Paramount Global Adds 3.5 Million Streaming Subs In Q3 But Revenues Fall 6% As TV & Film Dip

Paramount Global posted mixed third quarter financial numbers as its TV and film divisions dipped, but bosses are pointing to solid subscription growth and profits at Paramount+ and cost reductions as signs their plan is "working."

Revenues for Q3 were $6.73 billion, down 6% year-on-year, but adjusted earnings per share were up 63% at 49 cents, outperforming expectations. Wall Street analysts' consensus forecast had called for earnings of 24 cents a share, down from 30 cents in the year-ago period, with revenue declining to $6.95 billion from $7.13 billion. Adjusted OIBDA was up 20% at $858 million.

Direct-to-consumer revenue was a particular high spot, up 10%, with Paramount+ adding 3.5 million subscribers to push its total up to 72 million and solidify its spot as the fourth-largest global SVOD streamer. Revenue was up 10% to $1.86 billion and adjusted earnings swung from a $238 million loss in the third quarter of 2023 to a $49 million profit — marking the second quarter in a row DTC has made money for Paramount, as Paramount+ price hikes. DTC advertising on Paramount+ and Pluto TV was up 18% at $507 million.

Adding the DTC boost to operational changes that will reduce costs by $500 million annually, Paramount said "meaningful progress" was being made.

It was a different story in other parts of the business, with revenue for the TV segment at $4.3 billion, down 6% from 2023. The drop was attributed to lower affiliate revenue and fluctuations in licensing turnover. TV advertising dropped 2%, with political adverting in the run up to Donald Trump's re-election partially offsetting losses elsewhere. Additionally, recognition of revenue unreported by an international sales partner helped push the numbers in the right direction. Paramount also noted TV media licensing had dropped due to lower volumes in the secondary market. Adjusted earnings decreased 19% to $939 million.

Filmed entertainment revenues fell 34% to $590 million, with theatrical down 71%. Box office successes during the quarter included A Quiet Place: Day One and Transformers One. However, adjusted earnings increased by $52 million versus Q3 2023 when impact of the strikes was kicking in. "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," said Paramount.

"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," said Paramount Co-CEOs George Cheeks, Chris McCarthy and Brian Robbins 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."

The quarterly results are likely to be some of the last financials to emerge from Paramount Global in its current structure. Last summer, it reached a merger agreement with Skydance Media that will see the David Ellison-led company invest $8 billion in a two-step deal. After acquiring Paramount controlling shareholder National Amusements, Skydance will then merge with Paramount. Regulators are reviewing the combination, with the parties expecting to be able to close it during the first half of 2025. "Until then, Paramount continues to operate in the normal course of business," the company said today.

As the merger winds its way to completion, following a protracted, months-long bidding process involving multiple suitors, cutbacks have been a constant theme. Paramount confirmed in August it planned to cut 15% of its U.S. workforce by the end of 2024. The staff reductions had first been signaled officially in June, when the three occupants of Paramount's Office of the CEO, George Cheeks, Chris McCarthy and Brian Robbins, announced they had identified $500 million in annualized cost savings. Weeks later, Skydance said it was eyeing $2 billion in cost savings from the merger.

Along with Warner Bros. Discovery, Paramount also took a sizable write down on the value of its cable networks over the summer, booking the $6 billion transaction as it reported second-quarter results. Linear cable assets have been acknowledged to be the main headache for traditional media companies. Comcast said last week it was exploring the possible spinoff of its cable networks into a separate company in order to limit exposure to the rapidly declining asset, which has been ravaged by cord-cutting.

Paramount's full-year revenue to date is $21.23 billion, down 4% in the $22.01 billion posted in the first nine months of 2023. Though TV and filmed entertainment turnover is down bay 7% and 19% respectively, DTC has grown 15% to $5.62 billion. Operating loss is at $5.4 billion, but this includes a $6 billion goodwill impairment on in its cable networks from the second quarter.