Paramount Global reported a $5.99 billion write-down of its cable business as it acknowledged the ongoing decline in linear TV and prepared for it
Paramount Global reported a $5.99 billion write-down of its cable business as it acknowledged the ongoing decline in linear TV and prepared for its transaction with Skydance Media.
The company’s mixed second quarter saw a total revenue drop of 11%, with its streaming business swinging into profit. However, it posted a net loss of $5.3 billion, down from $250 million a year ago due to the impairment charge.
The company announced plans to lay off 15% of its US-based workforce, affecting approximately 2,000 people, as part of previously announced $500 million in cost savings. This is in addition to the approximately 800 staff laid off in February.
The executives expect the Skydance transaction to close in the first half of 2025 once customary closing conditions and regulatory hurdles are met, and said it will be “business as usual” in the meantime.
Total revenue fell to $6.8 billion, below Bloomberg consensus estimates of $7.24 billion. The company posted an adjusted earnings per share of 54 cents, beating the estimated 12 cents.
The streaming segment saw subscriptions tumble by 2.8 million to 68 million, mostly due to the planned exit from a hard bundle agreement in South Korea. However, the direct-to-consumer business was profitable, swinging $450 million year-on-year to $26 million due to revenue growth and lower costs.
Streaming revenue climbed 13% to $1.9 billion, with subscription revenue growing 12% and advertising revenue increasing 16% to $513 million.
The company’s filmed entertainment division saw a 18% revenue drop to $679 million, while theatrical revenues dropped 40%. Paramount+ revenue grew 46%, driven by year-over-year subscriber growth and a 26% increase in average revenue per user.
Leadership explored partnerships for the platform and expect it to become profitable in the US in 2025. Revenue at the TV media division fell by 17% to $4.3 billion, with advertising revenue declining 11% to $1.7 billion.
Paramount Global’s stock fell 2.4% during trading to $10.21 and climbed after hours, down 29.1% from its year-to-date start.
Conclusion:
In conclusion, Paramount Global’s mixed second quarter saw a significant decline in linear TV revenue, leading to a $5.99 billion write-down of its cable business. The company also announced plans to lay off 15% of its US-based workforce as part of previously announced cost savings. Despite this, the company expects its streaming business to become profitable in the US in 2025 and continue to grow its partnerships and content offerings.
Frequently Asked Questions:
Q: Why did Paramount Global report a $5.99 billion write-down of its cable business?
A: Paramount Global reported the write-down due to the ongoing decline in linear TV and prepared for its transaction with Skydance Media.
Q: How many people will be laid off as part of the company’s cost savings efforts?
A: Approximately 2,000 people, or 15% of its US-based workforce, will be affected by the layoffs.
Q: When does Paramount Global expect the Skydance transaction to close?
A: The company expects the transaction to close in the first half of 2025 once customary closing conditions and regulatory hurdles are met.
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