In a remarkable turn of events, Paramount Global’s stock witnessed a surge in after-hours trading following the release of its robust third-quarter earnings report, adding to the media giant’s already blockbuster day in the stock market. During the regular trading session, Paramount’s stock soared by over 10%, setting the stage for an impressive encore in extended trading.
Paramount Global, renowned for housing an array of iconic brands, including CBS, Showtime, BET, Nickelodeon, and its eponymous movie studio, reported a staggering 38% increase in year-over-year revenue. A standout contributor to this exceptional performance was the company’s streaming service, Paramount+, which boasted an impressive 2.7 million net additions to its already substantial subscriber count, reaching a total of 63 million subscribers. Furthermore, Paramount Global successfully narrowed losses in its streaming segment, reducing them from $343 million to $238 million compared to the previous year.
Here’s a breakdown of Paramount’s third-quarter performance in comparison to Wall Street estimates:
- Earnings per Share: Paramount exceeded expectations by reporting 30 cents per share, compared to the anticipated 10 cents per share, according to LSEG (formerly known as Refinitiv).
- Revenue: Paramount reported $7.13 billion in revenue, surpassing the estimated $7.099 billion, as per LSEG.
For the quarter ending on September 30, Paramount posted a profit of $295 million, equivalent to 43 cents per share, representing a significant increase from the $231 million profit, or 33 cents per share, reported the previous year. After adjusting for one-time items, earnings per share for the quarter stood at 30 cents.
CEO Bob Bakish expressed confidence in the company’s strategic execution, highlighting their commitment to prudent investments in streaming while maximizing earnings from traditional business operations. Bakish also outlined the company’s future trajectory, emphasizing their pursuit of substantial total company earnings growth expected in 2024.
Paramount’s strong performance had a ripple effect, with other media stocks also witnessing gains. Notably, streaming device manufacturer Roku experienced a remarkable 30% surge in its stock price following its own stellar earnings report.
The surge in theatrical revenue, up 63% year-over-year, was attributed to the success of movies like “Mission: Impossible – Dead Reckoning Part One” and “Teenage Mutant Ninja Turtles: Mutant Mayhem.” Paramount anticipates lower streaming losses for the full year in 2023, as overall revenue in the segment soared by 38% to $1.69 billion compared to the previous year.
However, the TV advertising market presented a challenge, with advertising revenue declining by 14% year-over-year. Paramount attributed this decline to the “continued softness in the global advertising market and lower political advertising.”
While addressing this challenge, Bakish emphasized Paramount’s commitment to creating world-class content with mass appeal, delivering it across various platforms, and monetizing it through multiple revenue streams. He also underscored the importance of adaptability in an evolving industry.
Despite recent actions by other streaming platforms such as Netflix and Disney to curb password sharing, Paramount+ currently does not see this as a major hindrance to its growth efforts. Chief Financial Officer Naveen Chopra stated that they would continue to monitor the situation but did not foresee it as a significant obstacle, citing powerful growth drivers.
In regards to potential merger and acquisition activity, company executives remained tight-lipped. Paramount recently closed a deal to sell book publisher Simon & Schuster to private equity firm KKR for $1.62 billion.