Paramount Global experienced a surge in its stock price during extended trading on Thursday, following the release of its impressive third-quarter earnings report. The media giant had already enjoyed a successful day in regular trading, with its stock closing over 10% higher. Paramount, known for its renowned brands such as CBS, Showtime, BET, Nickelodeon, and its eponymous movie studio, reported a significant 38% increase in revenue compared to the previous year. Notably, its streaming service Paramount+ witnessed a remarkable growth with 2.7 million net additions to its already impressive 63 million total subscriber count. Additionally, the company succeeded in narrowing its streaming segment losses, reducing them from $343 million to $238 million when compared to the same period last year.
Exceeding Wall Street Expectations
Paramount’s third-quarter performance surpassed Wall Street expectations. The company reported earnings per share of 30 cents, compared to the anticipated 10 cents per share, as predicted by LSEG (formerly known as Refinitiv). The revenue figure of $7.13 billion also outperformed the estimated $7.099 billion predicted by LSEG. These positive financial results reflect Paramount’s ability to execute its strategic plans and prioritize investments in its streaming services while simultaneously maximizing earnings from its traditional business.
Paramount’s profitability continued to grow, with a reported profit of $295 million for the third quarter, amounting to 43 cents per share. This represents a substantial increase from the previous year’s profit of $231 million, equating to 33 cents per share. When adjusted for one-time items, the company achieved earnings per share of 30 cents during the period. CEO Bob Bakish expressed confidence in the company’s future, highlighting their commitment to significant total company earnings growth by 2024. The positive momentum generated by Paramount’s strong performance was also reflected in the rise of other media stocks, with streaming device maker Roku seeing a 30% surge following its own impressive earnings report.
Challenges and Areas of Concern
While Paramount’s streaming segment thrived, the company faced challenges in other areas. The TV ad market presented a particular obstacle, with advertising revenue dipping by 14% compared to the previous year. Paramount attributed this decline to the “continued softness in the global advertising market and lower political advertising.” Licensing and other revenues also saw a 7% decrease, which the company linked to the impact of labor strikes. Despite these setbacks, Paramount’s executives expressed confidence in the power and appeal of their content.
Unlike some of its competitors, such as Netflix and Disney, Paramount+ currently has no intentions of implementing a password-sharing crackdown. Chief Financial Officer Naveen Chopra explained during the earnings call that they do not perceive it as a significant obstacle to their growth efforts. However, he acknowledged their commitment to monitor the situation closely and explore potential strategies to address it in a valuable and creative manner. Paramount+ believes it possesses potent growth drivers that will continue to fuel its success.
Looking ahead, Paramount Global faces a changing and evolving industry landscape. The company understands the importance of remaining agile and adaptive to successfully navigate these shifts. While executives did not provide specific details about potential merger and acquisition activity, Paramount Global remains open to exploring opportunities to further strengthen its position in the market.
Paramount Global’s impressive third-quarter earnings report demonstrates its resilience, profitability, and growth potential. The company’s strong revenue and subscription trends, coupled with its ability to narrow losses in the streaming segment, bode well for its future. However, challenges in the TV ad market and the impact of labor strikes warrant careful attention. As Paramount Global looks to the future, it remains committed to delivering world-class, appealing content across multiple platforms and revenue streams while maximizing its earnings.