Categories: NewsWorld

Paramount predicts end of ad slump after fourth-quarter drop

Paramount Global, the parent of CBS, MTV and other networks, said fourth-quarter sales fell 6% to $7.64 billion, the result of shrinking advertising on traditional TV channels.

While revenue came in below analysts’ expectations of $7.89 billion, the company posted better-than-expected earnings of 4 cents a share, excluding some items, according to a statement Wednesday. Wall Street was forecasting a break-even quarter.

Subscribers to the Paramount+ streaming service rose to 67.5 million, increasing 4.1 million from the prior quarter and beating Wall Street estimates. The New York media giant registered a loss of $490 million in its streaming business, beating projections. Revenue grew to $1.87 billion.

Viewers are canceling cable TV subscriptions and watching more video on demand, something that’s challenging traditional media companies as they struggle to wring profits from their own streaming services.

On a conference call with investors on Wednesday, management said the Paramount+ streaming service should be profitable domestically next year. In this year’s first quarter, they forecast that ad sales will climb by a low-to-mid-teens percentage, driven in part by record revenue from the Super Bowl.

Management also predicted “significant” earnings growth for the company overall this year.

John Rogers, chairman of Ariel Investments and a large Paramount shareholder, said in an interview that the growth in subscribers and focus on profitability were encouraging.

“The idea that they’ll be cash flow positive and pay down debt were sort of crucial things that we were excited to see,” he said.

Advertising at Paramount’s traditional TV business fell 15% in the fourth quarter, leading to a 12% decline in sales and operating income for the unit that generates nearly all of its profit. The business earned $1.14 billion on sales of $5.17 billion in the quarter.

Paramount’s namesake film studio struggled as well, with sales down 31% to $647 million and profit tumbling 72% to $24 million. The company cited lower home-entertainment revenue and the impact of last year’s strikes by actors and writers.

Paramount is taking a $1 billion charge in the current quarter to cover headcount reductions and programming changes. And the company expects overall growth in streaming subscribers to be lower this year.

The Redstone family, which controls Paramount, has been weighing offers for the company, including a possible sale of their stake. Asked on a conference call for an update on those discussions, Chief Executive Officer Bob Bakish said the company is always looking to create shareholder value. 

“And to be clear, that’s for all shareholders,” he said. –BLOOMBERG

Dayang Norazhar

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