It’s a very turbulent time for US-based media giant Paramount. CEO Bob Bakish stepped down from his position and board seat yesterday, replaced by a three person “office of the CEO”, following reported tensions with Paramount’s controlling shareholder Shari Redstone, who is currently negotiating a sale or merger for the business. Redstone is pushing for a deal with production business Skydance, while other shareholders may prefer a joint bid from Apollo and Sony.
Amid this madness, Paramount reported its Q1 financial results, and here at least there were signs of stability. The company’s share price has roughly halved over the past year, as it’s dealt with a tough TV ad market and slow sales at the box office while battling to turn a profit in its streaming unit. In Q1, there were signs that things are improving.
Total revenues were up six percent year-on-year, with its traditional TV, streaming, and film businesses all recording growth. And ad revenues were a major contributor: linear TV ad revenues were up 14 percent year-on-year, while streaming ad revenues grew by 31 percent.
The Super Bowl, which Paramount has broadcasting rights for this year and which was shown across CBS, Nickelodeon, and Paramount+, was a major factor here. But it wasn’t the only cause. Paramount’s chief financial officer Naveen Chopra said that ad revenue growth within its streaming segment did benefit from the Super Bowl, but also from increased sell-through and higher CPMs.
Streaming closes in on profitability
As was the case in the previous quarter, Paramount’s streaming service moved closer towards profitability. The company wants its direct-to-consumer business to be profitable by 2025, and cost-cutting measures alongside improved performance are making a difference on the balance sheet. Losses for the quarter dipped below $290 million, down from $511 million in Q1 last year and $490 million last quarter.
Alongside growth in ad revenues, subscription revenues were up by 22 percent, due to pricing increases and subscriber growth. Paramount+’s subscriber count reached 71 million this quarter, with 3.7 million net new additions across the three month.
Price increases and better CPMs mean that global average revenue per user for Paramount+ is up by 26 percent year-on-year.
There are still plenty of questions for Paramount’s streaming business. Profitability is just one part of the picture. Total direct-to-consumer revenues are not far off a third of traditional TV revenues, and streaming ad revenues are around a fifth of linear TV ad revenues. If Paramount’s streaming business is to fill in for its traditional TV business, assuming linear TV continues to decline, it will need to continue growing quickly.
And the future of Paramount’s streaming service remains up in the air, given the ongoing takeover talks. Sony has so far refrained from running its own streaming service – should it buy Paramount, it may look to offload or wind down any streaming assets.
