Paramount has just unleashed its first quarter financials and they look pretty promising, although all eyes are on the shakeup in the C-suite. Revenue was higher across the board, albeit a hair shy of Wall Street expectations. Operating losses narrowed. Free cash flow rose, a key metric since it allows the company to pay down debt.
After a bleak Q4, TV and media group advertising jumped 14%, buoyed by Super Bowl XVIII on CBS in February. The studio had two winners in Mean Girls and Bob Marley: One Love. Paramount+ ended the quarter with more than 71 million subscribers, beating expectations and up from 65.7 million at the end of 2023.
The number hit just after the company confirmed that CEO Bob Bakish is departing, replaced with three division heads in a new office of the CEO amid drama-filled takeover talks with David Ellison’s Skydance.
In Bakish’ absence, CFO Naveen Chopra delivered the standard earnings quote: “The team delivered another quarter of strong operational and financial performance — including significant growth in total company earnings and free cash flow — despite the dynamic environment we continue to operate in. It was a record-setting quarter for Paramount+ in engagement and revenue, and in the DTC segment as we continued to substantially narrow streaming losses. And CBS dominated with its powerful combination
of sports and the return of a delayed fall slate that launched to massive audiences. As we look ahead, we remain focused on execution and transforming our cost base to best position Paramount for the future.”
Chopra led the company’s conference call at 4:30 ET with brief comments by the three new chiefs. In a very rare move, no one took questions from analysts.
Paramount said streaming red ink narrowed to $288 million from $510 million in the year earlier quarter. The company has promised that streaming losses peaked in 2022 and that it expects the business to turn a profit domestically in 2025. It’s fourth in line in terms of subs among big streamers Netflix, Disney/Hulu and Max and would be the last to pull into the black – one of several reasons controlling shareholder Shari Redstone has been considering a deal. Skydance delivered what’s said to be its last and final offer for Paramount after a furious response by shareholders in recent weeks over the outlines of its first proposal.
Paramount’s total revenue, of just under $7.7 billion, was up 6%. Total operating losses narrowed to $417 million from $1.2 billion. Adjusted diluted EPS of 62 cents is up from 9 cents in the 2023 first quarter.
DTC revenue grew 24% to circa $1.9 billion, split between subscription (up 22% to nearly $1/4 billion) and advertising (up 31% to $520 million).
The TV Media group saw revenue nose up 1% to $5.2 billion, reflecting a 23-percentage point benefit from CBS’ broadcast of Super Bowl LVIII. Adjusted oibda (operating income before depreciation and amortization) grew 11% to $1.4 billion.
And filmed entertainment saw a 20% bump in theatrical revenue year-on-year (to $153 million) on the strength of Mean Girls, Bob Marley: One Love and Miramax’s release of The Beekeeper. Total revenue for the division grew 3% to $605 million. Licensing revenue fell 1% to $451 million.
As expected, the company took some heft one-time hits including $1.12 billion in programming charges as, it said, “we are rationalizing original content on our streaming services, especially internationally, and improving the efficiency of our linear network programming.” It incurred some charges for abandoning some projects in development and canceling other programming agreements. Another $186 million charge was for severance costs associated with layoffs in the first quarter. Paramount terminated about 800 staffers earlier this year.
