The Paramount Studios in Los Angeles on April 29, 2024.
Eric Thayer | Bloomberg | Getty Images
Paramount Global is cutting 15% of its U.S. workforce, or about 2,000 jobs, part of a broader cost-cutting plan as it prepares for a merger with Skydance Media.
Paramount has identified $500 million in cost savings, which include the head count reductions, as part of $2 billion in synergies related to its transaction with Skydance. The job cuts, which will begin in the coming weeks and largely conclude by year end, will target the company’s marketing and communications department and employees who work in finance, legal, technology and other support functions, the company said during its earnings conference call Thursday.
Paramount agreed to a merger with Skydance Media last month. That deal includes a 45-day go-shop period — in which a special committee of Paramount’s board could find another buyer — that concludes later this month.
Meanwhile, earnings surged as the company’s streaming division swung to an unexpected profit — the first time Paramount has announced a profitable quarter for its direct-to-consumer business.
Shares climbed more than 5% in after-hours trading Thursday.
Here’s how Paramount performed in the quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 54 cents adjusted vs. 12 cents expected
- Revenue: $6.81 billion vs. $7.21 billion expected
Revenue falls
Second-quarter revenue dropped 11% and missed analyst estimates as licensing, TV advertising and cable subscription sales dropped.
The revenue drop was the largest miss compared to analyst estimates since February 2020, according to LSEG data. Paramount attributed the miss to a decline in TV licensing revenue, which can be difficult for analysts to model given their start and end dates.
Paramount+ revenue grew 46% on year-over-year subscriber growth and higher prices. Paramount+ customers decreased 2.8 million from last quarter to 68 million as the company unwound a Korean partnership deal with entertainment company CJ ENM’s Tving streaming platform.
Paramount’s streaming division turned a profit for the quarter of $26 million after losing $424 million a year ago. Analysts had estimated a loss of $265 million this quarter.
Paramount reaffirmed it’s on track to reach U.S. profitability for Paramount+ in 2025. The streaming service has raised prices and cut content spend.
Paramount’s quarterly profit is helped by not having an NFL licensing charge for the period, which will kick in later in the year.
Shares have slumped 31% so far this year amid declines among cable subscribers and a soft linear TV advertising market.
Paramount also took a $6 billion one-time impairment charge associated with the decline in its cable networks. It comes on the heels of a $9.1 billion write-down from peer Warner Bros. Discovery on Wednesday.
The company had to take the charge as an adjustment forced by its transaction with Skydance.