(Bloomberg) -- Paramount Global, the parent of Nickelodeon, MTV and other channels, took a second-quarter impairment charge of US$5.98 billion on its cable networks, in yet another sign of weakness in the traditional TV industry.
The company made the decision after reevaluating the businesses in light of declining profit projections, shifts in the cable-TV subscriber marketplace and the recently agreed-to merger with Skydance Media, according to a statement Thursday.
The New York-based media giant joins Warner Bros. Discovery Inc. in taking such a step. Warner Bros. announced a $9.1 billion writedown on its cable networks on Wednesday, businesses that include CNN and TNT.
Paramount reported adjusted earnings of 54 cents a share for the second quarter, up from 10 cents a year ago and surpassing Wall Street’s estimates of 13 cents. Revenue dropped 11 per cent to $6.81 billion, missing analysts’ forecasts for $7.24 billion.
Sales at Paramount’s TV networks division tumbled 17 per cent to $4.27 billion, the result of a steep drop in licensing of programs to other outlets, as well as declining advertising and subscriber revenue.
Revenue at the company’s streaming services jumped 13 per cent to $1.88 billion, but the Paramount+ service lost 2.8 million subscribers due to the end of a distribution agreement South Korea’s TVing. Wall Street analysts had estimated Paramount+ would gain more than half a million subscribers during the quarter. The online unit posted its first profit, of $26 million, reflecting higher revenue and lower costs.
In July, Paramount agreed to merge with Skydance Media, the film production company founded by David Ellison. After months of dramatic negotiations, Paramount Chair Shari Redstone decided to sell her family’s holding company, National Amusements Inc., and its 77 per cent voting stake in Paramount to the son of Oracle Corp. co-founder Larry Ellison for $2.4 billion. The companies agreed to a 45-day period in which other potential bidders could submit competing offers though no serious contender has so far emerged.
Paramount has been led by three co-chief executives since CEO Bob Bakish stepped down in April. They have laid out plans for $500 million in cost cuts. Adjusted operating income before depreciation and amortization rose 43 per cent to $867 million in the quarter.
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