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, part of a broader cost-cutting plan as it prepares to merge with Skydance Media.
Paramount has identified $500 million in cost savings, which includes reducing its headcount, as part of $2 billion in synergies related to its Skydance transaction. The job cuts, which will begin in the coming weeks and be largely completed by the end of the year, will target the company’s marketing and communications division and employees working in finance, legal, technology and other support services, he said. the company during its earnings conference call on Thursday. .
Paramount agreed to a merger with Skydance Media last month. That deal includes a 45-day period — during which a special committee of Paramount’s board could find another buyer — that ends later this month.
Meanwhile, profits rose as the company’s streaming division posted a surprise 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’s expectations, based on a survey of analysts by LSEG:
- Earnings per share: 54 cents adjusted vs. 12 cents expected
- Annuity: $6.81 billion versus $7.21 billion expected
Revenues are falling
Second-quarter revenue fell 11% and missed analysts’ estimates as sales of licenses, TV ads and cable subscriptions fell.
The revenue drop was the biggest miss compared to analysts’ estimates since February 2020, according to LSEG data. Paramount attributed the loss to a decline in TV license revenue, which can be difficult for analysts to model given their start and end dates.
Paramount+ revenue increased 46% due to year-over-year subscriber growth and higher prices. Paramount+ customers fell 2.8 million from last quarter to 68 million as a company closed a Korean partnership agreement with entertainment company CJ ENM’s streaming platform Tving.
Paramount’s streaming division posted a profit of $26 million for the quarter after losing $424 million a year ago. Analysts had estimated a loss of $265 million this quarter.
Paramount has confirmed it is on track to reach profitability in the US for Paramount+ in 2025. The streaming service has raised prices and cut content spending.
Paramount’s quarterly earnings are helped by not having an NFL licensing fee for the period, which starts later this year.
Shares are down 31% so far this year amid a decline among cable TV subscribers and a soft linear TV advertising market.
Paramount also took a one-time $6 billion impairment charge related to the decline of its cable networks. It comes after a $9.1 billion write-off from peers Discovery by Warner Bros on Wednesday.
The company had to take the charge as an adjustment forced by its deal with Skydance.