Paramount Global, long the subject of talk that it might be sold, continued to balance a fast-growing but unprofitable streaming business with a collection of declining television and movie assets in late 2024.

Challenges in the Streaming Age

Paramount’s fourth-quarter results, released Wednesday evening, illustrate the challenges and time pressures faced by traditional media companies working to pivot from cable and movie-theater business models to direct-to-consumer offerings in the streaming age.

  • Paramount reported $7.6 billion in revenue for the last three months of 2024, down from $8.1 billion in the year-earlier period.
  • The company lost 2 cents per share in the fourth quarter, versus an 8-cent profit a year earlier and the analyst consensus forecast of a 1-cent loss.
  • Adjusted operating income before depreciation and amortization—Oibda, the profit measure Paramount management prefers—was $520 million, down 15% from $614 million.

Paramount has been most in the news lately in regards to merger speculation. Since the fall, Warner Bros. Discovery, Allen Media Group, and Skydance Media have all reportedly been in talks with or interested in taking over the company or its Redstone family-controlled parent, National Amusements, but no deal has emerged.

  • Paramount shares have completed a round trip from $11 to $17 and back over the past four months as merger rumors ebbed and flowed.

Growth Amidst Losses

  • The segment reported an adjusted Oibda loss of $490 million in the fourth quarter, better than the $575 million loss a year earlier.

In conclusion, Paramount Global faces a delicate balance between its growing streaming business and declining traditional assets as it navigates through a changing media landscape in 2024.

Paramount Streaming Business: A Tale of Losses and Hope

Recordings for 2023

For all of 2023, Paramount recorded an adjusted Oibda loss of $1.7 billion on its streaming business. That was again a slim improvement over 2022, and management said on Wednesday that streaming losses should narrow again in 2024. They expect Paramount+ to reach profitability in the U.S. in 2025.

Investor Concerns

The kind of fast but unprofitable growth seen at Paramount is unlikely to get as much credit from investors in the current higher interest-rate environment as it did a few years ago, when growth-at-any-price stocks were in vogue.

Challenges Ahead

When the streaming business is coupled with a melting ice cube of cable-TV and movie profits, Paramount needs to fund those streaming losses until the break-even point is reached. Paramount’s largest segment—TV media—saw a 12% drop in revenue, to $5.2 billion, as adjusted Oibda also dropped 12%, to $1.1 billion.

  • Affiliate fee revenues were flat year over year
  • Advertising was down 15%
  • Licensing was off 25%

Movie Segment Struggles

Trends at Paramount’s smaller movie segment looked even worse. Revenue was down 31% to $647 million and adjusted Oibda tumbled 63% to $24 million.

Future Outlook

The overall picture is of a race between declining legacy profits and narrowing losses on streaming, with an eventual path to profitability. For Paramount shareholders, a sale of the company may be the ultimate—and best—outcome. The question remains at what price.

Stock Performance

Paramount stock is up 7.1% on Thursday, but has lost 48% over the past year. Analysts aren’t particularly bullish, with only 26% having a Buy or equivalent rating on Paramount stock, versus 39% at Sell.

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