Paramount Global beats profit estimates on streaming growth, cost cuts

9:23 am Friday, November 08th, 2024

(Reuters) -Paramount Global surpassed quarterly profit estimates on Friday as the media giant benefited from cost controls and stronger-than-expected growth in streaming subscribers after the return of NFL.

A content line-up that included the National Football League (NFL), the second season of crime drama series “Tulsa King” and horror film “A Quiet Place: Day One” helped the Paramount+ streaming service add 3.5 million subscribers in the third quarter.

That was better than Visible Alpha estimates for 2.46 million additions, and marked a sharp turnaround from the 2.8 million subscribers the service lost in the previous quarter.

Overall, the streaming business posted an adjusted operating income of $49 million for the quarter, while analysts expected a loss of $160.1 million, according to data compiled by LSEG.

It was the second straight quarterly profit for the streaming unit, which also benefited from a price hike for Paramount+ in August and a 6% decline in costs.

The company has been cutting costs ahead of its planned merger with Skydance Media. The deal is expected to close in the first half of 2025, Paramount said.

“We continue to successfully execute non-content cost reductions that will result in $500 million in annual run rate savings,” Co-CEOs George Cheeks, Chris Mccarthy and Brian Robbins said.

Total costs fell nearly 2% in the September quarter, helping Paramount report an adjusted profit of 49 cents per share, compared with estimates for 24 cents.

CABLE, STUDIO WEAKNESS

Revenue at Paramount’s TV media business, which includes CBS and MTV, fell 6% due to lower spending from advertisers and a drop in subscribers.

Customers have been shunning cable TV for streaming platforms, eroding a lucrative profit engine for media companies and pressuring them to seek options for their legacy businesses.

Paramount’s total third-quarter revenue of $6.73 billion missed expectations of $6.95 billion, with its filmed entertainment business revenue down 34%.

It had one major theatrical release this quarter, the animated film “Transformers One”, which raked in a revenue of $127 million from the global box office. This compares to big hits last year like “Mission: Impossible – Dead Reckoning Part One.”

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Devika Syamnath)