Paramount’s streaming losses spike to $575 million – The Hollywood Reporter

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Paramount Global has reached more than 77 million streaming subscribers worldwide at the end of 2022, up from 67 million at the end of September, as Paramount+ posted a record quarterly gain in users, the Hollywood giant said on Thursday. However, higher investment in streaming has been a drag on the entertainment company’s profits, and ad sales from its TV units have declined.

Paramount, led by CEO Bob Bakish, reported that its Paramount+ streamer had reached nearly 56 million subscribers at the end of the year, after adding a company record of 9.9 million subscribers from 46 million at the end of September. , driven by such popular content as the blockbuster Top Gun: Maverick.

“Subscriber growth was driven by a strong slate of content, including the NFL, expansion of existing franchises like Top Gun: Maverick and 1923, the success of new franchises like Tulsa King and Smile, as well as slate of CBS’ overall entertainment,” the company said. “Internationally, Yellowstone and Top Gun: Maverick have been the primary acquisition drivers for the service.”

Paramount’s free, ad-supported streaming service Pluto TV also continued to grow its monthly active user (MAU) lately, the latest earnings report unveiled before the stock market opened. Pluto TV increased global MAUs by 6.5 million in the fourth quarter of 2022 to 78.5 million, “driven by growth across all markets and expansion into Canada.” It also increased global total viewing hours by “strong double-digits quarter-over-quarter and year-over-year,” it added.

Paramount’s direct-to-consumer (DTC) unit reported strong fourth-quarter revenue growth of 30% to $1.4 billion as subscription revenues increased 48%, which the company said touted as evidence that its investments are paying off and its content engine continues to perform well and ad revenue is up 4%. Quarterly adjusted operating loss before depreciation and amortization (OIBDA) in the DTC segment expanded again to $575 million from $502 million in the prior year quarter.

On Jan. 30, Paramount became the latest Hollywood conglomerate to revamp its streaming setup and strategy, unveiling a broad combination of streaming service Paramount+ and Showtime. The move will bring programming changes — originals like Kidding, Super Pumped, and American Rust, among others, have been removed from the Showtime platform — along with more layoffs. At the time, Wells Fargo analyst Steven Cahall estimated that the company could achieve $300 million to $400 million in cost savings, “that’s about 5 to 6 percent of Paramount’s estimated selling, general and administrative costs.” in ’22”. [expense].”

“Paramount continues to demonstrate the success of its global multiplatform strategy, with popular content at its core,” Bakish said in Thursday’s earnings update. “Nowhere was this more evident than in the growth of Paramount+, which added a record 9.9 million subscribers in the fourth quarter, driven by blockbuster content like Top Gun: Maverick, 1923 and Criminal Minds: Evolution. Additionally, in 2022, Paramount Pictures opened six No. 1 films at the US box office, and Paramount regained its position as the most-watched media family in linear television.

And the CEO promised, “Our content and platform strategy is working, and with even more great content arriving this year, we expect to return the company to earnings growth in 2024.”

Paramount’s Media TV unit reported a stronger bottom line despite lower revenue. For the segment, the company reported a 7% drop in revenue for the fourth quarter to less than $5.9 billion as advertising revenue declined 7%” as increases in political advertising and pricing only offset partially lower impressions” and an unfavorable foreign exchange impact, while affiliate and subscription revenue decreased 4% “as the evolution of some international affiliation agreements resulted in a shift in revenue from our pay TV services to our streaming services and rate hikes for our home networks only partially offset the decline in subscribers.”

Licensing and other revenue decreased 11% due to lower volume of programs produced for third parties. TV Media’s adjusted OIBDA was up 5%, though “as lower revenue was more than offset by cost reductions.”

Paramount’s film entertainment unit increased fourth-quarter revenue 35% “as the strength of our 2022 releases drove growth in both film and licensing revenues.” Movie revenue jumped 149%, boosted by the box office success of Smile, which, the company noted, “became the biggest global horror film of 2022 and the studio’s third-biggest revenue driver behind Sonic the Hedgehog.” 2 and Top Gun: Maverick”. Licensing and other revenue in the film division grew 28%, benefitting from 2022 releases in the home entertainment window, driven by the continued success of Top Gun: Maverick. Adjusted OIBDA per theater unit in the fourth quarter moved from breakeven to $87 million, “reflecting higher profitability of our theater slate in 2022,” the company said.

Paramount’s overall fourth-quarter revenue increased 2% to $8.1 billion. Operating income fell 93% to $182 million. Earnings from continuing operations fell from $3.05 per share to a loss of 29 cents per share.

Shortly after 7:40 a.m. ET, Paramount shares fell 7.5% in premarket trading to $22.70.

“The fourth quarter of 2022 was a mixed bag,” Wells Fargo analyst Steven Cahall wrote in an early reaction, noting “strong key streaming performance indicators.” He added, “With Paramount up 45% year-to-date (S&P 500 up 8%), we think the bogeyman for the stock is cost cuts and/or better losses ( of streaming) leading to positive free cash flow revisions amid difficult linear trends.Summed up the Wall Street pundit in the title of his report: “Mixed Fourth Quarter – All About ’23 Outlook.”

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