Paramount Revenues Dip Despite First-Time Streaming Profits

Paramount reported declines in its top-line, TV, and film revenues in its second-quarter earnings call Wednesday, but it turned a profit in its streaming division for the first time.

The company saw its year-over-year revenues dip 11%, from $7.6 billion to $6.8 billion. The revenue drop was the largest miss compared to analyst estimates since February 2020, according to LSEG data.

Revenues from its TV division declined 17%, from $5.2 billion to $4.3 billion, and its film and movies sector also saw an 18% reduction in revenue, falling from $831 million to $679 million in the quarter.

In a notable bright spot, Paramount’s streaming service, Paramount+, turned a profit for the first time. On Tuesday, Disney also reported that its streaming unit achieved profitability for the first time as well. Taken together, the two developments represent a symbolic turning point in the economics of the streaming landscape.

“We remain confident that Paramount+ will reach domestic profitability in 2025,” said co-CEO Chris McCarthy. “In addition, to further ancillary profitability and to increase our scale and engagement, we are exploring potential strategic partnerships with multiple parties and are in active discussions.”

The results come during a critical transitional period for Paramount, which is in the midst of being acquired by Skydance Media for $8 billion. 

As part of the process, Paramount promised in June to realize $500 million in cost reductions. On Wednesday, the company announced that it planned to lay off 15% of its U.S. workforce as part of that effort.

Paramount+ finds profitability

Revenue at Paramount+ and Pluto TV increased 13% year over year, driven by a 12% growth in subscription revenue and a 16% growth in advertising revenue. Paramount+ revenue grew 46%.

Paramount+ decreased in total subscribers, dropping 2.8 million to 68 million as a result of an exit from a bundle agreement in South Korea. Global annual revenue per user (ARPU) expanded 26% year over year.

The company has announced further price hikes to its Paramount+ service, which take effect on Aug. 24. Under the new plan, Paramount+ will increase in price from $5.99 per month to $7.99 per month.

On the advertising front, Paramount+ and Pluto saw advertising revenues increase. This growth came from increased viewing hours across Paramount+ and Pluto TV, along with higher CPMs overall, according to CFO Naveen Chopra.

The company, which declined to participate in the traditional upfront process, still secured streaming ad commitments above $1 billion. 

A transitional period for Paramount

The results come at a critical, transitional moment for Paramount. 

It agreed to be acquired by Skydance Media in July but is currently in the midst of a 45-day go-shop period that concludes Aug. 21, during which it can receive other acquisition bids.

The company is currently being led by a trio of co-CEOs, as it ousted former CEO Bob Bakish in April. The executive shake-up has left Paramount under new leadership as it attempts to navigate an acquisition process and a rapidly shifting media landscape.

Paramount had to take a $5.98 billion write-down in the value of its TV network, which it announced on Wednesday. These reflect the depreciating value of linear television, and Warner Bros. Discovery announced a similar writedown in its second-quarter earnings call, reducing the value of its linear assets by $9.12 billion.

“We’re not standing still during this interim period before the transaction closes,” Navin said. “We remain focused on achieving our goals for 2024, which means investing in key content assets, finding expense efficiencies, improving profitability, deepening partnerships, and deleveraging our balance sheet.”