Shares of Paramount Global tumbled as much as 25% in early trading Thursday after the media conglomerate reported disappointing first-quarter 2023 results and slashed its dividend.
Paramount posted a Q1 net loss of $1.12 billion, as revenue of $7.27 billion was down 1% on shortfalls in its TV media and filmed entertainment units. The topline number missed analyst estimates of $7.42 billion, while adjusted earnings per share of 9 cents also fell short of Wall Street’s expectation for EPS of 17 cents.
The company’s streaming business, which includes Paramount+ and Pluto TV, saw revenue rise 39% in the first quarter to $1.5 billion. However, the direct-to-consumer segment posted a loss of $511 million, growing 12% compared with the year-earlier period. The company said Paramount+ added 4.1 million subscribers in the quarter, coming to a total of 60 million overall.
Paramount’s Q1 results included a $1.67 billion programming charge. According to the company, “In connection with our plan to integrate Showtime into Paramount+ and initiatives to rationalize and right-size our international operations to align with our streaming strategy and close or globalize certain of our international channels, during the first quarter of 2023 we reviewed our content portfolio and determined that we would not use certain content on our platforms.” The programming charge comprised impairment charges for content removed from Paramount’s platforms or “abandoned,” as well as development cost write-offs and contract termination costs.
Paramount CEO Bob Bakish, in prepared remarks, touted Paramount+’s hitting 60 million subs and Pluto TV reaching 80 million monthly active users. He said the company is “focused on continuing to drive market-leading streaming growth while navigating a dynamic macroeconomic environment.”
On the earnings call, Bakish addressed the WGA’s writers strike, telling investors and analysts that “we hope we can come to a resolution that works for everyone fairly quickly” but that “it’s also fair to say there’s a really big gap.” Paramount has “a lot in the can, so to speak, content in the can,” he added. “So with the exception of things like late-night, consumers really won’t notice anything for a while.”
Meanwhile, the company chopped its quarterly cash dividend to shareholders to 5 cents per share. In each of the quarters in 2022, Paramount paid out a dividend of 24 cents per share. According to Bakish, the lower dividend “will further enhance our ability to deliver long-term value for our shareholders as we move toward streaming profitability.”
According to the company, Paramount+ subscriber growth was driven by a strong content slate including originals like “1923,” “Tulsa King” and the returns of “Mayor of Kingstown” and “Star Trek: Picard,” along with films “Top Gun: Maverick” and “Teen Wolf: The Movie,” as well as the NFL playoffs.