The streaming wars are no longer just about subscriber growth.
Paramount Global
added just 700,000 subscribers in the second quarter, compared to 4.1 million in the first quarter.
But the post-earnings stock price reaction couldn’t be more different.
The stock tumbled 28% back in May after its last quarterly earnings, yet it looks set to climb Tuesday despite the sharp slowdown in new subscribers. A deal to sell its publishing business Simon & Schuster for $1.62 billion to private-equity firm
KKR
is one reason for the move, but another is the progress it has made in its streaming business.
Paramount (ticker: PARA) grew subscription revenue in its streaming segment by 47% in the quarter, driving a beat in overall revenue. Losses in its direct-to-consumer business, which includes Paramount+, narrowed to $424 million from $445 million in the same quarter in 2022.
Paramount’s improvement on that front adds to the pressure on
Disney
(DIS), which is due to report earnings after the bell Wednesday. CEO Bob Iger has made turning around the media and entertainment giant’s streaming business a priority. The company’s direct-to-consumer segment has lost $4.2 billion in the past four quarters but management expects it to break-even by the end of the fiscal year 2024.
Investors will be keen to see some signs of improvement in
Disney’s
fiscal third quarter results Wednesday.
Paramount’s progress is partly down to its strategy of bundling subscription packages together, something it has done with Sky, Canal and
Walmart
(WMT). It has another bundle up its sleeve, launching an integration with Showtime at the end of June.
CEO Robert Bakish said the Showtime bundle has allowed the company to make cost savings and increase prices, on the company’s earnings call.
The slowdown in new subscribers reflects seasonal softness, but also the fact that Paramount has delayed some content releases to align with the Showtime bundle launch, Chief Financial Officer Naveen Chopra said. As a result subscriber growth should pick up again in the second half.
The company’s total revenue fell 2% to $7.62 billion, beating analysts’ estimates of $7.44 billion, according to FactSet data. Adjusted earnings per share of 10 cents per share, beat expectations for the company to break even.
The stock pointed 3.4% higher at $16.63 in premarket trading.
Write to Callum Keown at [email protected]
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