Paramount Outpaces Expectations, Adding Subscribers And Narrowing Streaming Losses

Paramount Global has one of the hottest shows on television over the past few years with Yellowstone, but it has been dogged by concerns about whether its streaming service, Paramount
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+, can compete against much bigger fish like Disney+ and Netflix
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, plus questions about TV advertising and streaming losses.

Its latest earnings report should ease some concerns about its competitiveness and long-term outlook. Investors were pleased, with company stock rising in after-hours trading.

During Thursday’s third quarter earnings call, Paramount Global CEO Bob Bakish fielded questions about all those issues while talking up successes in the film division and narrowed losses for streaming. In addition to owning Paramount+, Paramount Global holds traditional TV assets including CBS, Nickelodeon and a slew of other cable networks, as well as Paramount movie studios.

Paramount+ added 2.7 million subscribers during third quarter, more than analysts expected, swelling to an all-time high of 63 million subscribers. Paramount Global revenue grew during the quarter, despite the continued downturn of TV advertising (down 14%), and streaming losses narrowed to $238 million compared to $343 million at the same point last year. Film revenue jumped 63%, as did profits vs. last year.

Streaming Expansion On The Horizon

Bakish said he sees streaming expansion in the future and thinks the company is moving closer to eliminating streaming losses.

Paramount has always believed in the big tent for content—TV and movies produced to appeal to mass audiences that it can monetize worldwide. That’s long been the approach at CBS and several of the onetime Viacom networks, and it seems to be the vision for Paramount+ as well.

Earlier this year, Paramount folded its Showtime app into Paramount+, much like Warner Bros. Discovery did with HBO and Discovery cable networks under Max. Bakish hailed the results of the merge, saying it had strengthened Paramount+’s growth trajectory.

Asked whether Paramount+ will consider a password crackdown a la Netflix and Disney+, Chief Financial Officer Naveen Chopra said it’s not currently a priority, though that could change. “The good news is, I think there’s a template for how we could address that,” he said.

Bakish predicted losses would continue to narrow. “We now expect DTC [direct-to-consumer] losses in 2023 will be lower than in 2022 – meaning streaming investment peaked ahead of plan,” CEO Bob Bakish said.

‘Yellowstone’ Series Finale Will Air In 2024

Any Paramount call always focuses partly on Taylor Sheridan’s Yellowstone, which has become a trademark franchise. The show has faced questions over when it would return for its final season—it will be back in November 2024 to wrap up the series, assuming the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) strike ends soon.

Bakish said over 100 million people have watched the Yellowstone franchise across platforms, and it is a top show in the UK, France, Canada and across Latin America, in addition to domestically. Two more spinoffs will join the Yellowstone universe, too—1944 and a second with a working title of 2024.

Hollywood Actors’ Strike’s Impact

With less original content produced for third parties due to the actors and now-resolved writers strikes, Paramount saw a 12% decline in licensing and other revenue. “Content available for licensing was impacted by temporary production shutdowns as a result of labor strikes,” said Paramount’s earnings release.

Simon & Schuster Sale Closes

Paramount announced earlier this week that the sale of book publisher Simon & Schuster to KKR
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, a private equity firm, closed earlier this week. It came a year after a judge blocked the merger of the publisher with Penguin Random House, which had sparked monopoly concerns.

Paramount said it will use the proceeds from the sale, about $1.3 billion after taxes, to pay down debt.