The Paramount Studios in Los Angeles on April 29, 2024.
Eric Thayer Bloomberg Getty Images
Paramount Global is cutting 15% of its US workforce, or about 2,000 jobs, as part of a wider cost-cutting plan as it prepares for a merger with Skydance Media.
Paramount has identified $500 million in cost savings, which includes headcount reductions, as part of $2 billion in synergies related to the transaction with Skydance. The job cuts, which will begin in the coming weeks and generally end by the end of the year, will target the company’s marketing and communications departments and employees who work in finance, legal, technology and other support functions, the company said during an earnings conference call on Thursday. .
Paramount agreed to merge with Skydance Media last month. The deal includes a 45-day go-shop period — during which a special committee of Paramount’s board can find another buyer — that ends this month.
Meanwhile, earnings rose as the company’s streaming division posted an unexpected profit — the first time Paramount has reported a profitable quarter for its direct-to-consumer business.
Shares rose more than 5% in after-hours trading Thursday.
Here’s how Paramount performed in the quarter compared to Wall Street expectations, based on a survey of analysts by LSEG:
- Earnings per share: 54 cents adjusted vs 12 cents expected
- result: $6.81 billion vs $7.21 billion expected
Revenue falls
Second-quarter revenue fell 11% and missed analysts’ estimates as licensing, TV advertising and cable subscription sales fell.
The drop in revenue was the biggest loss compared to analyst estimates since February 2020, according to LSEG data. Paramount attributed the crash to a decline in TV license revenue, which can be difficult for analysts to model because of the start and end dates.
Paramount+ revenue grew 46% on year-over-year customer growth and higher prices. Paramount+ subscribers decreased by 2.8 million from last quarter to 68 million as the company canceled its Korean partnership agreement with entertainment company CJ ENM’s streaming platform Tving.
Paramount’s streaming division posted a profit for the quarter of $26 million after losing $424 million a year ago. Analysts had estimated a loss of $265 million this quarter.
Paramount reiterated that it is on track to reach US profitability for Paramount+ by 2025. The streaming service has raised prices and cut content costs.
Paramount’s quarterly profit was helped by not having NFL license fees for the period, which will kick in later in the year.
The stock has fallen 31% so far this year amid a decline among cable subscribers and a soft linear TV ad market.
Paramount also took a $6 billion one-time disruption charge related to the cable network’s decline. It comes on the heels of a $9.1 billion write-down from peer The invention of Warner Bros on Wednesday.
The company must take the cost as an adjustment forced by the transaction with Skydance.
