Paramount Global on Thursday said it would write down the value of its cable-networks business by about $6 billion and cut 15% of its workforce, even as its streaming business reported its first quarterly profit. Paramount shares rose more than 5% in after-hours trading.
The impairment reflects declining viewership for cable networks such as Nickelodeon, MTV and Comedy Central, which translates into lower advertising revenue. The announcement came a day after Warner Bros. Discovery wrote down its TV assets by $9 billion.
The looming merger with Skydance Media forced Paramount to revalue its divisions to better reflect their value to the company, resulting in the impairments. The size of these adjustments led to a $5.3 billion operating loss for Paramount in the second quarter.
On a conference call with investors and analysts, executives said the cuts would take place in the coming weeks and would focus on market, finance and legal positions. Based on the 21,900 full- and part-time employee headcount that Paramount reported late last year, the number of cuts would amount to about 3,200, and executives said it would result in a charge of $300 million to $400 million in the third quarter.
Additionally, Paramount is considering a variety of additional cost-cutting plans, Chief Financial Officer Naveen Chopra said.
Paramount also beat Wall Street targets for second-quarter adjusted operating profit, reporting a profit of $867 million, or 54 cents a share, beating expectations of 12 cents a share, LSEG said.
The company’s streaming business, which includes its Paramount+ subscription service and its free, ad-supported sister service Pluto TV, posted its first quarterly profit, helped by growth in subscription and advertising revenue. Its direct-to-consumer unit posted an operating profit of $26 million in the second quarter, up from a loss of $424 million in the same period a year ago.
“Paramount+ is on track to be profitable domestically in 2025,” Paramount co-CEOs George Cheeks, Chris McCarthy and Brian Robbins said in a joint statement.
The company reported revenue of $6.8 billion, down 11% from the same period a year ago, and below analysts’ expectations of $7.2 billion for the quarter ended June 30.
The television division, which includes CBS, the top-rated primetime network, and its cable networks, reported quarterly revenue of about $4.3 billion. The 17% year-over-year revenue decline reflected lower advertising revenue and programming licensing fees. Television operating income fell 15% to $1 billion.
“The impairments announced this week by Paramount and Warner Bros. Discovery put the nail in the coffin for[traditional]TV,” said Ross Benes, a TV and streaming analyst at eMarketer. “For Paramount, Skydance is their best chance of exiting. The longer they wait, the less valuable the company will be.”
Paramount’s film division reported a loss of $54 million, even though “IF” topped the box office in its domestic debut and “A Quiet Place” was the best-performing horror movie franchise of all time.
