Paramount Global ( PARA ) on Thursday reported a profit in its broadcast division for the first time as its TV business fell more than expected as the company took about $ 6 billion in the value of its cable business.
In the conference call, the company also announced plans to lay off 15% of its US workforce. The divestment will take place “in the coming weeks and will be largely completed by the end of the year,” according to executives.
The results come as Paramount prepares for its expected merger with Skydance Media, which will be completed in the third quarter of 2025.
In the second quarter, Paramount reported operating income for its direct-to-consumer (DTC) division of $26 million, an improvement of $450 million from last year. The company reported a loss for this segment of $286 million in the first quarter.
“Our strong performance in Q2 demonstrates that we are executing on our priorities,” our CEOs George Cheeks, Chris McCarthy and Brian Robbins said in the release.
“We will continue to implement our strategic plan, which focuses on changing the flow to accelerate profitability, improving our organization – including at least $500 million in annual cost savings – and improving the balance sheet by increase free cash flow and improve our asset mix.”
Shares rose 5% in after-hours trading as investors digested the results. When we came to the report, the high price was down about 30% this year.
Overall, the company reported adjusted Q2 earnings of $0.54 per share, above the $0.13 analysts polled by Bloomberg were expecting and well above the $0.10 Paramount reported in the same quarter last year. .
The income reached $ 6.81 billion, missing consensus expectations for $ 7.24 billion and a decrease of 11% compared to the $ 7.62 billion recorded during the previous year. Linear advertising revenue fell by double digits in the quarter, down 11% year over year compared to the 10% decline analysts were expecting.
Linear ad revenue enjoyed a 14% increase in Q1 thanks to Super Bowl ad sales, but the second quarter highlighted the challenges media companies are facing amid major cutbacks cables.
As legacy media competitor Warner Bros. Discovery, the company took a $5.98 billion payment related to its network.
Paramount CFO Naveen Chopra said the charge comes after the company “assessed relevant factors that may affect the fair value of our reporting units, including the overall market value of the company reflected are Skydance’s collaborations with the latest brands in the joint market.”
Although it made a profit in its streaming division, Paramount + shed 2.8 million in the quarter to 68 million, “mainly reflecting the planned exit from the difficult agreement in South Korea.” But average global revenue per user, or ARPU, increased by 26% year over quarter. That helped boost revenue at Paramount+ by 46% compared to last year.
In the six months ending June 30, the flow division is still operating at a loss of 260 billion but the company reiterated earlier guidance that it was still on track to achieve domestic profit. for Paramount + in 2025.
In the earnings call, the company said that there is an opportunity for strategic cooperation and possible joint ventures between the competing streaming platforms in order to facilitate the large scale.
Meanwhile, revenue in the movies segment faced a double-digit decline, down 18% as the company blamed “quarterly release timing” and tough comparisons to Last year’s “Transformers: Rise of the Beasts.”
Skydance takes the next step
Thursday’s results come as Skydance’s pending takeover of the company remains imminent.
Skydance, which will be valued at $4.75 billion after the sale of all assets is completed, said it will invest $6 billion in Paramount, with $1.5 billion going directly to Page. that of balance and liabilities.
Skydance CEO David Ellison will become chairman and CEO of the combined company, while former NBCUniversal CEO Jeff Shell, who was fired last year for an “inappropriate relationship” with a female employee, he will serve as president.
Last month, the new leadership team laid out their strategic vision for Paramount. This includes $2 billion in cost reductions with $500 million already underway. Thursday’s job announcement highlighted this effort.
“We love the creative engine of this company. But it is clear that a large part of the company is in the same world and we know that linear is challenged and declining,” Shell said at the time “I think that most of us in the business know we have to run these businesses differently as they decline.”
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow him to X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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