Paramount Global had a rocky June quarter in film as Transformers: Rise Of The Beasts, not surprising, found it tough going against last year’s Top Gun: Maverick.The second quarter also had the costs of Mission Impossible – Dead Reckoning Part One, which was released in the current third quarter.DTC subscriber growth was weaker than expected with Paramount+ clocking less than a million net new subs to reach about 61 million. The Street had been looking for the service to end the quarter at 61.5 million subs. But the Streeet has also been saying that sub growth is not the be-all end-all anymore.There were quite a few bright spots in the numbers, which came out after market close, as did news that the company has sold Simon & Schuster to KKR for $1.62 billion in cash. The challenged share price closed up 3% today at $16.09 and popped another 4% in after-market trading. The stock has been working its way back from a crash in May when first-quarter earnings were a downside surprise and the company slashed its dividend.DTC revenue of $1.66 billion beat forecasts, up 40% from a year ago, as did the traditional TV Media businesss (CBS and cable networks) where revenue of $5.1 billion was down 2%, less than expected. DTC subscription revenue rose 47%, ad sales were up 21%. Paramount+ revenue grew 47%. Total DTC losses narrowed to $424 million from $445 million for the quarter. Executives have called 2023 is the peak year for streaming losses and negative free cash cash after it joined the industry in a major pivot.In TV Media, ad revenue dipped 10% to $1.95 billion. Affiliate and subscriptions revenue eased 2%. Licensing and other rose 17% to $1.2 billion. OIBDA (operating income before depreciation and amortization) fell 13% to $1.14 billion.“In Q2, we maintained our focus on scaling our streaming platforms, maximizing our traditional business, and building a sustainable business model that will return the company to significant earnings growth in 2024,” said CEO Bob Bakish. “Notably, Paramount+ revenue grew 47%, total DTC ad revenue increased 21%, and global viewing hours on Paramount+ and Pluto TV were up 35% year-over-year. And despite the environment, TV Media continued to contribute significant earnings. As we look forward, we will continue to be guided by our content-first approach and seek to maximize its value across platforms and revenue streams, while also operating with the utmost efficiency through this year of peak streaming investment.”Paramount Global’s total revenue of $7.6 billion was also down 2% but above forecasts of $7.4 billion. Adjusted diluted earnings per share of 10 cents — down from 64 cents a year ago — also beat expectations that were flat to down a penny.Filmed entertainment sales plunged nearly 40% to $831 million on the Top Gun comparison. Adjusted OIBDA dropped by almost 100% to $5 million from $181 million, reflecting the timing and mix of theatrical releases each year.On a post-earnings conference call with analysts, CEO Bob Bakish said the company will direct proceeds of the Simon & Schuster deal to paying down debt and took questions, many of which dealt with the ongoing strikes by the WGA and SAG-AFTFA. He’s “hopeful” for a resolution sooner rather than later and said the company’s TV and streaming in decent shape through the fall given content in the pipeline, “but it all depends on duration.”
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