Paramount Studios in Los Angeles on April 29, 2024.
Eric Thayer | Bloomberg | Getty Images
Paramount Global is cutting 15% of its U.S. workforce, or about 2,000 jobs, as part of a broader cost-cutting plan as it prepares for a merger with Skydance Media.
Paramount has identified $500 million in cost savings, including headcount reductions, as part of $2 billion in synergies related to its Skydance transaction. The staff cuts, which will begin in the coming weeks and largely conclude by the end of the year, will focus on the company’s marketing and communications department and employees working in finance, legal, technology and other support functions, the company said during its earnings call Thursday.
Paramount agreed to a merger with Skydance Media last month. That agreement includes a 45-day period to seek another buyer, during which a special committee of Paramount’s board of directors could find another buyer, which concludes later this month.
Meanwhile, earnings rose as the company's streaming division posted an unexpected profit — the first time Paramount has reported a profitable quarter for its direct-to-consumer business.
Shares rose more than 5% in after-hours trading Thursday.
Here's how Paramount performed in the quarter compared with what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: 54 cents adjusted versus 12 cents expected
- Revenue: $6.81 billion versus the expected $7.21 billion
Income falls
Second-quarter revenue fell 11%, missing analysts' estimates as licensing, TV advertising and cable subscription sales declined.
According to LSEG data, the revenue drop was the biggest it has missed analyst estimates since February 2020. Paramount attributed the drop to a decline in TV licensing revenue, which can be difficult for analysts to model given their start and end dates.
Paramount+ revenue grew 46% thanks to year-over-year subscriber growth and higher pricing. Paramount+ customers fell by 2.8 million from the previous quarter to 68 million as the company ended a Korean partnership deal with entertainment company CJ ENM’s streaming platform Tving.
Paramount's streaming division posted a quarterly profit of $26 million, after losing $424 million last year. Analysts had expected a loss of $265 million this quarter.
Paramount reaffirmed that it is on track to achieve U.S. profitability for Paramount+ in 2025. The streaming service has raised prices and cut spending on content.
Paramount's quarterly earnings are helped by the fact that it does not have an NFL licensing fee for the period, which will take effect later in the year.
Shares have fallen 31% so far this year amid declines among cable subscribers and a weak linear TV advertising market.
Paramount also took a one-time impairment charge of $6 billion associated with the decline of its cable networks. This follows a $9.1 billion writedown from its peers. Warner Bros. Discovery On Wednesday.
The company had to take the charge as a forced adjustment from its transaction with Skydance.
