Paramount Global said its impending merger with Skydance Media Inc. led to a $5.98 billion goodwill impairment charge in the second quarter, the latest warning sign for a media industry that is seeing audiences abandon cable in favor of streaming video in a way that is upending the sector’s economics.
The company, which owns CBS, Paramount Pictures and cable networks such as Comedy Central, Nickelodeon and MTV, said total revenue for the period fell 11%, driven by declines in traditional film and TV operations. However, Paramount’s streaming business reported a profit for the first time, with ad sales at Pluto and Paramount Plus up 16%.
However, the company’s strong streaming performance wasn’t enough to bolster overall results. Paramount said it lost nearly $5.32 billion during the period, up from $250 million in the year-earlier period. The company said it is prepared to cut costs by $500 million in the near future.
Paramount’s top executives remained upbeat. “We are proud of our results, including significant earnings growth driven largely by our DTC segment,” said a statement attributed to current leaders George Cheeks, Chris McCarthy and Brian Robbins. “In fact, for the fourth year in a row, Paramount+ is leading the industry in domestic subscriptions driven by our blockbuster TV series and blockbuster movies.”
Paramount’s results echo the devastating figures Warner Bros. revealed Wednesday. Discovery said it took a $9.1 billion charge to its cable networks, reflecting falling subscribers, reduced ad sales and the loss of the NBA franchise that was due to be released after next season. Other media companies have also sought to cut costs through job cuts and other maneuvers, with Fox and Disney laying off employees in recent weeks.
Unlike Warner, whose executives believe they can turn the business around in the next two years, Paramount will move into the corporate arms of an outside company. Skydance Media, a production company led by David Ellison, will take control of Paramount’s parent company, National Amusements Inc., the Redstone family’s investment vehicle. Skydance sees an opportunity to shave $2 billion off the company over time.
Paramount's television operations, the company's largest business, saw revenue decline 17%, due to an 11% decline in advertising revenue and a 5% decline in affiliate and subscription fees. Licensing revenue fell 48%
The film segment saw revenue decline 18%, due to the timing of releases during that period. In the previous quarter, Paramount released “Transformers: Rise of the Beasts” in theaters. Theatrical revenue declined 40%, while licensing revenue declined 9%.
Second-quarter streaming revenue rose 13%, with subscription revenue up 12% year-over-year following price increases for Paramount+ (with more to come). Advertising revenue rose 16% on sales growth at both Paramount+ and Pluto TV. The company said Paramount+ revenue grew 46%. However, total Paramount+ subscribers fell by 2.8 million, due to the end of the company’s bundling agreement for the service in South Korea.
