Paramount Preps for Long Writers Strike, Takes Streaming Loss

Even though Paramount+ broke 60 million subscribers, it wasn’t enough to stop the parent company’s stock from tumbling 25% Thursday morning.

Paramount slashed its dividend from 24 cents to 5 cents per share—the first time the company reduced its dividend since 2009—and hopes to save $500 million from the cut.

CEO Bob Bakish reaffirmed during the company’s quarterly earnings call Thursday morning that this year will represent peak losses for its streaming business. Revenue for Paramount+ and Pluto TV rose 39% year-over-year to $1.5 billion, but direct-to-consumer losses jumped to $511 million from the $456 million loss a year ago.

Paramount also was hit with $1.67 billion in impairment charges in the first quarter due to removing content ahead of combining Paramount+ with Showtime into a single streaming service. That wasn’t unexpected, with CFO Naveen Chopra previously warning investors the company was expecting negative cash flows for the year.

The company’s flagship streaming service added 4.1 million subscribers to reach 60 million—but that’s less than half of the 9.9 million it added last quarter.

The company pointed to the streaming service benefitting from bundling with Showtime content, including Your Honor and Yellowjackets. In addition, Paramount+ saw further subscription growth from originals such as 1923 and Tulsa King, as well as returns of Mayor of Kingstown and Star Trek: Picard.

Pluto TV grew its monthly active users to 80 million and increased its viewing hours by 35% year-over-year. DTC avenue revenue went up 15% to $398 million, driven by Paramount+.

Consumers ‘won’t notice’ WGA strike

Bakish didn’t seem too concerned about the impact of the Writers Guild of America Strike on the company, saying that Paramount had been preparing for the possibility.

“Writers are an essential part of creating content that our audiences enjoy across platforms, and we hope we can come to a resolution that works for everyone fairly quickly. But it’s also fair to say there’s a pretty big gap today,” said Bakish. “We do have many levers to pull, and that’ll allow us to manage through this strike, even if it’s for an extended duration.”

The CEO said the company has a “lot of content in the can.”

“With the exception of things like late night, consumers really won’t notice anything for a while,” said Bakish. “Add to that a broad range of reality and unscripted, where we’re definitely a leader as well as sports, and that’s not affected. We can do more in those areas, if necessary.”

Paramount’s upcoming release slate features four franchise films, including the next Transformers and Mission: Impossible installments. Taylor Sheridan’s next show, Special Ops: Lioness, is also on the way.

Bakish was the first major media executive to speak publicly about the strike, which has now entered its third day. Writers have been picketing in New York and L.A., including outside Paramount’s headquarters.

The CEO likely won’t be the last to comment on the strike. Warner Bros. Discovery will report earnings on Friday, and Bob Iger and Disney go next week.

Upfront season

Paramount made waves late last year when it pulled out of 2023’s upfront week, abandoning its usual Carnegie Hall presence in favor of smaller client dinners.

According to Bakish, the company has now wrapped nine upfront events.

“We’re in a new format that strongly resonated with our clients in the room,” Bakish said, adding that clients liked that the events targeted specific buyer groups.

“That contrasts with the old model of one big presentation event and then a huge party after—not really effective anymore,” said Bakish. “We did it earlier, and that’s clearly better for us. And more efficient, because in aggregate it costs significantly less than the old model.”