Paramount Global (PARA, Financial) released its third-quarter financial report, revealing mixed results. The company's revenue fell short of expectations due to underwhelming box office performance and declines in its cable television sector, despite better-than-expected streaming service growth following the NFL content return. Paramount's Q3 revenue reached $6.731 billion, missing the forecasted $6.95 billion, though its Non-GAAP earnings per share of $0.49 exceeded market expectations of $0.24.
The television media segment, which includes CBS and MTV, saw a 6% revenue decline. This drop was attributed to decreased advertising spending, declining subscriber numbers, and a lack of paid boxing events. As customers shift from cable subscriptions to streaming platforms, traditional media companies face challenges in maintaining profitable operations, even as they strive to enhance streaming profit margins.
The streaming business reported an adjusted operating income of $49 million, a significant improvement from the $238 million loss in the previous year, marking the second consecutive profitable quarter. Analysts, according to data compiled by LSEG, had anticipated a $160.1 million loss. Paramount's streaming success this quarter was driven by price hikes for Paramount+, popular sports content like NFL games, and the second season of the crime drama "Tulsa King."
Paramount+ added 3.5 million users, surpassing the expected 2.46 million, bringing its total subscribers to 72 million. This comes after a user decrease of 2.8 million in the previous quarter.
On the downside, Paramount's film entertainment revenue dropped by 34% due to fewer film releases and decreased home entertainment revenue. The animated film "Transformers One," released during the quarter, grossed $127 million globally.
In July, Paramount and Skydance Media agreed to merge to strengthen content creation and expand digital platforms like Paramount+ and Pluto TV. This merger is expected to finalize in the first half of next year, pending regulatory approval and customary closing conditions. Operations will continue normally in the meantime.
Additionally, Paramount plans to cut its U.S. workforce by 15%, impacting about 2,000 employees, aiming to save $500 million annually. The layoffs will focus on eliminating redundant functions and streamlining teams in areas such as marketing, communications, finance, legal, and technology.
