Paramount Global (PARA) unveiled its second quarter (Q2) earnings, outperforming forecasts as it rebounded from advertising challenges and improved streaming losses.
Paramount Global Q2 Earnings
In its Q2 earnings report, Paramount Global reported a direct-to-consumer loss of $424 million, an improvement from the $445 million loss in the same period last year and the $511 million loss in the prior quarter. The company reiterated that streaming losses are expected to peak this year, having amounted to $1.82 billion in 2022.
The announcement triggered an after-hours trading surge of up to 7% in company shares, driven by narrower streaming losses. Currently, Paramount stocks stand at 16.09 USD, marking a 2.94% gain today.
Challenges and Optimism in Advertising
Despite gains, Paramount faced challenges in the television advertising market. Linear ad revenue declined by 10% YoY, exceeding the projected 8% drop but improving from the 11% decrease in the first quarter. Management expressed optimism about the ad market’s anticipated improvement in the latter half of the year.
Simon & Schuster Sale and Paramount Q2 Earnings
Of note, Paramount revealed the $1.62 billion sale of Simon & Schuster to investment firm KKR, following a previous deal’s collapse. Paramount’s Q2 revenue was $7.62 billion, surpassing estimates of $7.43 billion. However, this is lower than the $7.8 billion recorded the prior year. Operating loss was $250 million, a stark contrast to the $819 million profit in Q2 2022. Adjusted earnings exceeded projections at $0.10 per share, down from $0.64 per share a year ago.
Future Plans and Strategies
Paramount plans to achieve positive free cash flow and earnings growth by 2024. Strategies include recent streaming tier price hikes, layoffs, restructuring, and dividend reduction, which initially led to a 30% share value drop.
The flagship Paramount+ with Showtime, priced at $11.99 per month, launched on June 27. The integration prompted a $1.67 billion content impairment charge but is expected to save $700 million annually. However, the integration impacted subscriber net additions, with only 700,000 added in Q2 compared to 3.7 million in Q2 2022.
Paramount Global’s Q2 earnings signal a resilient recovery from streaming losses and advertising challenges, setting the stage for renewed growth and profitability in the future.
