Paramount Global takes $6bn write-down, will lay off 15% of workforce

Paramount Global leadership reported a $5.99bn write-down of the cable business as they acknowledged the ongoing decline in linear TV and prepared for the transaction with Skydance Media.

In a mixed second quarter that brought a total 11% revenue drop and saw the streaming business swing into profit during the period ended June 30, co-CEOs Brian Robbins, George Cheeks, and Chris McCarthy said they will start to lay off 15% of the US-based workforce in the coming weeks, equating to approximately 2,000 people.

That is part of previously announced $500m in cost savings, which are part of $2bn in savings identified by Skydance Media. Staff in marketing and communications, finance, legal, technology and other support functions will be affected. The lay-offs are expected to be completed by the end of the year. The company laid off approximately 800 staff in February.

Leadership did not use Thursday’s earnings call with analysts to comment on the remaining period of the go-shop window, in which Paramount Global’s special committee has until August 21 to consider competing bids to that filed by Skydance Media.

The executives expect the Skydance transaction to close in the first half of 2025 once customary closing conditions and regulatory hurdles, and said it will be “business as usual” in the meantime.

Total Paramount Global revenue fell to $6.8bn, below Bloomberg consensus estimates of $7.24bn, and the company posted a net loss of $5.3bn down from $250m a year ago due to the impariment charge. On Wednesday Warner Bros Discovery reported a $9.1bn write-down.

However adjusted earnings per share reached 54 cents, blowing past the estimated 12 cents.

In the streaming segment, subscriptions tumbled by 2.8m to 68m, which the company attributed mostly to its planned exit from a hard bundle agreement in South Korea.

Yet the direct to consumer business was profitable for the quarter as numbers swung $450m year-on-year to $26m due to revenue growth and lower costs for marketing and content.

Streaming revenue climbed 13% to $1.9bn, subscription revenue grew 12%, and advertising revenue climbed 16% to $513m reflecting growth from Paramount+ and Pluto TV.

Paramount+ revenue grew 46%, driven by year-over-year subscriber growth and a 26% increase in average revenue per user expansion.

The co-CEOs said they are exploring partnerships for the platform, adding that in Q3 and Q4 they expect streaming to revert to a loss and subscriptions to grow due to the timing of upcoming releases. That said, they expect Paramount+ to become profitable in the US in 2025.

Revenue at the filmed entertainment division fell 18% to $679m, while theatrical revenues dropped 40%, reflecting a tough comparison to the release of Transformers: Rise Of The Beasts in the prior year.

Highlights were the number one North American debut of IF, which earned $186.6m worldwide, while A Quiet Place: Day One opened just prior to the end of Q2 and has gone on to earn $259.2m at the global box office.

The well documented linear television woes continued as revenues at the TV media division fell by 17% to $4.3bn, and advertising revenue fell 11% to $1.7bn.

Paramount Global stock fell 2.4% during trading to $10.21 and climbed after hours. Year-to-date, stock has declined by 29.1% from a $14.40 start.

Source: JEREMY KAY