Paramount misses revenue estimates, shares fall despite streaming growth

Paramount Global reported weaker-than-expected quarterly revenues on Friday, as struggles in its studio and cable divisions overshadowed strong growth in streaming subscribers. Despite this, the company exceeded Wall Street’s profit expectations, driven by cost control measures and a strong performance in its streaming service following the return of the NFL. Paramount's shares fell 3.7% in early trading, reflecting the disappointing revenue figures.

In the third quarter, Paramount+ saw impressive subscriber growth, adding 3.5 million new customers, thanks to content such as the National Football League (NFL), the second season of "Tulsa King," and the horror movie "A Quiet Place: Day One." This growth surpassed analysts' expectations of 2.46 million new subscribers and marked a notable recovery from the 2.8 million losses experienced in the previous quarter.

Despite the success of its streaming platform, Paramount's TV media division, which includes networks like CBS and MTV, saw a 6% decline in revenue. This drop was attributed to reduced advertising spending and subscriber losses. The shift from traditional cable TV to streaming services has continued to erode the profitability of cable networks, prompting companies to rethink their legacy businesses.

Paramount's overall third-quarter revenue reached $6.73 billion, missing the anticipated $6.95 billion, as per data from LSEG. Its filmed entertainment division also faced a sharp 34% revenue decline, largely due to a lack of major theatrical releases. The studio's sole significant release for the quarter was the animated film "Transformers One," which generated $127 million globally at the box office.

On a brighter note, Paramount's streaming business posted adjusted operating income of $49 million for the quarter, defying analysts' expectations of a $160.1 million loss. This marks the second consecutive profitable quarter for Paramount's streaming division, which benefitted from an August price increase for Paramount+ and a 6% reduction in operating costs.

Chris McCarthy, Co-CEO of Paramount, expressed confidence in the company’s streaming future, stating, "We feel good about our position and our ability to remain a standalone streaming service. You can count on us to be opportunistic, looking at partnerships."

Ahead of its planned merger with Skydance Media, Paramount has been actively reducing costs. The merger is expected to close in the first half of 2025. Overall, the company reported an adjusted profit of 49 cents per share for the quarter, surpassing analysts' estimates of 24 cents, partly due to nearly 2% cost reduction across its business.