Paramount Global, the parent of CBS, MTV and other channels, plunged by almost 30% after reporting a steep quarterly loss and slashing its dividend by 79%.
(Bloomberg) — Paramount Global, the parent of CBS, MTV and other channels, plunged by almost 30% after reporting a steep quarterly loss and slashing its dividend by 79%.
The broadcast and cable company on Thursday posted an adjusted loss of $1.81 a share in the first quarter — reflecting its decision to cancel or abandon film and TV projects at a cost of $1.67 billion. Wall Street was expecting profit of 14 cents a share.
To preserve cash, Paramount reduced its quarterly dividend to 5 cents a share from 24 cents. The move should save about $500 million annually, executives said on a call with investors.
The shares tumbled as much as 28% to $16.42 in New York. They were up more than 30% this year through Wednesday.
Paramount’s quarterly revenue fell about 1% to $7.27 billion, missing analysts’ estimates of $7.43 billion.
Losses from streaming and the decline in the traditional TV businesses have forced media companies like Paramount to slash costs. Walt Disney Co. is in the process of eliminating 7,000 jobs. Warner Bros. Discovery Inc. reported writedowns and merger-related losses of $5.3 billion in December.
Both of those companies are scheduled to report financial results in the coming days.
Paramount Chief Executive Officer Bob Bakish said the results reflected the company’s investment in streaming combined with continued softness in the advertising market. Ad revenue in its TV media unit decreased 11%. Bakish said 2023 will be its peak investment year for streaming.
Bakish added that Paramount was implementing “significant” cost saving measures and divesting noncore assets. The company has restarted the sale process for book publisher Simon & Schuster, he said.
Paramount expects to cut spending on streaming content and find marketing efficiencies as it integrates the Showtime cable with the Paramount+ streaming service, a move that’s supposed to save $700 million annually.
The TV industry has been losing viewers to streaming outlets. Consumers have been canceling cable and satellite TV subscriptions, which cuts into the fees companies like Paramount earn from those sources, as well as advertising. The New York-based company has been investing heavily in programming for Paramount+. That business added 4.1 million subscribers in the quarter, bringing the total to 60 million.
“Paramount’s direct-to-consumer pivot is turning out to be extremely challenging given the heavy $511 million streaming losses in 1Q, which suggest well over $2 billion for the full year and led to a 40% decline in total Ebitda,” said Geetha Ranganathan, a Bloomberg Intelligence analyst.
Bakish said Paramount can “manage through” the writers strike, adding that “we have a lot of content in the can.” He said the strike could be “slightly dilutive” to the company’s revenue but also could boost its cash depending on how long it lasts.
“With the exception of late-night [shows], consumers really won’t notice anything for a while,” he said.
(Updates with details of dividend cut in third paragraph.)
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