Paramount Global reported strong direct-to-consumer user growth, but also wider losses, in the company’s fourth quarter.
In addition, Paramount expects to see a $1.3 billion to $1.5 billion hit in Q1 2023 due to content and other investments as it restructures to merge Showtime with Paramount+, according to CFO Naveen Chopra.
However, expenses will peak in 2023, and the merger is expected to yield $700 million in future savings, said Chopra, who also revealed that the company will implement higher subscription prices. Getting Paramount+ with Showtime, the merged, no-ads premium offering, will cost $11.99 per month, up $2 from the no-adds Paramount+ solo offering. The Paramount+ "essential," ad-supported plan without Showtime will rise $1, to $5.99.
Together, the increased revenue and lowered costs should put Paramount on track for streaming profitability by 2024, Chopra said.
The company’s worldwide streaming subscribers totaled more than 77 million at year-end 2022
— up from 67 million in the previous quarter — and its direct-to-consumer (DTC) unit saw Q4 revenue jump by 30%, to $1.4 billion.
Subscription revenue in the quarter jumped 48%, and ad revenue rose 4%.
Driven by hit content including the blockbuster “Top Gun: Maverick,” Paramount+ posted its largest quarterly subscriber gain to date, adding 9.9 million to reach 56 million by year’s end. That was up from 46 million at the end of September.
At free, ad-supported streamer Pluto TV, global monthly active users (MAUs) rose by 6.5
million in Q4, to total 78.5 million, driven by expansion into Canada and growth in all other markets, according to the company. Pluto TV’s viewing hours rose by “strong double
digits” on both a quarter-over-quarter and year-over-year basis, Paramount said.
However, increased investments in streaming widened the DTC unit’s losses to $575 million, from $502 million in Q4 2021.
Strong releases that drove both theatrical and licensing revenue growth drove filmed entertainment unit’s revenue up 35%, and operating income before depreciation and amortization (OIBDA) up from breakeven in the year-ago quarter to $87 million.
The TV Media unit’s adjusted OIBDA rose 5%, as lower costs offset a 7% decline in ad revenue due to lower impressions and currency exchange challenges, subscription and affiliate revenue declined 4%, and licensing and other revenue declined 11%.
Total Q4 revenue rose 2%, to $8.1 billion, but operating income fell 93%, to $182 million, and earnings per share from continuing operations dropped from $3.05 to negative 29 cents.
Paramount’s content and global multiplatform strategy is succeeding, with popular content—including six films that opened at #1 in U.S. box office last year, Paramount Global CEO Bob Bakish declared in a statement accompanying Thursday’s earnings report.
With “even more exceptional content coming this year, we expect to return the company to earnings growth in 2024,” Bakish said.