Paramount Rises with Steady Streaming Growth Despite TV Unit Writedown

Paramount Global’s shares experienced a 6% surge in premarket trading on Friday, as investors responded positively to robust growth in the media conglomerate’s streaming business. This comes despite Paramount following the footsteps of Warner Bros Discovery by writing down the value of its TV assets.

On Thursday evening, Paramount surpassed Wall Street’s earnings expectations, driven by its streaming division, which includes the Paramount+ and PlutoTV services. This division reported its first quarterly profit in three years. Additionally, the company announced plans to reduce its U.S. workforce by 15%, a cost-cutting move ahead of its merger with Skydance Media.

The streaming profit managed to overshadow Paramount’s $6 billion writedown of its cable network assets, underscoring the diminishing value of traditional TV businesses in the streaming era. As viewership and revenue from conventional TV continue to decline, streaming services are becoming more critical for media companies.

“Results in the rest of Paramount’s business were unsurprisingly weak, but at Paramount’s current market value, it shouldn’t take much good news to generate enthusiasm,” commented Morningstar analyst Matthew Dolgin.

Paramount+ saw a 46% increase in revenue during the second quarter, driven by subscriber growth and higher prices. In contrast, Paramount’s television unit experienced a 17% decline in revenue.

Earlier this week, Warner Bros Discovery announced a staggering $9 billion charge on its TV assets, highlighting similar struggles in the industry.

To expand its audience, Paramount, like other media companies, has been enhancing its streaming offerings. Early this year, Paramount signed a deal with U.S. cable giant Charter Communications to provide Charter’s Spectrum TV customers access to Paramount+’s ad-supported service.

“While the viewership of linear networks has declined significantly, and Paramount+ is not currently in the same league as the biggest and most popular streaming platforms, we still see advantages to the menu of distribution that Paramount offers,” added Dolgin.

Source: Reuters