Despite Paramount’s remarkable success of garnering 77 million subscribers, its streaming losses have dramatically broadened to an astounding $575 million.
On Thursday, Paramount Global announced an impressive record in their user growth – 77 million streaming subscribers worldwide by the end of 2022! This number is significantly higher than where they were in September 2020 (67 million). The success is due to a tremendous increase from their platform, Paramount+, which saw its most successful quarter yet. Notwithstanding, increased streaming investments harmed the company’s overall profits and caused television unit advertising sales to plummet.
Under the leadership of CEO Bob Bakish, Paramount’s streaming platform Paramount+ achieved a record-breaking 9.9 million subscriber increase by year’s end and ended up with approximately 56 million subscribers! This monumental accomplishment was attributed to their hit movie Top Gun: Maverick, among other popular content offerings.
“Subscriber growth was driven by a strong content slate, including the NFL, the expansion of existing franchises like Top Gun: Maverick and 1923, the success of new franchises like Tulsa King and Smile, as well as CBS’ overall entertainment slate,” the organization declared. “Internationally, Yellowstone and Top Gun: Maverick were top acquisition drivers for the service.”
According to the company’s most recent earnings report, Paramount’s free streaming service, Pluto TV, experienced impressive growth in monthly active users (MAUs). Free from ads and other external factors, this platform is an excellent way for users to access their favorite shows without financial burden.
Fueling its growth trajectory, Pluto TV achieved a staggering 6.5 million more global MAUs in Q4 of 2022 for an impressive total of 78.5 million worldwide users “driven by growth in all markets and expansion into Canada.” Furthermore, it drastically grew the global total viewing hours by “strong double digits quarter-over-quarter and year-over-year,” it added.
Paramount’s direct-to-consumer (DTC) segment illustrated remarkable revenue growth of 30% during the fourth quarter, reaching $1.4 billion; moreover, their subscription revenue surged 48%, affirming that their investments have been successful. These impressive numbers are evidence that their approaches and strategies have paid off! Its content engine continues to perform excellently, and advertising revenue grew by 4 percent. This quarter’s operating loss before depreciation and amortization (OIBDA) in the DTC segment deepened to $575 million, a stark contrast from the same period last year when it was only at $502 million.
On the 30th of January, Paramount made a big splash in streaming services by combining Paramount+ and ShowTime into one comprehensive platform. This groundbreaking move has revolutionized their approach to streaming entertainment from Hollywood conglomerates. With this shift, original series such as Kidding, Super Pumped, and American Rust was removed from the Showtime platform while additional layoffs occurred. The repercussions will be felt across programming, yet the transformation will prove advantageous. According to Wells Fargo analyst Steven Cahall, the company could save between $300 and 400 million dollars with their cost-saving measures “or around 5-6 percent of Paramount’s ’22 estimated selling, general & administrative [expense].”
“Paramount continues to demonstrate the success of its global multiplatform strategy, with popular content at its core,” during Thursday’s earnings update, Bakish emphatically proclaimed. “Nowhere was this more evident than in the growth of Paramount+, which added a record 9.9 million subscribers in the fourth quarter, driven by hit content like Top Gun: Maverick, 1923 and Criminal Minds: Evolution. In addition, in 2022, Paramount Pictures had six films open at number 1 in the U.S. box office, and Paramount regained its position as the most-watched media family in linear television.”
The Chief Executive Officer said, “Our content and platform strategy is working. With even more exceptional content coming this year, we expect to return the company to earnings growth in 2024.”
Even though the revenue was lower, Paramount’s TV Media unit boasted a healthier bottom line. The segment reported 7% less in revenue for Q4 at around $5.9 billion as advertising income declined similarly by 7% “as increases from political advertising and pricing only partially offset lower impressions” simultaneously, affiliate and subscription revenue experienced a 4 percent drop. At the same time, we also faced an unfavorable foreign-exchange impact “as the evolution of certain international affiliate agreements resulted in a shift of revenue from our pay television services to our streaming services and rate increases for our domestic networks only partially offset subscriber declines.”
A decrease in third-party programming resulted in an 11 percent decline in licensing and other revenue. Despite the turbulent industry climate, TV Media reported a promising 5% increase in OIBDA “the revenue decline was more than offset by lower costs.”
Paramount’s filmed entertainment segment had a stellar fourth quarter, as revenue surged by 35%, providing an impressive boost to the company “as the strength of our 2022 releases drove growth in both theatrical and licensing revenues.” The theatrical revenue skyrocketed 149%, largely due to Smile’s smashing box office success, which the firm undoubtedly noticed, “it became 2022’s biggest global horror movie and the studio’s third-biggest revenue driver behind Sonic the Hedgehog 2 and Top Gun: Maverick.” Our film division saw an incredible 28% increase in licensing and other revenue, thanks to the successful 2022 home entertainment window of releases–including Top Gun: Maverick. The film unit’s fourth-quarter OIBDA surged from a breakeven point to an impressive $87 million, “reflecting higher profitability of our theatrical slate in 2022,” the company highlighted.
Paramount’s fourth-quarter revenue saw a slight rise, hitting an impressive $8.1 billion – a 2% increase from last year’s period. Operating income experienced a dramatic plummet of 93% to an alarming $182 million. Earnings from continuing operations plunged drastically, going down from $3.05 per share to a loss of 29 cents per share.
Shortly after, the clock struck at 7:40 a.m. ET, Paramount stocks plummeted by an ominous 7.5 percent in pre-market trading to $22.70 – reflecting a worrying market trend for investors and stakeholders alike. “The fourth quarter 2022 was a mixed bag,” In his premier reaction, Wells Fargo analyst Steven Cahall observed “strong streaming key performance indicators.” He added: “With Paramount up 45 percent year-to-date (the S&P 500 up 8 percent), for the stock to hold, we think the bogey is cost cuts and better (streaming) losses that lead to positive free cash flow revisions amidst tough linear trends.” Captured the crux of the Wall Street expert’s report with a succinct headline. “Mixed Fourth Quarter — All About ’23 Outlook.”
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