Ups And Downs At Paramount: Streaming Grows, Box Office Lows

Tough comparisons to last year, when Paramount released "Top Gun: Maverick," led to box office ... [+] declines for the company.

Last year, Paramount had two of the year’s biggest successes with TV drama Yellowstone and box office smash Top Gun: Maverick. The only downside to such unmitigated wins is that, eventually, you need to compare current results to those past triumphs. And that led to mixed results for Paramount in its second quarter earnings.

The company released its results Monday, with highlights including a significant improvement in streaming losses (adjusted operating loss before depreciation and amortization of $424 million vs. $445 million last year at this time and $511 million in first quarter). Streaming revenue jumped 21% from last year, and total subscribers rose 700,000 from last quarter, to 61 million. It was a slower gain than the previous quarter, when Yellowstone was airing.

At the same time, box office revenue took a huge hit, with filmed entertainment revenue off 39% versus last year, to $831 million. That was a tough comparison—Top Gun: Maverick alone made more than $1.4 billion worldwide last year.

Paramount Global CEO Bob Bakish echoed the outlook of Sumner Redstone, the longtime chairman of Paramount Global predecessors CBS and Viacom, who always claimed content was king. Bakish lauded streaming success for Yellowstone creator Taylor Sheridan’s latest, The Lioness, and other streaming, cable and broadcast content.

“The breadth of our content serves an impressively large addressable market, within the household, across the country and around the world. That is the power and quality of our content engine. And that's a key competitive advantage for us,” Bakish said.

Bakish also announced that book publishing arm Simon & Schuster is being sold for $1.62 billion in cash to private equity firm KKR, less than a year after the publisher’s sale to Penguin Random House was blocked on antitrust grounds following a sensational trial. Executives said they expect to use the proceeds from the sale to pay down debt.

The slowdown in subscription growth wasn’t a surprise. No new episodes of Yellowstone aired this quarter. Also, Paramount instituted its first rate hike for Paramount+ during second quarter. Executives said they anticipate “revising pricing” in some global markets as they also revise tiers.

A restructuring of streaming services in Latin America will result in a loss of almost 1 million subscribers next quarter, but Paramount does expect stronger subscriber growth in the second half of the year.

The company finished its integration of Paramount+ and Showtime during this quarter, which it has projected will result in a significant cost savings.

TV advertising slowed for at least the third straight quarter, down 10% from second quarter. This has been a theme across media companies during this round of earnings calls.

This quarter’s biggest Paramount release, Transformers: Rises of the Beasts, was no match for Maverick—the newer film has grossed a solid $433 million worldwide, but that’s $1 billion below Maverick. “The film numbers reflect the tough comparisons to Top Gun: Maverick,” said Paramount Chief Financial Officer Naveen Chopra.

Of course, most people wanted to look forward and not back. The impact of the writers and actors strikes is on analysts’ minds.

Bakish said many films slated to come out in the next few months won’t be derailed by the strike, including the upcoming Killers of the Flower Moon and the Mean Girls musical.

The next Sheridan TV original, Lawmen: Bass Reeves, is also on track to premiere as expected, Bakish said.