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Paramount Global added 6.3 million global streaming subscribers in the first quarter to top the 62 million mark as of the end of March, up from more than 56 million as of the end of 2021.
The entertainment conglomerate revealed the latest figures on Tuesday as part of its first-quarter earnings report. It also detailed that its Paramount+ streaming platform grew to “almost 40 million” subscribers from 32.8 million as of the end of December. Its disclosure of 6.8 million new subscriber additions at Paramount+ would put the flagship streamer at 39.6 million.
In the fourth quarter of 2021, the company, led by president and CEO Bob Bakish, had added 9.4 million global subscribers to its pay streaming offerings, which also include Showtime OTT.
Paramount explained why it added more Paramount+ users in the latest quarter than total streaming subscribers, saying: “Other direct-to-consumer services subscribers declined, primarily due to timing of new programming.”
On a morning post-earnings release analyst call, Bakish talked up what he called a “differentiated playbook” to give Paramount Global an edge over industry rivals. “By going broad — on content, on streaming models, on platforms and on global reach — we have written and are executing on a differentiated playbook to grow a diversified entertainment company and build a financially attractive business with healthy long-term margins,” he argued.
Bakish brushed off Netflix recently announcing that it had lost subscribers and share price value to argue his studio’s growth strategy, which includes a mix of TV platforms, legacy and digital, would allow continuing growth for its streaming business globally. “We’re putting all that together in a unique model, which really drives streaming momentum and builds us to a more attractive financial model where we’re able to produce similar margins, we believe, to legacy streamers, at a lower scale,” he told analysts.
“So despite all that conversation, nothing has changed in the context of our thinking. We see tremendous momentum here, and we’re very excited about the road ahead,” Bakish added.
Rebuffing the suggestion from one analyst question that the streaming market was possibly saturated, Bakish underlined how the key to the Paramount Global strategy was appealing to the broadest number of TV consumers with free and pay TV streaming options. “So while there’s no question that market sentiment has moved around a little bit, we continue to think that consumers are only moving in one direction and we’re very excited about the potential there,” he insisted.
Free, advertising-supported streaming service Pluto TV also continued to grow its monthly active users, or MAUs, further to “nearly” 68 million after ending 2021 with more than 64 million. The streamer said total global viewing hours rose by double digits year-over-year.
BMO Capital Markets analyst Daniel Salmon had recently raised his end-of-first-quarter forecast from 35 million to 37.9 million Paramount+ subscribers and his estimate for global streaming subs from 59.3 million to 62.1 million. He had also projected the company would end March with 65.7 million MAUs.
In February, the former ViacomCBS revealed its name change to Paramount Global and detailed plans to “accelerate the global momentum behind Paramount+,” unveiling new content, enhanced product offerings and continued international expansion during an investor event. At the time, it also raised its global streaming subscribers goal from 65-75 million by year-end 2024 to more than 100 million subscribers. The company also boosted its 2024 direct-to-consumer revenue goal from $6 billion to $9 billion.
“We see a huge global opportunity in streaming, a much larger potential market than can be captured by linear TV and film alone,” said Bakish at the time. “We’re excited about our ability to not just compete, but thrive, creating significant value for both consumers and shareholders. … As we look forward, the size of the opportunity we see is matched only by our ambition to seize it.”
Paramount’s first-quarter earnings report disclosed financials for new reporting segments, including direct-to-consumer (DTC), or streaming, TV media and filmed entertainment.
First-quarter DTC revenue jumped 82 percent to $1.09 billion, led by a 95 percent gain in subscription revenue (to $742 million) and advertising revenue growth of 59 percent (to $347 million), “reflecting growth from Pluto TV and Paramount+ driven by increased pricing and impressions on both services.”
The streaming unit’s adjusted operating income before depreciation and amortization (OIBDA) line saw its quarterly loss widen to $456 million from $149 million in the first quarter of 2021 as expenses jumped from $747 million to nearly $1.55 billion. Wall Street has as of late increasingly focused on the profitability outlook for streaming businesses.
The company’s film releases in the latest period included Scream and Jackass Forever. First-quarter film unit revenue dropped 27 percent to $624 million, driven by lower licensing revenue than in the year-ago period. Adjusted OIBDA fell swung to a $37 million loss from a $179 million profit, “due to increased marketing expense associated with in-quarter and future theatrical releases,” the company said.
Also on the analyst call, Bakish was bullish about a recovering theatrical movie business this year after the studio racked up three No. 1 box office hits during the most recent quarter – Scream, Jackass Forever and The Lost City – and had a fourth No. 1 in the second quarter with Sonic the Hedgehog 2.
He predicted box office for 2022 will be down around 20 percent against the performance in 2019. “We’re very happy to be in the business. We think it’s a good stand-alone business and clearly drives streaming,” Bakish said.
Theatrical revenue in the first quarter increased $130 million to $131 million after the prior-year period was “impacted by the closure or reduced capacity of movie theaters in response to COVID-19.” Licensing and other revenue decreased 42 percent, “primarily driven by the benefit in the prior-year period from the licensing of Coming 2 America and Tom Clancy’s Without Remorse.”
In Paramount’s TV Media unit, first-quarter revenue declined 6 percent to $5.65 billion. Excluding the impact of not airing the Super Bowl, like the company’s CBS had done in 2021, revenue grew 2 percent. Quarterly advertising revenue decreased 13 percent, “primarily reflecting an impact of 17 percentage points from the comparison against CBS’ broadcasts of Super Bowl LV in the prior-year quarter. Excluding the Super Bowl, ad revenue grew 4 percent. First-quarter affiliate and subscription revenue rose 1 percent “as higher revenues from rate increases and expanded virtual multichannel video programming distribution were somewhat offset by (traditional pay TV) subscriber declines.”
Adjusted OIBDA in the TV Media segment fell 13 percent to $1.54 billion in the first quarter, “primarily driven by the comparison to the Super Bowl broadcast in the prior-year period and higher costs in 2022 associated with more original programming.”
Paramount reported total first-quarter revenue of $7.33 billion, down 1 percent. But excluding the impact from the year-ago airing of the Super Bowl, revenue would have risen 5 percent. Paramount’s quarterly operating income dropped 49 percent to $775 million, with adjusted OIBDA falling 44 percent to $913 million.
Wells Fargo analyst Steven Cahall summarized the results this way: “Strong Paramount+ results, while Pluto misses our estimates.” He added in a report: “Paramount is in the midst of a linear to streaming pivot and … it’s a hybrid stock whereby it needs to manage/grow its traditional earnings, while also successfully building out the DTC assets. Overall, we think it pulled this off pretty well in the first quarter print, first and foremost on the strong Paramount+ net adds/revenues. TV Media performed well and beat estimates, while Pluto monetization leaves some questions for management.”
Paramount’s stock fell more than 4 percent in pre-market trading.
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