Paramount Global on Thursday reported that it has taken a $6-billion divestment from its network television business, another sign that Hollywood is coping with the ongoing decline of the traditional television business.
Executives also announced another round of layoffs that cut Paramount’s workforce by 15%.
The announcements, which are part of Paramount’s second quarter earnings, come as the company prepares to be taken over by David Ellison’s Skydance Media in the first quarter of next year. Paramount has for years struggled with the erosion of its network media portfolio, which includes Comedy Central, MTV and Nickelodeon.
The once-lucrative cable business has been decimated by declining demand and accelerating cord-cutting as audiences gravitate to broadcast services.
During a conference call with analysts, Co-CEO Chris McCarthy said the planned job cuts — a total of about 2,000 positions — were part of a previously announced effort to achieve $500 million in cost savings. of each year.
The cuts, which will take place over the next few weeks, will be focused on business and communications, finance, legal technology and the corporate office.
“As you can imagine, these are difficult decisions to make,” McCarthy said. “We have incredibly talented people at Paramount and these actions are not a reflection of their contributions. Rather, they are necessary to transform our organization for the future.”
Paramount is trying to transition from cable channels to streaming with its Paramount+ service, which has been growing but has lost money for years. During the second quarter, Paramount’s streaming business, which includes the free ad-supported service Pluto TV and Paramount+, reported a small profit, with operating income of $26 million.
It was the first profit for the streaming unit since the launch of Paramount+ more than three years ago. Paramount+ now has 68 million subscribers worldwide.
The company plans to introduce Paramount+ pricing to increase profits.
The ad-supported version of Paramount+ will add $2 per month to $7.99 for new customers. Executives are also touring fares for Paramount+ and Showtime. Those fees will increase by $1 per month to $12.99 for all customers, the company said. The new rates go into effect this month.
This week has been another twist for traditional media companies.
On Wednesday, the Walt Disney Co. they fell after executives released earnings that showed it collected a small profit in its streaming division – but it was still feeling soft in its reliable entertainment business.
Rival Warner Bros. Discovery made a bitter admission during its earnings call on Wednesday, telling investors that its cable properties, including HGTV, Cartoon Network, CNN and the Food Network, are now worth billions of dollars. 9 thousand more than two years ago.
From time to time companies write documents to show when their stock goes down for various reasons.
Chief Financial Officer Naveen Chopra told analysts that his company’s large write-down was due in part to the ongoing damage from wire-cutting. But the bigger issue, Chopra said, is that the company needs to align the value of its assets with the values ​​that were part of the $8-billion Skydance deal.
Paramount stock fell 3% to $10.18 on Thursday. Shares are down nearly 30% on Wall Street so far this year.
The company reported second-quarter revenue of $6.8 billion, down 11% from the same period last year. Its unadjusted operating loss was $5.3 billion, compared to a loss of $250 billion in the year-ago quarter.
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