Paramount Global’s latest earnings report underscored the strength of its direct-to-consumer (DTC) streaming division, with a $49 million profit marking the second consecutive quarter in the black. Paramount+ continues to show momentum, adding 3.5 million subscribers, bringing the platform to 72 million global subscribers. This growth, largely fueled by a high-profile content and sports programming lineup, has positioned Paramount+ as a formidable player in the SVOD space.
Despite the gains in streaming, Paramount’s broader revenue picture could have been more optimistic. Total revenue fell by 6% year-over-year to $6.73 billion, missing analyst expectations, with TV and film units declining. Yet, the DTC segment’s performance and Paramount’s cost-saving initiatives offer a strategic path forward as it gears up for a major merger with Skydance Media in 2025.
Streaming and Direct-to-Consumer: A Profit-Making Quarter
Paramount’s DTC segment reported $49 million in adjusted operating income, starkly contrasting the $238 million loss from a year ago. This improvement reflects robust revenue growth in both advertising and subscriptions. Total DTC revenue grew 10% year-over-year to $1.86 billion, including a notable 18% jump in streaming ad revenue and a 7% rise in subscription revenue. Paramount+ revenue alone surged 25%, supported by year-over-year subscriber gains and an 11% increase in ARPU.
The addition of 3.5 million new subscribers was driven by the return of popular sports content, including NFL and college football, original series like Tulsa King, and high-profile post-theatrical releases such as A Quiet Place: Day One. Paramount expects to continue its profitability streak and achieve sustained profitability for Paramount+ by 2025.
TV and Media Challenges: Linear Revenue Declines
Paramount’s TV and media unit saw a 6% drop in revenue to $4.3 billion and a 19% decrease in adjusted operating income, falling to $936 million. Linear advertising revenue continued its descent, dropping 2% year-over-year, though this was a smaller decrease than the previous quarter’s 11% dip. The advertising declines, partly offset by political ad spending, mirror wider industry struggles with cord-cutting and rate pressure.
Affiliate and subscription revenues also fell, down 7%, with lower subscriber counts and a lack of pay-per-view boxing events this quarter. Paramount has already responded to these pressures, announcing a nearly $6 billion write-down of its cable business and a 15% workforce reduction by year-end.
Filmed Entertainment: Profit Recovery Amid Revenue Drop
Paramount’s filmed entertainment division managed a modest profit of $3 million in the third quarter, turning around from a $49 million loss a year ago. However, the segment’s total revenue plummeted 34% to $590 million. Theatrical revenue was hit hardest, dropping 71%, reflecting fewer releases and a sparse box office schedule than the previous year.
Licensing and other revenue also dipped, down 6%, as home entertainment sales continued to slow, offset slightly by revenue gains in studio facility operations. Paramount’s box office highlights included A Quiet Place: Day One and Transformers One, though neither was enough to prevent the quarter’s sharp revenue decline.
Strategic Focus Ahead of Skydance Merger
As Paramount approaches its $8 billion merger with Skydance Media, expected to close in the first half of 2025, it has emphasized a $500 million cost-saving plan. Paramount’s CEO team, consisting of Brian Robbins, George Cheeks, and Chris McCarthy, expressed confidence in the company’s ability to execute these reductions. Skydance’s capital infusion of $6 billion, of which $1.5 billion will go toward debt, positions Paramount well for its next growth phase. With a strategic realignment under Skydance’s leadership, Paramount aims to sharpen its focus on profitable streaming growth and continued cost efficiency across its divisions.
