Paramount Global Inc., the media and entertainment giant, has surprised investors with an unexpected adjusted quarterly profit. The company’s shares rose after it reported a per-share profit of 4 cents, beating FactSet estimates of a 1 cent per-share loss. This unexpected profit can be attributed to higher subscription prices for its Paramount+ streaming platform, which led to increased sales.
Although revenue fell by 6% to $7.64 billion, which was worse than expectations, the positive earnings report is encouraging for Paramount. Chief Executive Bob Bakish expressed optimism about the future, stating that the company expects to achieve domestic profitability for Paramount+ by 2025. Bakish also emphasized the importance of maximizing the return on content investments and scaling streaming while transforming the cost base of the business.
The rise in streaming prices and subsequent increase in revenue for Paramount comes at a time when other streaming platforms are also looking to consolidate and raise prices. The industry has spent years chasing subscribers, and now investors are pressuring streaming services to focus on generating greater profits. Paramount has reportedly entertained bids for a merger or acquisition, with Warner Bros. Discovery Inc. having recently stopped talks on an acquisition. Skydance Media is still considering its options for a potential deal.
During the earnings call, Paramount revealed that revenue within its direct-to-consumer segment, which includes Paramount+, Pluto TV, and BET+, saw a significant jump of 34% during the quarter. Subscription sales rose by 43%, driven by both subscriber growth and pricing increases for Paramount+. Additionally, ad sales were up by 14%.
However, it wasn’t all positive news for Paramount’s TV business. Last year’s Hollywood strikes and a weaker worldwide ad market negatively affected the segment. Revenue in the TV media segment as a whole declined by 12%, and ad revenue in that segment fell by 15%. Despite these challenges, Paramount was able to benefit from strong NFL viewership.
In conclusion, Paramount’s unexpected adjusted profit is a welcome surprise for the company and its investors. The higher subscription prices for its streaming platform, Paramount+, have led to increased sales and boosted revenue. With a focus on maximizing content investments, scaling streaming, and transforming the cost base of the business, Paramount aims to achieve domestic profitability for Paramount+ by 2025. While the TV business faced challenges due to Hollywood strikes and a weaker ad market, Paramount still managed to capitalize on strong NFL viewership. As the streaming industry continues to evolve, Paramount’s ability to adapt and generate profits bodes well for its future success.
