Paramount's third-quarter 2024 earnings report reveals mixed financial performance with meaningful strides in its direct-to-consumer (DTC) segment but challenges in traditional media revenue. Moreover, across its operations, the company reported a strategic focus on streamlining costs, projecting $500 million in annual savings through non-content cost reductions. Paramount continues to advance on these financial goals while anticipating the closure of its Skydance transactions in early 2025, subject to regulatory approvals. This move is expected to fortify Paramount's financial and operational framework further.
The DTC segment saw strong growth, with revenue rising by 10% year-over-year to $1.86 billion. Paramount+ led this growth, adding 3.5 million new subscribers to reach a global subscriber count of 72 million. Paramount+ revenue grew by 25%, driven by an 11% increase in global ARPU (Average Revenue Per User), supported by a mix of sports programming, including the NFL and UEFA, and original shows like "Tulsa King" and "Mayor of Kingstown." Advertising revenue within the DTC sector increased by 18%, attributed to both Paramount+ and Pluto TV. The overall adjusted OIBDA for the DTC segment saw a significant improvement, rising by $287 million to reach $49 million, reflecting both revenue growth and effective cost management.
Despite being a Paramount Network original, "Yellowstone" is infamously available on Comcast’s streamer, Peacock, in the US due to a pre-Streaming Wars era licensing deal. According to Parrot Analytics, if available on Paramount+ during the third quarter of 2024, "Yellowstone" would have been responsible for 2.94% of US subscribers acquired to the platform. This would be second only to "Star Trek: Discovery," wiched racked up a 3.59%.
Moreover, Paramount remains in third place in the corporate demand category, which helps assess which companies have the most in-demand content to license as well as keep in-house to drive subscription growth/retention, and can effectively value a conglomerate’s legacy and library content in aggregate. It is well ahead of a rising Netflix and declining NBCUniversal, but far behind leaders Disney and Warner Bros. Discovery. However, it has been on a downward trend in corporate demand share — dipping from 12.0% in Q1 2024, to 11.4% in Q2 to now 11.1% in Q3.
As for the TV Media segment, its revenue decreased by 6% to $4.3 billion. This drop is attributed to lower affiliate revenue and fluctuations in licensing revenue. TV advertising revenue fell by 2% as a result of a weaker linear advertising market, although this was partially offset by political advertising and the resolution of previously underreported international sales. Affiliate and subscription revenue declined by 7%, driven by subscriber losses and fewer pay-per-view boxing events, though there were minor gains from price increases. Despite the setbacks, CBS and other properties within the segment saw robust viewership for events like the MTV Video Music Awards and shows like "The Daily Show," which have maintained cross-platform growth. Adjusted OIBDA for TV Media fell by 19% to $936 million due to reduced revenue.
The Filmed Entertainment segment experienced a 34% decrease in revenue, falling to $590 million. Theatrical revenue declined steeply by 71%, largely due to fewer releases compared to the same quarter in the previous year. Licensing revenue also dropped by 6%, influenced by lower home entertainment sales and fewer film library licensing deals, though studio facility revenue partially offset these losses. Despite these challenges, the adjusted OIBDA for the Filmed Entertainment segment improved by $52 million year-over-year, reflecting cost savings from reduced activity due to labor strikes and fewer releases.
George Cheeks, Chris Mccarthy & Brian Robbins, Co-CEOs of Paramount, stated: “Our hit content drove strong performance in Q3 where Paramount+ added 3.5 million new subscribers, solidifying our position as the #4 global SVOD service. Our DTC segment successfully delivered profitability for the second quarter in a row, improving by more than $1 billion over the past four quarters, and, across the company, we continue to successfully execute non-content cost reductions that will result in $500 million in annual run rate savings. With two very strong quarters under our belt, it’s evident that we have clear momentum and that our plan is working thanks to our very talented teams and creative partners.”
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