Paramount Global took a huge hit to its earnings, reporting a loss of nearly $6 billion as part of its second-quarter earnings, a day after Warner Bros. Discovery reported a bigger loss.
Both depreciation charges are intended to bring the book value of linear TV assets in line with their likely current value — not to mention years of decline and an uncertain future. The $9.12 billion depreciation charge was raised because of the recent loss of NBA games.
Paramount’s timing is tied to its books being in order ahead of Skydance’s acquisition. The deal, announced last month, will go ahead at 11:59 p.m. ET on Aug. 21 if no better offer emerges. Paramount’s impairment charges widened its operating loss to $5.3 billion from $250 million in the second quarter of 2023. “During the second quarter of 2024, we recorded a goodwill impairment charge for our cable reporting unit of $5.98 billion,” the earnings statement said in a small footnote.
Overall, the quarter was mixed, with total revenue down 11% to $6.8 billion, missing Wall Street expectations. The numbers were outperformed by other metrics. Paramount+ subscribers fell 2.8 million in the quarter to 68 million, which the company said primarily reflected its planned exit from a difficult bundle agreement in South Korea. Streaming revenue was up 13% year over year.
Subscription revenue was up 12%, and advertising revenue was up 16%. Paramount+ revenue was up 46%, driven by year-over-year subscriber growth and ARPU expansion.
Paramount+’s global ARPU increased 26% year-over-year. Operating income increased $450 million year-over-year to $26 million, reflecting revenue growth and lower marketing and content costs. TV media revenue decreased 17% to $4.3 billion, primarily due to fluctuations in the timing of licensing revenues. Advertising revenue decreased 11%, reflecting a decline in the linear advertising market.
Affiliate and subscription revenue decreased 5%, largely due to lower subscriber numbers. Licensing and other revenue decreased 48%, reflecting tough comparisons to 2023, which included the final season of Jack Ryan Secondary licensing volume declined. Operating income fell 15% to $1 billion. Theatrical entertainment declined 18% to $679 million.
Theatrical revenues fell by 40%. if Could not match Transformers: Rise of the Beasts last year. Quiet Place: Day One It opened just before the end of the quarter. Revenue from licensing of movie library titles declined.
“Our strong performance in the second quarter demonstrates that we are delivering on our strategic priorities. We are proud of our results, including significant revenue growth driven largely by our DTC segment. In fact, for the fourth consecutive year, Paramount+ has led the industry in domestic subscriptions driven by our blockbuster TV series and blockbuster movies. Total DTC revenue growth over the past four quarters has been nearly $900 million and we are on track to reach domestic profitability for Paramount+ in 2025,” said Co-CEOs George Cheeks, Chris McCarthy and Brian Robbins. “Looking ahead, we will continue to aggressively execute on our strategic plan focused on transforming streaming to accelerate profitability, simplify our organization — including at least $500 million in annual cost savings — and improve our balance sheet by increasing free cash flow and optimizing our asset mix. We are confident that our plan will drive long-term value by leveraging our broadly successful content as we continue to transform Paramount for the future.”
Skydance estimates even greater cost savings when it takes over, in the $2 billion range, a figure Paramount insiders don’t dispute. With layoffs looming, employees are nervous, but Wall Street is looking forward to hearing that more efficiencies are possible. Deadline reported earlier Thursday that hundreds of workers are expected to be laid off starting Aug. 13. In a June shareholder presentation, Cheeks, McCarthy and Robbins promised more details on the restructuring plans during the call.