Paramount Sales Beat Forecast After Growth in Online Division

Christopher Palmeri, Bloomberg News

(Bloomberg) -- Paramount Global reported second-quarter sales that beat analysts’ projections, thanks in part to a 40% jump in its streaming-TV business.

The parent of CBS, MTV and other TV networks reported revenue of $7.62 billion, beating analysts’ estimates of $7.43 billion. Earnings came to 10 cents a share, the company said Monday, beating Wall Street projections for a break-even quarter.

The shares rose as much as 7.8% to $17.35 in after-hours trading before giving up much of their gain. They were down 4.7% this year through the close of regular trading on Monday.

Paramount managed to beat estimates despite weakness in the TV ad market. Ad sales at traditional networks fell 10% to $1.95 billion.

The company reported 61 million subscribers for its Paramount+ streaming service, slightly below forecasts for 61.2 million. The direct-to-consumer unit lost $424 million, compared with analysts’ projections for a loss of $527 million. Its portfolio also includes the ad-supported, free-to-watch Pluto service.

Profit at Paramount’s film studio tumbled to $5 million. Last year’s second quarter included results from the hit Top Gun: Maverick.

The company also announced the sale of its Simon & Schuster publishing business to KKR & Co. for $1.62 billion and plans to use the proceeds to reduce debt.

On a conference call with investors, Chief Executive Officer Bob Bakish said this would be the peak year for investment in the streaming business and he expects a return to earnings growth for the company overall in 2024.

Bakish said Paramount is working to minimize disruptions from the twin strikes by writers and actors that have shut down much of the production in Hollywood. While he hopes for a timely resolution, Bakish said the company has finished production on a number of films.

“From a content perspective we’re in pretty good shape,” he said.

The company expects free cash flow to be “significantly higher” in the second half of this year due the work stoppage, according to Chief Financial Officer Naveen Chopra.

(Updates with CEO comments in fourth-to-last paragraph.)