Paramount Global writes down value of cable networks, cutting 15% of jobs, posts first streaming profit
Adds job cut plans, additional cost cut plans, para 4
By Dawn Chmielewski
Aug 8 (Reuters) -Paramount Global PARA.O wrote down the value of its cable networks by nearly $6 billion and announced it would cut 15% of jobs on Thursday, even as the company's streaming business reported its first quarterly profit. Paramount stock rose more than 5%in extended trading.
The impairment reflects a shrinking audience for cable TV networks such as Nickelodeon, MTV and Comedy Central, a decline that translates to lower advertising revenue. The announcement comes a day after Warner Bros Discovery took a $9 billion write-down on its TV assets.
The pending merger with Skydance Media forced Paramount to reassess the value of each of its units to better reflect their worth to the company, resulting in the write-down. The magnitude of the reconciliation dragged Paramount into an operating loss of $5.3 billion for the second quarter.
The job cuts will be carried out in coming weeksand focus on market, finance and legal positions, executives said on a conference call with investors and analysts. That would amount to close to 3,200 positions, based on the 21,900 full- and part-time employees Paramount reported at the end of last year, and executives said it would lead to charges of $300-400 million in the third quarter. Moreover,Paramount is looking at a variety of additional cost-reduction plans, Chief Financial Officer Naveen Chopra said.
Paramount also reported second-quarter adjusted operating profit ahead of Wall Street targets, with income of $867 million, or 54 cents a share, topping the consensus of 12 cents a share, according to LSEG.
The company's streaming business, which includes the Paramount+ subscription service and its free, ad-supported sibling, PlutoTV, posted its first quarterly profit, fueled by growth in subscription and ad revenue. The direct-to-consumer unit reported an operating income of $26 million in the second quarter, compared with a loss of $424 million a year ago.
"We are on track to reach domestic profitability for Paramount+ in 2025," Paramount co-CEOs George Cheeks, Chris McCarthy and Brian Robbins said in a joint statement.
The company reported revenue of $6.8 billion, down 11% from the same period a year ago. That missed analyst forecasts of $7.2 billion for the quarter ended June 30.
The television unit, which includes prime time's top-rated network, CBS, as well as the company's cable networks, reported quarterly revenue of nearly $4.3 billion. The 17% decline in revenue from a year ago reflects a lower ad revenue and fees paid to license its shows. Operating income for the television group fell 15% to $1 billion.
"Paramount and Warner Bros Discovery’s writedowns this week add nails to (traditional) TV’s coffin," said Ross Benes, television and streaming analyst at Emarketer. "Paramount's best chance for an exit is through Skydance. The longer they wait, the less the company will be worth."
Paramount's film business reported a loss of $54 million, despite releases like "IF" topping the box office in its domestic debut, and "A Quiet Place: Day One" recording the best financial performance for the horror franchise.
Reporting by Dawn Chmielewski in Los Angeles; Editing by Anil D'Silva and Jonathan Oatis
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