Paramount earnings miss estimates, stock plunges

·Senior Reporter

February 16, 2023 at 7:22 AM·3 min read

Paramount Global (PARA) reported its fiscal fourth-quarter earnings before the bell on Thursday, missing on both the top and bottom lines amid weak ad revenue and accelerated streaming losses.

Shares of the streaming giant were down more than 1% as of early afternoon trading on Thursday.

The company reported a direct-to-consumer loss of roughly $1.82 billion in 2022 — slightly above previous guidance of $1.8 billion. In the release, CEO Bob Bakish asserted that "we expect to return the company to earnings growth in 2024."

Here are Paramount's fourth quarter results compared to Wall Street's consensus estimates as compiled by Bloomberg:

Revenue: $8.13 billion versus $8.17 billion expected
Adj. earnings per share (EPS): $0.08 versus $0.24 expected
Paramount+ subscriber net additions: 9.9 million versus 9.9 million expected
Global Pluto monthly active users (MAUs): 79 million versus 77 million expected

"Paramount continues to demonstrate the success of its global multiplatform strategy, with popular content at its core," Bakish stated in the earnings release. "Nowhere was this more evident than in the growth of Paramount+, which added a record 9.9M subscribers in the fourth quarter, driven by hit content like Top Gun: Maverick, 1923 and Criminal Minds: Evolution."

Bakish added "in 2022, Paramount Pictures had 6 films open at #1 in the U.S. box office and Paramount regained its position as the most-watched media family in linear television. Our content and platform strategy is working and, with even more exceptional content coming this year, we expect to return the company to earnings growth in 2024."

Paramount executive Bob Bakish attends the 2022 MTV Europe Music Awards (EMAs) at the PSD Bank Dome in Duesseldorf, Germany, November 13, 2022. REUTERS/Thilo Schmuelgen (Thilo Schmuelgen / reuters)

Despite the streaming division's profitability struggles, subscribers continued to surge with Paramount+ adding nearly 10 million in the quarter to reach a total of almost 56 million. This was on par with consensus estimates as the company leans on franchises with spinoffs for popular series like "Yellowstone," "Dexter" and "Billions" currently in the works amid the Showtime/Paramount+ rebrand.

Paramount, which recently announced it will be merging its Paramount+ and Showtime streaming services into one offering dubbed "Paramount+ with Showtime," has eyed greater integration between its cable television and streaming offerings amid escalating cord cutting trends and direct-to-consumer losses.

Advertising revenue has also been a headwind with ad growth in the company's TV media division decreasing 7% year-over-year in the quarter amid lower impressions and an unfavorable impact from foreign exchange.

Overall, the company saw a 5% decline in quarterly ad revenue after a 2% drop in Q3.

As a result of the Paramount+/Showtime merger, the company unveiled a restructuring plan that combines Showtime with MTV Entertainment Studios. Four Showtime executives departed the company on the heels of that news with an additional 120 Showtime employees laid off earlier this week.

Shares of Paramount Global, although up about 45% year-to-date, are still off nearly 20% compared to this point last year — but one bullish stakeholder doubled down on the embattled company: Warren Buffett.

According to a new regulatory filing released on Tuesday, Buffett's Berkshire Hathaway (BRK-B) boosted its stake in Paramount Global, purchasing an additional 2.4 million shares worth more than $40 million in the fourth quarter of 2022.

Buffett's firm now owns more than 93 million shares in the streaming giant.

Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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