Paramount Global fell way shy of Wall Street forecasts with ongoing losses in streaming exacerbated by soft advertising at its TV/Media group last quarter and a dip in filmed entertainment as well. The stock is down sharply — about 14% — in early trading.Revenue was flattish (off1%) at $7.26 billion in the first quarter of 2023 from the year earlier. Analysts were looking for $7.4+ billion. And the company swung to a loss of $1.1 billion for the first three months, from a profit of $433 million.Sales in TV/Media (CBS and cable networks) fell 8%, with an 11% dip in advertising reflecting weakness in the global ad market and fewer NFL games on CBS. Licensing and other revenue declined 15% year-over-year primarily reflecting a lower volume of licensed content. Operating income fell 15%.Paramount+ reached 60M total subscribers, adding 4.1M subs in the quarter — that’s less than half the number it added in the previous quarter. Operating losses for streaming widened to $511 million from $456 million. Execs had warned the street to expect peak streaming losses this year as the company continues to spend heavily on content.Pluto TV hit 80 million monthly active users (MAU) in the quarter.DTC revenue increased 39% year-over-year. Subscription revenue grew 50% to $1.1B, principally reflecting subscriber growth on Paramount+, including the benefit from previous launches in international markets. Advertising revenue rose 15% year-over-year driven by strong engagement on Paramount+, where revenue grew 65% year-over-year driven by subscriber growth and increased advertising revenue.Global subscriber growth was driven by a strong content slate including top originals like 1923, Tulsa King and the returns of Mayor of Kingstown and Star Trek: Picard, film franchises Top Gun: Maverick and Teen Wolf: The Movie, as well as the NFL Playoffs. The Paramount+ with Showtime bundle also benefited from strong Showtime content slate including Your Honor and Yellowjackets.Filmed entertainment sales dipped 6% year-over-year. Theatrical revenue decreased $4M reflecting the timing and mix of releases. Licensing and other revenue decreased $35M driven primarily by lower consumer products licensing revenues.Operating income fell by $62 million, reflecting, the company said, an adverse impact from the timing of the release of Dungeons & Dragons: Honor Among Thieves on the last day of the of the quarter — meaning costs but not the benefits — as well as costs from the release of Miramax’s Operation Fortune: Ruse de Guerre.Scream VI opened no. 1 in March, debuted on Par+ in late April.The advertising market, visibility on the timing of streaming profits and the impact of Hollywood labor action are all front and center ahead of a conference call with executives shortly. Paramount is the first major studio to report numbers and address the Street since the WGA began striking this week. Late night went dark immediately, and a number of TV shows have been impacted – including Yellowjackets.The guild struck after its contract with the Alliance of Motion Picture and Television Producers expired with out a new contract. As issue is compensation for writers in a shifting media landscape that’s coming to be dominated by streamers and with threats from AI looming.“Paramount continues to demonstrate the strength of its content engine, driving momentum across streaming, television and theatrical. This resulted in Paramount+ and Pluto TV reaching significant milestones with 60 million subscribers and 80 million MAUs, respectively, while CBS is poised to claim the #1 spot in broadcast for the 15th straight season,” said CEO Bob Bakish.“Looking ahead, we are focused on continuing to drive market-leading streaming growth while navigating a dynamic macroeconomic environment. In addition, the updated dividend policy we have announced today will further enhance our ability to deliver long-term value for our shareholders as we move toward streaming profitability.”Execs had said to expect price increases at Paramount+ this year.In the fourth quarter, the streamer added 9.9 million subscribers and direct-to-consumer business lost $575 million.Paramount announced in Jan. that the company is rebranding the premium cable network as “Paramount+ with Showtime” as part of a wide-ranging change that also brings the two brands together in the streaming world. Later this year, Showtime, which already went through major changes last year with the departure of David Nevins, is becoming Paramount+ with Showtime across both linear and streaming. Showtime content will then be available on Paramount+’s premium tier. The move is U.S. only.Paramount has also been shedding assets. It’s still trying to unload Simon & Schuster after regulators nixed an initial sale, and is currently fielding offers for BET.
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