With continuous streaming losses that were made worse by weak advertising at its TV/Media segment last quarter and a decline in filmed entertainment, Paramount Global significantly missed Wall Street projections. In early trade, the stock is down substantially by roughly 14%.

At $7.26 billion, revenue in the first quarter of 2023 was essentially unchanged (down 1%) from the same period in 2012. Analysts anticipated $7.4 billion or more. Additionally, the business went from making $433 million in profit to losing $1.1 billion in the first three months.

Sales of TV and media (CBS and cable networks) decreased by 8%, and advertising revenue declined by 11% as a result of fewer NFL games on CBS and a weaker global ad market. Revenue from licencing and other sources decreased 15% year over year, mostly due to a decrease in the amount of licenced content. Operating revenue dropped 15%.

With 4.1M new customers in the quarter, fewer than half the number it added in the previous quarter, Paramount+ hit 60M overall subscribers. Streaming’s operating losses increased from $456 million to $511 million. As the firm continues to invest extensively in content, executives have warned the public to expect peak streaming losses this year.

In the quarter, Pluto TV reached 80 million MAUs (monthly active users).

DTC revenue grew 39% over the previous year. Revenue from subscriptions increased by 50% to $1.1 billion, mostly due to membership growth on Paramount+, including the benefit from prior subscriptions.

overseas markets are opened. Strong engagement on Paramount+, where income surged 65% year over year due to subscription growth and increased advertising revenue, was the primary driver of the advertising revenue rise of 15%.

Strong original programming like 1923, Tulsa King, Mayor of Kingstown, Star Trek: Picard, the return of Teen Wolf: The Movie and Top Gun: Maverick, as well as the NFL Playoffs, were the main drivers of global subscriber growth. The excellent Showtime programming lineup, which included Your Honour and Yellowjackets, boosted the Paramount+ with Showtime package as well.

Sales of motion pictures fell 6% from the previous year. The timing and mix of releases may be seen in the $4M decline in theatrical revenue. The $35M decline in licencing and other revenue was mostly due to lower licencing revenues from consumer goods.

Operating income decreased by $62 million as a result of costs associated with the release of Miramax’s Operation Fortune: Ruse de Guerre and Dungeons & Dragons: Honour Among Thieves on the last day of the quarter, which resulted in costs but no benefits, according to the company.

Scream VI appeared on Par+ in late April after debuting at number one in March.

Prior to a conference call with executives that will take place shortly, the advertising market, visibility on the timing of streaming earnings, and the impact of the Hollywood labour action are all top of mind. Since the WGA started its strike this week, Paramount is the first significant studio to provide numbers and respond to the Street. A number of TV programmes, notably Yellowjackets, were impacted when late night went dark right away.

After its contract with the Alliance of Motion Picture and Television Producers expired without a new agreement, the guild went on strike. Compensation for authors is a problem in a media world that is changing, being increasingly controlled by streamers, and facing impending threats from AI.

“Paramount keeps showcasing the power of its content engine by gaining traction across streaming, television, and the theatre. With 60 million subscribers and 80 million MAUs, respectively, Paramount+ and Pluto TV were able to achieve significant milestones, and CBS is now prepared to hold the top spot in broadcast for the fifteenth consecutive season, according to CEO Bob Bakish.

“As we look to the future, we are committed to sustaining market-leading streaming growth while navigating a dynamic macroeconomic environment,” the company said. Additionally, as we work towards streaming profitability, the revised dividend policy we announced today will strengthen our capacity to provide long-term value for our shareholders.

This year, executives had predicted price rises at Paramount+.

The streamer gained 9.9 million members in the fourth quarter while losing $575 million in direct-to-consumer sales.

In January, Paramount revealed plans to rebrand the premium cable network as “Paramount+ with Showtime” as part of a significant transformation that also unites the two names in the streaming space. Later this year, Showtime, which underwent significant transition last year with David Nevins’ departure, will merge with Paramount+ to become Showtime across both linear and streaming. At that point, the premium tier of Paramount+ will provide Showtime content. Only Americans are affected by the action.

Additionally, Paramount is selling off assets. After regulators rejected an initial sale, it is still attempting to sell Simon & Schuster, and it is now reviewing proposals for BET.