Paramount Global reported higher fourth-quarter earnings as it cut costs and reduced losses at its direct-to-consumer business.
Paramount has been the subject of acquisition reports because it is widely seen as being too small to compete in the DTC business. There was also a report that there were talk about about combining Paramount Plus with Comcast NBCUniversal’s Peacock streaming service.
Earlier this month, the company dismissed about 800 employees to lower expenses and now says it expects significant earnings growth in 2024. The layoffs will result in a $1 billion charge against earnings in Q1 but reduce costs on an annual basis by about $200 million.
The company also said it will look to lower expenses by producing more shows internationally, like NCIS Sydney and the upcoming season of Billions and a Ray Donovan spinoff.
In the fourth quarter, Paramount’s direct-to-consumer business narrowed its loss on an adjusted operating income before depreciation and amortization (OIBDA) basis to $490 million, compared to $575 million a year ago.
DTC revenue rose 34% to $1.9 billion, with advertising revenue up 14% to $526 million and subscription revenue increased 43% to $1.3 billion.
For the full year, adjusted OIBDA was $4.8 billion,down from $5.5 billion in 2022.
That means DTC losses peaked in 2022, a year ahead of plan
Paramount Plus increased fourth quarter revenue 69%,compared to a year ago and the company expects the streamer to post a profit domestically in 2025.
Paramount Plus added 4.1 million subscribers in the quarter, reaching 67.5 million subscribers, and average revenue per global average revenue per subscriber (ARPU) increased 31%, thanks in part to a price increase.
Overall, Paramount’s fourth quarter net income was $514 million, or 77 cents a share, up from $21 million, or 1 cent a share a year ago, when the company took $309 million in restructuring charges.
Revenue fell to $7.6 billion from $8.1 billion. Affiliate and subscription revenue grew 13%. Advertising revenue was down 11%.
At Paramount’s traditional TV media business, adjusted OIBDA fell 12% to $1.1 billion as revenues dropped 12% to $5.2 billion.
Advertising revenues were down 15% to $2.3 billion. Affiliate and subscription revenue dipped 1% to $2 billion
At Filmed Entertainment. Revenue was down 31% to $647 million.
“Our disciplined execution and strong content offering drove our results in 2023, as we continue to evolve our business for profitable growth in 2024 and beyond,” said CEO Bob Bakish.
“Looking ahead, we continue to be focused on maximizing the return on our content investments and scaling streaming, while transforming the cost base of our business,” Bakish said. “And I couldn’t be more thrilled with the early momentum we’ve had across every platform in 2024, demonstrating the power of our strategy and assets.
