Paramount Global reported reaching 61 million Paramount+ streaming subscribers worldwide for the three months ending June 30, a modest increase from the 60 million reported last quarter. More notably, the company managed to reduce its streaming losses.
In its streaming division, the company posted a quarterly adjusted operating loss before depreciation and amortization of $424 million, an improvement from the $511 million loss last quarter and $445 million loss a year ago.
Subscription revenue saw a 21 percent year-over-year increase, reaching $1.2 billion. This growth was driven by an increase in subscriber numbers compared to the second quarter of 2022, along with an uptick in digital advertising revenue.
Addressing the slight increase in net subscribers, CFO Naveen Chopra attributed the numbers to “seasonal softness” and a “strategic shift of content releases to better align with the launch of Paramount+ with Showtime.”
He projected higher subscriber growth in the latter half of the year but noted that the third quarter would see a loss of over 1 million subscribers due to the restructuring of a Latin America bundle deal.
Looking ahead to 2024, Chopra stated that the company expects to achieve more than 20 percent growth in average revenue per user on Paramount+ globally.
This growth is anticipated to come from the full-year impact of the domestic price increase that took effect on or after July 27, 2023, as well as the international rollout of new subscription tiers and revised pricing in specific markets.
Additionally, the platform is expected to benefit from the integration with Showtime, which was officially completed in June.
This growth is expected to help offset some of the advertising challenges Paramount continues to face in its traditional TV networks. Advertising revenue in its TV division declined by 10 percent compared to the previous quarter, reflecting ongoing softness in the market.
However, Paramount noted signs of strength in the national domestic market, particularly in sectors such as pharmaceuticals, retail, movies, and travel, according to the earnings report. This followed an 11 percent drop in TV ad revenue in the prior quarter and a 7 percent decline in the fourth quarter of 2022.
Revenue from the filmed entertainment segment dropped 39 percent year-over-year, amounting to $831 million.
This decrease is largely due to the comparison with the second quarter of 2022, which included the release of Top Gun: Maverick and generated $1.4 billion in revenue.
In the recent quarter, Paramount released Transformers: Rise of the Beasts.
Paramount Global’s total revenue was $7.6 billion, down from $7.8 billion in the second quarter of 2022. The company reported an operating loss of $250 million, a significant drop from the $819 million profit recorded a year ago.
On Monday, Paramount Global announced the sale of its book publishing segment, Simon & Schuster, to private equity firm KKR for $1.62 billion.
The proceeds, including the termination fee from a previous attempted sale, will be used to pay down debt, according to company executives.
The media giant had previously tried to sell Simon & Schuster to Penguin Random House in a $2.2 billion deal, but the sale was blocked by a federal judge on antitrust grounds.
During the earnings call, CEO Bob Bakish addressed the ongoing writers and actors strike, emphasizing the studio’s “critical” partnership with the artists.
He noted that Paramount had positioned itself to withstand the strike by adjusting its fall schedule to include acquired series like Yellowstone, focusing on its sports lineup, licensing content to third parties, and sharing content across its own platforms.
Bakish also highlighted the company’s extensive slate of international scripted and unscripted Paramount+ Originals, with more than 85 projects either produced, in production, or greenlit, along with over 20 local versions of global unscripted formats scheduled to debut through 2024.
“We’re saddened that as an industry, we couldn’t reach an agreement to prevent this. Our partnership with the creative community is vital to the health of our industry.
We remain hopeful for a timely resolution and are committed to finding a path forward. At the same time, we have a responsibility to minimize disruptions to our audiences and other stakeholders,” Bakish said.
When asked whether the strikes would affect the release of upcoming Paramount films, Bakish mentioned that several films, including Killers of the Flower Moon, Bob Marley: One Love, John Krasinski’s IF, A Quiet Place: Day One, and the Mean Girls musical for Paramount+, had already completed production.
However, he acknowledged that the strikes present “marketing challenges,” which the studio is currently assessing concerning the films’ release schedules.
Chopra added that some originals expected to debut on Paramount+ in the fourth quarter would be delayed until 2024 due to strike-related production setbacks.
Despite the strikes, the company reported a free cash flow loss of $210 million in the second quarter, with “modest impact from the strikes,” according to Chopra.
He also projected that free cash flow in the latter half of the year would be “significantly higher” than previously expected.
