Paramount Global,
long the subject of talk that it might be sold, continued to balance a fast-growing but unprofitable streaming business with a collection of declining television and movie assets in late 2024.
Paramount’s fourth-quarter results, released Wednesday evening, illustrate the challenges and time pressures faced by traditional media companies working to pivot from cable and movie-theater business models to direct-to-consumer offerings in the streaming age.
Paramount reported $7.6 billion in revenue for the last three months of 2024, down from $8.1 billion in the year-earlier period. The average call among Wall Street analysts had been for $7.8 billion.
The company lost 2 cents per share in the fourth quarter, versus an 8-cent profit a year earlier and the analyst consensus forecast of a 1-cent loss. Adjusted EPS was a profit of 4 cents.
Adjusted operating income before depreciation and amortization—Oibda, the profit measure Paramount management prefers—was $520 million, down 15% from $614 million.
Paramount has been most in the news lately in regards to merger speculation. Since the fall,
Warner Bros. Discovery,
Allen Media Group, and Skydance Media have all reportedly been in talks with or interested in taking over the company or its Redstone family-controlled parent, National Amusements, but no deal has emerged.
Paramount shares have completed a round trip from $11 to $17 and back over the past four months as merger rumors ebbed and flowed.
Paramount’s streaming segment saw a 34% surge in revenue, to $1.9 billion, from the same period a year ago. Its flagship Paramount+ service reached 67.5 million subscribers, including 4.1 million added in the quarter and 11.6 million over the past year.
That is fast growth, but it hasn’t translated to profits for Paramount. The segment reported an adjusted Oibda loss of $490 million in the fourth quarter, better than the $575 million loss a year earlier.
For all of 2023, Paramount recorded an adjusted Oibda loss of $1.7 billion on its streaming business. That was again a slim improvement over 2022, and management said on Wednesday that streaming losses should narrow again in 2024. They expect Paramount+ to reach profitability in the U.S. in 2025.
That kind of fast but unprofitable growth is unlikely to get as much credit from investors in the current higher interest-rate environment as it did a few years ago, when growth-at-any-price stocks were in vogue.
That is especially true when the streaming business is paired with a melting ice cube of cable-TV and movie profits, which Paramounts needs to fund those streaming losses until the break-even point is reached. Paramount’s largest segment—TV media—saw a 12% drop in revenue, to $5.2 billion, as adjusted Oibda also dropped 12%, to $1.1 billion. Affiliate fee revenues, which pay-TV package distributors such as cable companies pay to channel owners such as Paramount, were flat year over year, advertising was down 15%, and licensing was off 25%.
Trends at Paramount’s smaller movie segment looked even worse. Revenue was down 31% to $647 million and adjusted Oibda tumbled 63% to $24 million.
The overall picture is of a race between declining legacy profits and narrowing losses on streaming, with an eventual path to profitability. For Paramount shareholders, a sale of the company may be the ultimate—and best—outcome. The question remains at what price.
Paramount stock has lost 48% over the past year, including a 28% one-day drop in May after the company cut its dividend to save cash. More recently, the company has been cutting jobs.
Analysts aren’t particularly bullish: 26% have a Buy or equivalent rating on Paramount stock, versus 39% at Sell. The average stock in the S&P 500 has about 55% Buy ratings.
Write to Nicholas Jasinski at nicholas.jasinski@barrons.com
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