Paramount’s Q4 Earnings Were Nothing to ‘Smile’ About

Paramount+ added nearly 10 million subs with "1923" and "Tulsa King," but the company's operating income plummeted 93 percent.
SMILE, Caitlin Stasey, 2022. © Paramount Pictures / Courtesy Everett Collection
SMILE, Caitlin Stasey, 2022. © Paramount Pictures / Courtesy Everett Collection
©Paramount/Courtesy Everett Collection

Paramount Global ended 2022 with more than 77 million streaming subscribers, the company said; nearly 56 million of those came from Paramount+. That means the core streamer added 9.9 million subs in the final quarter of the year, a record.

Unfortunately, overall operating income plummeted 93 percent in the fourth quarter to just $182 million (down from $2.664 billion in Q4 2021). Wall Street forecast the company would report fourth-quarter earnings of 24 cents per share on $8.16 billion in revenue. Paramount posted adjusted earnings of 8 cents per share on $8.131 billion in revenue, missing both benchmarks. Without those adjustments, Paramount Global swung to a loss.

Streaming revenue rose 30 percent, but expenses increased 25 percent. Movies had a similar, but more favorable, trajectory: Revenue was up 35 percent, but expenses increased 22 percent. Both revenue and expenses decreased by single digits in linear television, where advertising sales saw the most significant decline.

Paramount Pictures released “Smile” and “Babylon” theatrically in the fourth quarter. “Smile” left executives smiling; box-office bomb “Babylon” decidedly did not. “Top Gun: Maverick” helped home entertainment take off.

On the series side, “Yellowstone” prequel “1923” starring Harrison Ford and Helen Mirren, premiered in December; another Taylor Sheridan series, “Tulsa King” starring Sylvester Stallone, debuted in November.

FAST service Pluto TV added 6.5 million monthly active users (MAUs) globally in the quarter, reaching nearly 79 million.

Shares in Paramount Global (PARA) are currently down 7 percent in pre-market trading.

“Paramount continues to demonstrate the success of its global multiplatform strategy, with popular content at its core,” Paramount Global chief Bob Bakish said in a statement accompanying the earnings. “Nowhere was this more evident than in the growth of Paramount+, which added a record 9.9M subscribers in the fourth quarter, driven by hit content like ‘Top Gun: Maverick,’ ‘1923’ and ‘Criminal Minds: Evolution.'”

“In addition, in 2022, Paramount Pictures had 6 films open at #1 in the U.S. box office and Paramount regained its position as the most-watched media family in linear television,” he continued. “Our content and platform strategy is working and, with even more exceptional content coming this year, we expect to return the company to earnings growth in 2024.”

Bakish and his senior executive team will host a conference call at 8:30 a.m. ET to discuss the quarter in greater detail.

Tulsa King Sylvester Stallone as Dwight "The General" Manfredi of the Paramount+ original series TULSA KING. Photo Cr: Brian Douglas/Paramount+. © 2022 Viacom International Inc. All Rights Reserved.
Sylvester Stallone in “Tulsa King”Brian Douglas / Paramount+

Late last month, Paramount brought Paramount+ and Showtime (closer) together. At some point “later this year,” the the company said, the Showtime linear-television channel will be rebranded as “Paramount+ with Showtime.” The existing ad-free Paramount+ “Premium” tier without Showtime ($9.99/month) is poised to go away; the version that includes Showtime ($14.99/month) will also be known as Paramount+ with Showtime.

The combination of the brands means certain Paramount+ originals will air on Showtime’s linear channel. It could also be the next-to-last step toward fully folding Showtime into Paramount+, which would mean the end of the linear channel altogether. The two previously joined forces via a Showtime tile inside Paramount+.

It also means layoffs, which have already begun. On Monday, Chris McCarthy merged his newly acquired Showtime staff with MTV Entertainment Studios. He elevated Nina L. Diaz to his chief creative office and president of content, and (basically) showed the door to Showtime co-presidents Gary Levine and Jana Winograde.

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