Paramount Global (PARA) reported third quarter earnings before the bell on Friday that showed further strength in streaming as the company reported its second profitable quarter for the segment, with profitability improving by more than $1 billion over the past four quarters.
But revenue missed expectations as the media giant saw continued declines from its linear TV business and drops in its studios segment.
The report comes as the entertainment giant focuses on cleaning up its balance sheet ahead of its merger with Skydance Media, which is expected to close in the first half of 2025.
Shares moved more than 1% higher in premarket trading immediately following the results.
Revenue came in at $6.73 billion, missing Bloomberg consensus expectations of $6.95 billion and was a 6% drop compared to the $7.13 billion seen in Q3 2023
The company reported adjusted earnings per share of $0.49 versus $0.30 in the year-earlier period. Consensus expectations had anticipated earnings to come closer to $0.23 a share.
Streaming was a bright spot in the quarter, with Paramount reported operating income for its direct-to-consumer (DTC) segment of $49 million, a $287 million improvement from the prior year period.
Analysts had expected a loss for this segment of $161.5 million after it reported operating income of $26 million in the second quarter, following a loss of $286 million in the first quarter.
In the nine months ending Sept. 30, the streaming division is still operating at a loss of $211 million but the company has maintained previous guidance that it remains on track to reach domestic profitability for Paramount+ in 2025.
The streamer currently boasts 72 million total subscribers after gaining 3.5 million net additions in the quarter, mostly due to the return of the NFL and college football, in addition to original series like “Tulsa King” and post-theatrical releases like “A Quiet Place: Day One” and “If.”
Analysts had expected subscriber gains of 2.4 million compared to the 2.7 million net additions the company reported a year ago.
Outside of strong subscribers, the company saw an 18% year-over-year jump in streaming advertising revenue.
On the flip side, linear advertising revenue once again declined but improved on a sequential basis. The segment dropped 2% year over year compared to the 11% seen drop in Q2. Consensus estimates had pegged the segment revenue to fall 5%.
Linear profits also fell 19%, continuing their plunge amid greater cord-cutting trends, which have slowed carriage-free growth and pressured distribution rates.
