#Paramount’s Streaming Losses Narrow to $424M as Subscribers Inch to 61M

Paramount Global reached 61 million Paramount+ streaming subscribers worldwide in the three months ended June 30, a slight gain from the 60 million announced last quarter, but importantly the company pared down its streaming losses. 

On the streaming side, the company reported a quarterly adjusted operating loss before depreciation and amortization of $424 million compared to $511 million last quarter and $445 million a year ago. Subscription revenue increased 21 percent year-over-year, to reach $1.2 billion, thanks to growth in the number of subscribers compared to Q2 2022.

Addressing the softness in net subscriber addition, CFO Naveen Chopra said the numbers reflect “seasonal softness” as well as “a strategic shift of content releases to better align with the launch of Paramount+ with Showtime.” Subscriber growth is expected to be higher in the back half of the year, but he noted that Q3 will see the loss of just over 1 million subscribers due to the restructuring of a Latin America bundle deal.

Advertising revenue in its TV unit fell 10 percent compared to last quarter, “reflecting continued softness.” However, Paramount says that in “the national domestic market, pharma, retail, movies, and travel are showing signs of strength,” according to the earnings release. This came after an 11 percent drop in TV ad revenue in the previous quarter and a seven percent drop in the fourth quarter of 2022.

Revenue in the filmed entertainment segment fell 39 percent year-over-year, to reach $831 million, due to the comparison with Q2 2022, which saw the release of Top Gun: Maverick in Q2 2022 and recorded revenue of $1.4 billion. Paramount released Transformers: Rise of the Beasts this past quarter.

Total revenue for the entertainment giant was $7.6 billion, down from $7.8 billion in Q2 2022. The company reported an operating loss of $250 million compared to profits of $819 million a year ago.

On Monday, Paramount Global announced a long-expected deal to sell book publishing segment Simon & Schuster. The book publisher will be sold to private equity firm KKR $1.62 billion, and the proceeds will be used to help pay down debt, according to executives. The media giant had previously tried to sell Simon & Schuster to book publisher Penguin Random House, in a $2.2 billion deal, but the sale was blocked by a federal judge on antitrust grounds. 

On the earnings call, CEO Bob Bakish addressed the ongoing writers and actors strike by mentioning studios “critical” partnership with the artists. However, he added that his studio had positioned itself to withstand the strike by adjusting its fall schedule to now feature acquired series such as Yellowstone, as well as focusing on its sports lineup and licensing its content to third parties, in addition to sharing content across its own different platforms.

Bakish also noted that the company has more than 85 International scripted and unscripted Paramount+ Originals already produced, in production or greenlit, as well as more than 20 local versions of global unscripted formats, which are scheduled to debut through 2024.

“We’re saddened that as an industry, we couldn’t come to an agreement that would have prevented this. Our partnership with the creative community is critical to the health of our industry. So we remain hopeful for a timely resolution, and we are committed to finding a path forward. At the same time we have a responsibility to minimize disruptions to our audiences and other constituents,” Bakish said.

The company recorded free cash flow of a loss of $210 million in the second quarter with “modest impact from the strikes,” according to Chopra, who also estimated there will be “significantly higher” free cash flow in the back of the year than expected.

More to come.