramount+ subscriber growth in its Q1 results, with the streamer adding 4.1 million new subs to reach a 60 million total, driven, it said, by original shows such as 1923, Tulsa King, Mayor Of Kingstown and Star Trek: Picard.

AVOD service Pluto TV also increased total global viewing hours by 35% year over year.

The company’s TV and media segment revenue, meanwhile, declined by 8% year over year, including an 11% drop in advertising revenue, with Paramount citing weakness in the global ad market and the impact of fewer NFL games on CBS.

Affiliate and subscription revenue took a small dip of 1% year-over-year, with restructuring causing a shift of revenue from pay-TV to DTC services.

In the Q1 earnings call, CEO Bob Bakish told analysts that the goal of streaming profitability “takes investment”, amid concerns about mounting costs.

“The levers are in place to continue to drive Paramount+ subscriber revenue and ultimately continue down this path to profitability,” he said.

Bakish also said that Paramount is prepared to ride out the US writers strike, telling analysts on the call that “we have been planning for this” and revealed “we do have many levers to pull and that will allow us to manage through the strike even if it’s an extended duration.”

The Paramount chief said that the company has “a lot of content in the can” and that “with the exception of late-night, consumer won’t notice anything for a while.” Bakish added that offshore production and “one of the largest libraries in media” would mitigate the impact of the WGA strike and the company was “well positioned” to handle the disruption.

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