Paramount Misses Q4 Expectations, But Narrows Streaming Losses 42% to $286 Million

Yahoo

27-02-2025

Paramount Global missed Wall Street expectations in its fourth quarter of 2024, after its results were weighed down by operating losses in direct-to-consumer and filmed entertainment divisions and lower revenue and operating profit in its TV/Media segment.
The streaming division, which includes Paramount+ and Pluto TV, narrowed its losses by 42% to $286 million during the quarter and 70% to $497 million for the year, with improvements driven by revenue growth and cost efficiencies.
Overall streaming revenue climbed 8% to $2.01 billion during the quarter, which included a 9% increase in advertising revenue to $574 million due to growth at Paramount+ and Pluto, including higher political advertising; a 7% increase in subscription revenue to $1.44 billion, driven by subscriber growth but impacted by the cannibalization of Showtime OTT revenue following the integration of Showtime into Paramount+; and a 50% drop in licensing revenue to $2 million.
Paramount+, which increased revenue by 16% to $1.56 billion for the quarter and 33% to $5.9 billion for 2024, is on track to reach full year domestic profitability in 2025, the company said.
Shares fell as much as 2.3% in extended trading in New York.
Here are the top-line results:
Net loss: $224 million, compared to a profit of $514 million a year ago. For 2024, Paramount's net loss widened to $6.19 billion, compared to a loss of $608 million in 2023.
Earnings Per Share: A loss of 33 cents per share. On an adjusted basis, the company posted a loss of 11 cents per share, compared to a profit of 10 cents per share expected by analysts surveyed by Zacks Investment Research.
Revenue: $7.98 billion, up 5% year over year, compared to $8.14 billion expected by Zacks. For the full year, revenue fell 1% to $29.2 billion.
Operating income: $129 million, down 68% year over year, compared to $404 million a year ago. For the full year, Paramount's operating loss widened to $5.27 billion.
Streaming subscribers: Added 5.6 million subscribers during the quarter for a total of 77.5 million. For the full year, Paramount added 10 million subscribers.
'We are proud of the results we achieved for the full year, which reflect the progress we have made since becoming co-CEOs,' co-CEO Brian Robbins told analysts on Wednesday. '2024 demonstrated meaningful progress against our long term goals, including significant improvement in DTC profitability, driven by continued top line growth powered by one of the strongest content slates in the industry, all while strengthening our balance sheet.'
The latest quarterly results comes as Paramount awaits FCC approval of its pending $8 billion merger with Skydance Media, which is on track to close in the first half of 2025, the company said.
The Trump administration has criticized Paramount-owned CBS, accusing it of favorably editing a '60 Minutes' interview with former Vice President Kamala Harris during the 2024 election. FCC chairman Brendan Carr revived a previously dismissed 'news distortion' complaint against the network from The Center for American Rights — a self-described 'nonpartisan public interest law firm.' Carr has said the complaint would likely arise during his review of the Skydance-Paramount merger.
Trump filed a $20 billion lawsuit against Paramount alleging it manipulated the '60 Minutes' interview to make Harris look good ahead of the 2024 election. CBS has maintained that it did nothing wrong and has said the entire foundation of Trump's argument is 'belied' by the complete transcripts for the interview, which were handed over to the FCC, released publicly and included in Trump's amended complaint — in which he doubled the damages sought after initially seeking $10 billion.
Trump and Paramount have discussed a settlement in light of the approval needed for the Skydance merger, and continue to consider 'alternative dispute resolution options,' according to a recent court filing. If the case moves to a jury trial, it will take place for two weeks in August 2026, per the filing.
The Skydance deal also faces opposition from several Paramount shareholders, including the Employees' Retirement System of Rhode Island (ERSI), Mario Gabelli, the largest class A shareholder behind Shari Redstone, Scott Baker, who has filed a proposed class-action lawsuit; the California State Teachers' Retirement System (CalSTRS), and five of New York City's pension funds.
If the consummation of the transaction does not occur before April 7, subject to two automatic 90-day extensions, or if a regulator blocks the merger, both Paramount and Skydance have the option of terminating the deal. Exercising that option would leave Paramount on the hook to pay Skydance a $400 million breakup fee.
The TV/Media segment saw total revenue decline 4% to $4.98 billion, while the segment's operating profit fell 17% to $949 million, driven by lower revenue.
Advertising revenue fell 4% to $2.2 billion driven by declines in linear advertising and fewer sports on CBS, offset by higher political advertising. Affiliate and subscription revenue fell 7% to 1.87 billion, reflecting subscriber declines, partially offset by price increases. But licensing and other revenue grew 3% to $911 million.
The Filmed Entertainment segment posted a 67% jump in revenue to $1.08 billion, but higher marketing costs associated with the theatrical releases of five films in the quarter led to an operating loss of $42 million, compared to a profit of $24 million a year ago.
Theatrical revenue grew to $414 million from $336 million, driven by the releases of 'Gladiator II' and 'Sonic the Hedgehog 3.' Licensing and other revenues increased 17% to $661 million, reflecting a higher volume of licensing of library titles and higher studio facility revenue compared with 2023, which was impacted by the Hollywood labor strikes.
Paramount achieved its targeted annual run rate cost savings of $500 million in 2024. Free cash flow came in at $56 million for the quarter and $489 million for the year.
'As we work to close the Skydance transaction, we're focused on continuing to leverage Paramount's content assets to transform our business for the streaming era,' CFO Naveen Chopra said. 'That means continuing to invest in sports, powerhouse film and TV franchises and streaming originals to support DTC growth. It means continuing the transition of our advertising business from linear to digital, and it means delivering domestic profitability for Paramount+, while identifying additional cost reduction opportunities across the company.'
Looking ahead, Paramount executives expect continued growth at Paramount+ in Q1, but noted it would be lower than the fourth quarter. It also expects affiliate revenue in its TV/Media segment to continue to decline in Q1, but expects growth when combined with streaming as the division continues to scale.
Advertising growth in TV/Media and DTC will be impacted by the comparison to the 2024 Super Bowl. The first quarter will also include approximately $150 million in cash restructuring payments, negatively impacting free cash flow, though free cash flow is expected to increase in full year 2025.
Chopra said that Paramount remains 'highly focused' on managing expenses to maximize earnings in the TV/Media business. Robbins added that the company's licensing business is 'very strong' and 'an essential component of what we do.'
'This will pay real dividends downstream in the growth of our DTC platforms, which is why we are making fewer originals for third parties,' Robbins added. 'Additionally, we believe there's real room for innovation in windowing strategy and deal structures that could unlock even more value from our content in the future.'
Co-CEO George Cheeks also noted that Paramount would continue to experiment with skinny bundles, citing its involvement in Comcast's sports and news TV package and discussions with DirecTV about joining their MySports package.
'When we look at these distribution relationships, we look at them holistically, meaning we negotiate our economic distribution commitments across all tiers of service that are going to be offered or proposed by the applicable distributor. And when it makes business sense for us, overall, we're going to add tiers,' Cheeks said. 'We know they're here, but we're just not at this point convinced there's a compelling value proposition relative to the full bundle. From what we've seen so far, the price benefit for the consumer is just quite small. But nevertheless, we're going to be committed to working with our partners to help them create the most compelling offerings with the greatest value.'
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