Paramount Global’s success in streaming is hurting its bottom line.
The New York-based owner of the CBS broadcast network and the Paramount movie studio said that the costs of generating gains in streaming crimped the conglomerate’s operating income and forced a swing to a loss in its fiscal fourth quarter, the latest of the nation’s big media companies to show some of the wear and tear that the shift to court viewers who stream is taking on the industry’s financials.
The company said it added 9.9 million subscribers to its Paramount+ streaming hub in the period and saw a new cohort of users come to its free, ad-supporters streaming venue Pluto. But those gains could not overcome a 93% decline in operating income., or a 7% decline in revenue among the company’s biggest business, its traditional TV networks. Paramount Global said the company swung to a loss, compared with a sizable profit in the year-earlier period.
“Our content and platform strategy is working and, with even more exceptional content coming this year, we expect to return the company to earnings growth in 2024,” said Bob Bakish, Paramount Global’s president and CEO, in a prepared statement.
Paramount Global said revenue fell 7% in the period at its traditional TV operations, declining to $5.88 billion compared with approximately $6.3 billion in the year-earlier quarter. Advertising revenue in the sector fell 7% and revenue from affiliate fees was off 4%. The company cited shrinking linear audiences and subscriptions to cable and satellite distributors as some of the factors in the results.
The company saw better results from its film operations, which it has been working to revive after a less robust period. Revenue rose 35% during the quarter, to approximately $936 million, compared with $694 million in the year-earlier quarter, based in part on success at the box office for "Smile" and home-entertainment revenue driven by the smash "Top: Gun: Maverick."
Activity from streaming was among the most robust. Paramount+ subscribers increased by 9.9 million during the period, bringing the service's overall subscriber base to nearly 56 million. Revenue from direct-to-consumer businesses like Paramount+ and Pluto rose 30% to nearly $1.4 billion. Even so, Paramount said operating income at the unit decreased by $73 million, "reflecting investments in content and international expansion."