Paramount Global reported its third-quarter financial results and latest streaming updates, including a swing to a streaming profit from a year-ago loss, on Friday in the Hollywood conglomerate’s second earnings report since its sale to Skydance Media was unveiled. That marked the second quarter of streaming unit profitability in a row.
Paramount, currently controlled by National Amusements, led by Shari Redstone, said its streamer Paramount+ added 3.5 million subscribers compared with the second quarter in June to end September with around 72 million subscribers.
Adjusted operating income before depreciation and amortization (OIBDA) in Paramount’s streaming unit, known as its direct-to-consumer (DTC) segment, amounted to $49 million in the third quarter, compared with a year-ago loss of $238 million. DTC segment revenue rose 10 percent to $1.86 billion, driven by an 18 percent advertising gain and a 7 percent subscriber revenue increase. Paramount+ revenue even jumped 25 percent, “driven by year-over-year subscriber growth and average revenue per user (ARPU) expansion” of 11 percent.
“Sports, including the return of the NFL and UEFA, originals like Tulsa King, which saw the biggest global debut in platform history for season 2, and Mayor of Kingstown, as well as post-theatrical releases, such as A Quiet Place: Day One and IF, all drove acquisition in the quarter,” the company said.
The transactions with Skydance “are anticipated to close in the first half of 2025,” the conglomerate reiterated in its earnings update. “Until then, Paramount continues to operate in the normal course of business.”
Paramount also posted the latest quarterly results for its Filmed Entertainment unit, whose biggest new release in the period was Transformers One, while its biggest third-quarter box office performer was A Quiet Place: Day One, released at the end of the second quarter on June 28. Filmed Entertainment unit adjusted OIBDA came in at $3 million, a $52 million turnaround from the loss of $49 million in the year-ago period hit by the dual Hollywood strikes. The key driver of the bottom line was the fact that expenses declined from $940 million to $587 million.
Filmed Entertainment revenue in the third quarter fell 34 percent to $590 million as theatrical revenue decreased 71 percent, “reflecting the number and timing of releases in the quarter compared to the prior year,” and licensing and other revenue dropped 6 percent as “lower revenue from home entertainment and the licensing of film library titles were partially offset by higher studio facility revenue compared to last year, which was impacted by the labor strikes.”
TV Media unit adjusted OIBDA fell 19 percent to $936 million in the third quarter as revenue declined 6 percent to $4.3 billion, “primarily driven by lower affiliate revenue and fluctuations in licensing revenue.” Affiliate and subscription revenue was down 7 percent, “driven by subscriber declines and a two-percentage-point decrease from the absence of pay-per-view boxing events, partially offset by price increases,” the company said. Advertising revenue fell 2 percent on “declines in the linear advertising market, partially offset by higher political advertising and the recognition of revenue underreported by an international sales partner in prior periods.”
Paramount’s total third-quarter revenue declined by 6 percent to $6.73 billion, operating income fell by 46 percent to $337 million, while adjusted OIBDA rose 20 percent to $858 million.
In August, Paramount emphasized its focus on a $500 million cost-savings plan and goal of reaching sustained profitability in streaming by 2025. Back then, the company said its cost-savings plan would include reducing its U.S.-based workforce by approximately 15 percent. The areas hit will be redundant functions within marketing and communications and in finance, legal, technology and other support functions. The cuts are expected to be completed by the end of the year.
Paramount is currently being run by the Office of the CEO, consisting of top executives George Cheeks, Chris McCarthy, and Brian Robbins. Redstone is serving as chair.
“Our hit content drove strong performance in the third quarter where Paramount+ added 3.5 million new subscribers, solidifying our position as the number 4 global SVOD service,” the executives said in Friday’s earnings report. “Our DTC segment successfully delivered profitability for the second quarter in a row, improving by more than $1 billion over the past four quarters, and, across the company, we continue to successfully execute non-content cost reductions that will result in $500 million in annual run-rate savings.”
The trio concluded: “With two very strong quarters under our belt, it’s evident that we have clear momentum and that our plan is working thanks to our very talented teams and creative partners.”