- Paramount Global reported $6.92 billion in revenue in the third quarter, falling short of analysts’ expectations.
- Paramount’s television business revenue fell 5% due to declining advertising and pay TV subscribers.
- Streaming service Paramount+ now has 46 million subscribers, with total direct sales revenue up 38%.
Paramount Global on Wednesday reported third-quarter revenue that rose 5% year-over-year, but the results fell short of expectations as it was hit by a shrinking cord and falling advertising revenue.
Its shares fell 12% on Wednesday.
Here’s what the company said compared to analysts’ expectations, according to Refinitiv:
- Adjusted EPS: 39 cents vs. 43 cents expected.
- Revenue: $6.92 billion vs. $7.01 billion expected.
Paramount said its television media segment revenue was down 5% to approximately $4.9 billion quarter-on-quarter due to a decline in pay TV subscribers. The device includes the CBS broadcast network and cable television channels such as MTV, Nickelodeon and the Showtime premium network.
Ad revenue for its television networks fell 3% to about $1.9 billion, a sign that macroeconomic headwinds are starting to kick in. In the summer, the company warned that it was beginning to feel a downturn in the advertising market.
During a phone call with investors on Wednesday, CEO Bob Bakish noted that digital advertising has more of a problem, especially since TV has the advantage of selling ads up front.
“If an advertiser wants to make a national impression, there is no better medium than television,” Bakish said.
The spot market, that is, the market for TV ads bought and sold closer to the ad date, also saw some weakness. Advertising in categories such as travel and electronics remains strong, Bakish said, while the automotive sector, which usually holds a large share of the advertising market, has still not improved due to supply chain problems.
The company noted that it also restructured some of its international TV partner agreements during the quarter, shifting pay TV revenues to streaming.
“We have two goals: to generate cash flow and profit from traditional media, and at the same time scale up through the most important growing media sector, streaming,” Bakish said.
Paramount Pictures’ revenue rose 48% to $783 million year-over-year, driven by more releases compared to earlier days of the pandemic when lockdowns were still in place. Paramount Pictures also increased licensing revenue from other platforms by 19% to $549 million.
The consumer-facing streaming segment also performed best. Paramount+, the company’s answer to premium subscription services like Netflix and Disney+, added 4.6 million subscribers, bringing the total to 46 million. Paramount+ also lost 1.9 million subscribers during the quarter as SkyShowtime, its European joint venture with Comcast, opened in Scandinavia and replaced Paramount+.
Paramount+’s subscriber growth was driven by sports, especially the NFL and international football, as well as the launch of a partnership with Walmart+. The company also announced Wednesday that its blockbuster Top Gun: Maverick, as well as recent box-office hit Smile, will hit Paramount+ by the end of the year, likely to give the streaming service a boost.
Overall, Paramount said its total consumer-facing streaming customers, including their Showtime, BET+ and Noggin services, rose to nearly 67 million at the end of the quarter. The company now expects that number to exceed 75 million by the end of the year.
Paramount said its total direct sales revenue increased 38% year-over-year and its subscription revenue rose 59% to $863 million, largely due to an increase in Paramount+ paid subscribers. Advertising revenue in this segment grew by 4%.
“We expect long-term streaming operating margins to approach television media margins as the benefits of our multi-platform strategy materialize,” Chief Financial Officer Naveen Chopra said in a phone call with investors on Wednesday.
Meanwhile, Pluto TV, the company’s ad-supported free streaming service, reached 72 million monthly active users worldwide and increased total hours watched by double digits, the company said. On Tuesday, Fox Corp. reported that Pluto’s rival Tubi has become a bright spot for the company as the service’s revenue and advertising have grown significantly.
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