Paramount Global’s stock witnessed a significant surge in extended trading on Thursday, driven by its strong revenue and subscription trends showcased in its third-quarter earnings report. This after-hours movement came on top of an already impressive day for the media giant, as the stock closed more than 10% higher during the regular trading session. Paramount, known for its powerhouse brands such as CBS, Showtime, BET, Nickelodeon, and its namesake movie studio, reported a notable 38% increase in revenue year over year.
One of the standout achievements for Paramount in the third quarter was the performance of its streaming service, Paramount+. The platform experienced a commendable 2.7 million net additions to its existing subscriber base of 63 million, solidifying its position in the competitive streaming landscape. Furthermore, the company managed to reduce losses in its streaming segment to $238 million from $343 million a year ago.
Paramount’s third quarter results exceeded Wall Street estimates, further reinforcing its positive trajectory. With earnings per share of 30 cents, surpassing the expected 10 cents per share, according to LSEG (formerly known as Refinitiv). Similarly, the reported revenue of $7.13 billion was slightly above the projected $7.099 billion. These numbers clearly indicate that Paramount is effectively capitalizing on its strategic direction and making significant progress in its earnings growth.
“We continue to execute our strategy and prioritize prudent investment in streaming while maximizing the earnings of our traditional business,” stated CEO Bob Bakish in the earnings release. Paramount remains optimistic about its future prospects, with Bakish expressing confidence in achieving substantial total company earnings growth by 2024. This stance aligns with the company’s commitment to delivering exceptional content across platforms and leveraging various revenue streams.
Paramount’s impressive performance resonated with other media companies, as several media stocks closed higher on Thursday. Streaming device maker, Roku, experienced a notable surge of 30% following its stellar earnings report. Paramount’s success in the theatrical space was a noteworthy contributor to this positive momentum. The company saw a 63% increase in theatrical revenue compared to the previous year, largely attributed to the success of movies like “Mission: Impossible – Dead Reckoning Part One” and “Teenage Mutant Ninja Turtles: Mutant Mayhem.”
While Paramount’s streaming segment thrived, the TV ad market posed a challenge for the company, with a 14% decline in advertising revenue year over year. Paramount attributed this decline to the “continued softness in the global advertising market and lower political advertising.” Despite this setback, the company still managed an overall revenue jump of 38% to $1.69 billion from the previous year in its streaming segment. Licencing and other revenue, however, decreased by 7%, influenced by the impact of labor strikes.
As the media industry continues to evolve, Paramount’s CEO, Bob Bakish, emphasized the importance of remaining agile and adaptive. In the earnings call, Bakish stated, “While we remain focused on executing our strategy…there’s never been a more important time for us to remain agile and adaptive as the industry continues to evolve.” Despite the rising trend of password-sharing crackdowns implemented by Netflix and soon-to-be-expected from Disney, Paramount does not view it as a major obstacle to their growth efforts. CFO Naveen Chopra acknowledged the situation but reassured investors, stating that Paramount+ has robust growth drivers and innovative approaches to address any challenges that may arise.
Amidst the promising results, Paramount executives were hesitant to address inquiries regarding potential merger and acquisition activity. While the focus remained on the current achievements, shareholders and industry observers eagerly await any updates regarding strategic moves and expansions.
Paramount Global’s strong performance in the third quarter, particularly in its streaming segment, signifies the company’s growth potential and solid positioning in the media industry. With a clear focus on content creation and strategic investments, Paramount remains optimistic about achieving significant earnings growth in the coming years. As the industry landscape continues to evolve, Paramount recognizes the need for adaptability and agility to establish itself as a leader in the ever-changing world of media and entertainment.
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