Paramount slashed its dividend 79% as it reported first-quarter earnings on Thursday, which showed strong growth in its Paramount+ streaming service but continued losses.
Paramount+ added 4.1 million subscribers during the first three months of 2023 for a global total of 60 million, Paramount Global said in its first-quarter earnings report. Losses in the streaming business widened to $511 million in the quarter from $456 million a year earlier, but fell from $575 million in the December quarter. Meanwhile, Paramount’s free, ad-supported streaming service Pluto TV hit 80 million monthly active users during the first quarter.
The increase in subscriber numbers came as Paramount reported a total loss of $1.1 billion, adjusted earnings per share of 9 cents, and revenue of $7.3 billion. Analysts were expecting earnings of 12 cents per share on revenue of $7.42 billion.
The company also announced that it would reduce its quarterly dividend from 24 cents per share to 5 cents per share, which Bob Bakish, CEO of Paramount Global, said that “we will further enhance our ability to provide long-term value for our shareholders.” will increase as we move toward streaming profitability.”
“Looking forward, we are focused on continuing to deliver market-leading streaming growth while navigating a dynamic macroeconomic environment,” Bakish said.
Paramount shares fell more than 14% in pre-market trading after the earnings announcement.
Revenue in the direct-to-consumer division grew 39% year over year to $1.5 billion. Paramount+ revenue grew 65% year-over-year, driven by subscriber growth and increased advertising revenue. Subscription revenue grew 50% year-over-year to $1.1 billion, primarily reflecting subscriber growth on Paramount+, including benefits from previous launches in international markets. Advertising revenue grew 15% year-over-year to $398 million, driven by strong engagement on Paramount+.
Executives attributed the subscriber growth to a strong content slate including hit movie franchises in “1923,” “Tulsa King” and “Mayor of Kingstown” and top originals like “Star Trek: Picard” to “Top Gun: Maverick.” “Teen Wolf: The Movie,” as well as the NFL Playoffs.
The previously announced integration of Showtime into Paramount+ will officially launch in the third quarter, the company confirmed. The combination, which is expected to generate approximately $700 million in future annual expense savings, resulted in a programming charge of $1.7 billion during the first quarter.
As part of the move, the company is raising its prices for Paramount+ subscriptions. The top tier of Paramount+ will increase from $9.99 per month to $11.99 per month. The cheaper, ad-supported Essentials tier, which will not include Showtime, will increase from $4.99 per month to $5.99. Consumers already paying for the Paramount+/Showtime bundle will not be affected by this price increase.
Revenue in the TV media segment fell 8% year over year to $5.19 billion. Advertising revenue declined 11% year over year to $2.26 billion, reflecting weakness in the global advertising market and fewer NFL games on CBS. Affiliate and subscription revenue decreased 1% year-over-year to $2.07 billion due to foreign exchange and the previous restructuring of certain international affiliate agreements, which resulted in the transfer of revenue from our pay television services to DTC services. Licensing and other revenue fell 15% year-over-year to $870 million, primarily reflecting the lower volume of licensed content.
CBS leads broadcast networks with Top 10 and 8 of 14 Top 20 series, including #1 drama in “NCIS”, #1 comedy in “Young Sheldon” and top three new shows in “Fire Country” . New York” and “So Help Me Todd.” Adult cable series on Paramount’s network ranked in the top 4 among viewers aged 18 to 34. Nickelodeon’s top 10 children’s cable series were top 3 and 7.
Viewers ages 2 to 11, featuring the #1 new kids cable series “Rubble & Crew.”
Revenue in the Filmed Entertainment segment fell 6% year over year to $588 million. Theatrical revenue decreased by $4 million to $127 million, reflecting the release timing and mix. Licensing and other revenue decreased $35 million to $456 million, driven primarily by lower consumer product licensing revenue. The segment posted an adjusted operating loss of $99 million, reflecting an adverse impact from the release of “Dungeons & Dragons: Honor Among Thieves” on the last day of the quarter, as well as costs from the release of Miramax’s “Operations” Fortune: Ruse de Guerre,” and the macro-driven softening of licensing of consumer products.
