Paramount’s profit falls on rising costs

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Paramount CEO sees ‘very strong future’ in TV, movie streaming

Paramount Global President and CEO Bob Bakish says the film industry giant is ‘in the middle of a transformation.’

Paramount Global reported a drop in third-quarter profit on higher costs, while revenue increased nearly 5% as the media company added 4.6 million subscribers to its Paramount+ streaming service.

Both the top and bottom lines missed Wall Street expectations. Shares fell about 11% in recent trading.

The New York-based company said Wednesday that revenue gains for its direct-to-consumer and film business were offset in part by a decline in its television division, which suffered from a drop in advertising revenue.

Tom Cruise plays Capt. Pete “Maverick” Mitchell in Top Gun: Maverick from Paramount Pictures, Skydance and Jerry Bruckheimer Films. Paramount’s ‘Top Gun: Maverick’ continued its run in theaters and became the top digital sell-through title in the U.S (EPK  / Fox News)

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On the closely watched streaming side, Paramount said it ended the quarter with 46 million Paramount+ subscribers, about 750,000 short of analyst expectations, according to FactSet.

The streaming service has beaten out its competitors on sign-ups year-to-date, Paramount said, adding that a 1.9 million drop in subscriptions during the third quarter came after the company launched SkyShowtime, a joint streaming venture with Comcast Corp., to replace Paramount+ in several Nordic countries.

TickerSecurityLastChangeChange %
PARAPARAMOUNT GLOBAL16.79-2.38-12.42%
CMCSACOMCAST CORP.30.91-0.65-2.06%

Overall revenue came in at $6.92 billion for the quarter ended Sept. 30. Analysts had expected $7.08 billion. Revenue from Paramount+ nearly doubled while its overall direct-to-consumer business, which includes the flagship streaming service as well as Pluto TV, Showtime, Noggin and BET+, logged a 38% gain to its top line.

The company’s traditional TV offerings saw a 5% decline in revenue after increases in spending on political advertising failed to offset a decline in viewers and the impact of foreign-currency fluctuations.

CANNES, FRANCE – JUNE 21: Kevin Costner attends ‘A conversation with Kevin Costner from Paramount Network and Yellowstone’ during the Cannes Lions Festival 2018 on June 21, 2018 in Cannes, France. (Photo by Richard Bord/Getty Images for Cannes Lions) (Getty Images / Getty Images)

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Paramount on Wednesday told investors to expect similar declines in its television business in the fourth quarter amid an overall pullback in advertising due to macroeconomic uncertainty.

Paramount is making moves to cut costs amid economic headwinds. Last month, the company announced that it was reorganizing Showtime’s television and streaming divisions following the announcement that David Nevins, chief executive officer of Showtime, was leaving. As a result of the reorganization, which will continue through the fourth quarter, the company said it may post a restructuring charge.

This image released by Paramount Pictures shows Tom Cruise in a scene from “Mission: Impossible – Fallout,” the sixth film in the Mission Impossible franchise. Paramount Pictures on Monday halted production on the seventh “Mission: Impossible” film d

Meanwhile, Paramount’s film business continued to bounce back from last year’s dismal box-office numbers. It saw a 48% jump in revenue as "Top Gun: Maverick," the summer blockbuster that bested "Titanic" to become the studio’s biggest domestic movie of all time, continued its run in theaters and became the top digital sell-through title in the U.S.

Paramount posted a profit of $231 million, or 33 cents a share, down from $538 million, or 80 cents a share, in the same quarter a year ago, as costs and expenses rose 11.5%.

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Stripping out one-time items, adjusted earnings were 39 cents a share. Analysts polled by FactSet had been expecting 46 cents a share.

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