Paramount Global ((PARA)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Paramount Global’s recent earnings call presented a mixed sentiment, with significant achievements in its streaming services, particularly Paramount+, offset by challenges in linear TV advertising and affiliate revenue. While the company celebrated robust growth in direct-to-consumer (D2C) performance and cost-saving initiatives, concerns remain regarding declining DTC advertising revenue and linear TV challenges.
D2C Revenue Growth
Paramount Global reported an impressive 15% acceleration in direct-to-consumer revenue growth, with Paramount+ revenue growing by 23% year-over-year. The subscription revenue growth was particularly robust, marking a 22% increase, highlighting the company’s successful expansion in the streaming sector.
Paramount+ Subscriber Milestone
The company achieved a significant milestone with Paramount+ reaching 77.7 million subscribers, reflecting a year-over-year increase of 9.3 million subscribers. This growth underscores the platform’s increasing popularity and competitive positioning in the streaming market.
Streaming and CBS Alignment
Streaming of CBS series on Paramount+ saw a remarkable 42% growth over the last year. CBS content now accounts for nearly half of all viewing on Paramount+, showcasing the strategic alignment between CBS and Paramount+ in driving viewer engagement.
Mission Impossible Franchise Success
“Mission Impossible: The Final Reckoning” achieved the biggest global opening in the franchise’s history, resulting in a 60% lift in daily active subscriber households for the franchise on Paramount+. This success highlights the franchise’s strong appeal and its contribution to subscriber growth.
OIBDA Growth
Operating income before depreciation and amortization (OIBDA) grew by 30% to $3.1 billion, driven by a nearly $1.2 billion improvement in D2C profitability. This growth reflects the company’s effective cost management and profitability strategies.
Cost Reduction and Efficiency Gains
Paramount Global implemented over $800 million in annual run-rate non-content expense savings, making the organization leaner and more nimble. These efficiency gains are part of the company’s broader strategy to optimize operations and improve financial performance.
Linear TV Challenges
The company faced challenges in its linear TV segment, with advertising revenue down 4% year-over-year due to higher CPMs being offset by viewership declines. Additionally, TV media affiliate revenue declined by 7% compared to the prior year, indicating ongoing pressures in traditional TV media.
DTC Advertising Revenue Decline
Direct-to-consumer advertising revenue experienced a 4% decline, impacted by increased supply in the digital ad marketplace. This decline highlights the competitive pressures in the digital advertising space.
Filmed Entertainment OIBDA Loss
The Filmed Entertainment segment reported an $84 million loss in adjusted OIBDA, reflecting lower profit from licensing. This loss underscores the challenges faced in the filmed entertainment sector.
Forward-Looking Guidance
Looking ahead, Paramount Global remains optimistic about its streaming services, with Paramount+ achieving a top four global SVOD position. Despite a slight subscriber reduction due to an expiring international distribution agreement, the platform saw a 23% revenue increase year-over-year. The company also highlighted a 15% growth in D2C revenue and a $300 million improvement in adjusted OIBDA. While the TV media segment faced a 4% decline in advertising revenue, CBS maintained its leadership as the most-watched broadcast network for the 17th consecutive season. Paramount Pictures recorded a 2% revenue increase, driven by the success of the Mission Impossible franchise.
In conclusion, Paramount Global’s earnings call reflected a balanced outlook, with strong growth in streaming services and cost-saving measures countered by challenges in linear TV and DTC advertising. The company’s strategic focus on expanding its streaming footprint and optimizing operations positions it well for future growth, despite the hurdles in traditional media segments.