Paramount Global slumped after the entertainment giant reported a steep loss in the first quarter and slashed its quarterly dividend by 79%.
(Bloomberg) — Paramount Global slumped after the entertainment giant reported a steep loss in the first quarter and slashed its quarterly dividend by 79%.
The parent company of CBS, MTV and other channels reported an adjusted loss per share from continuing operations of $1.81 in the first quarter, while Wall Street was projecting a profit of 14 cents a share. The company reduced its quarterly cash dividend to 5 cents a share from 24 cents.
The shares tumbled 21.3% to $18.02 at 9:39 a.m. in New York. They were up more than 30% this year through Wednesday.
On an earnings call, 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 non-core 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 Showtime with Paramount+.
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. The New York-based company has been investing heavily in programming for its Paramount+ streaming service. That business added 4.1 million subscribers in the quarter, bringing the total to 60 million.
Paramount reported revenue declined 1% to $7.27 billion in total sales in the three months ended March 31. Investors had been anticipating $7.43 billion.
“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 won’t notice anything for a while,” he said.
(Updates with executive comments from earnings call)
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