Paramount Hits Nearly 64M Global Streaming Subs as Paramount+ Grows to Top 43M
Paramount Global reached “nearly 64 million” streaming subscribers worldwide as of the end of June, up from more than 62 million as of the end of March. The latest period saw the addition of 5.2 million subscribers, partially offset by the removal of 3.9 million subscribers in Russia due to the country’s invasion of Ukraine.
The Hollywood giant revealed the latest figures Thursday as part of its quarterly earnings report, which saw its revenue jump 19 percent to $7.78 billion amid 126 percent growth in the film unit, driven by such recent hit releases as Top Gun: Maverick, and despite a TV media unit advertising revenue drop.
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During an earnings conference call, management detailed total global subs had reached 63.7 million.
Adjusted operating income before depreciation and amortization (OIBDA) for Paramount’s second quarter fell 22 percent to $963 million amid increased streaming investments. Quarterly net earnings from continuing operations dropped from $995 million in the year-ago period to $358 million.
The company detailed in its results that its Paramount+ streaming platform added 4.9 million subscribers in the March-June period, partially offset by the removal of 1.2 million Russia subscribers, to hit “over 43 million” subscribers, compared with around 39.6 million as of the end of March. It later detailed that it had ended June with 43.3 million Paramount+ subs.
“Paramount+ captured the most sign-ups, gross and net subscriber additions of any premium domestic streaming service in the quarter according to Antenna’s June 2022 Report,” Paramount touted in its earnings report. “Paramount+ subscriber growth was partially driven by successful international market launches, including the U.K., Ireland and South Korea.” On Thursday’s earnings conference call, Paramount president and CEO Bob Bakish mentioned that the streamer has been performing “above expectations” in those new markets, but didn’t share specifics.
The company also touted its streaming content lineup. “Paramount+’s broad content strategy continued to draw audiences in the quarter, including highly anticipated original series, movies and sports,” the company said. “Paramount+ saw strong acquisition and engagement from a variety of content, led by Halo, 1883, The Lost City, Sonic the Hedgehog 2, Jackass Forever, Star Trek: Strange New Worlds and the UEFA Champions League. Both domestic and international hours watched per household demonstrated strong growth year-over-year.”
In the fourth quarter of 2021, Paramount had added a company record 9.4 million global subscribers to its pay streaming offerings, which also include Showtime OTT.
Paramount’s free, advertising-supported streaming service Pluto TV also continued to grow its monthly active user (MAUs) to 69.6 million as of the end of June after hitting “nearly” 68 million as of the end of March. Pluto TV grew total global viewing hours by double digits year-over-year for the
second consecutive quarter, Paramount noted, also touting the service’s “expanded international presence.”
In his earnings preview, Wells Fargo analyst Steven Cahill had forecast 4 million Paramount+ subscriber net additions in the second quarter, or 5 million when excluding Russia, but only 1.3 million total streaming net adds “due to some weakness at Showtime and a (negative) 2 million impact from non-Paramount+ Russia subs.” He suggested that Showtime OTT, Noggin and BET+ collectively lost around 600,000 subs.
Paramount’s direct-to-consumer unit posted second-quarter revenue growth of 56 percent to $1.19 billion, including a 74 percent gain in subscription revenue and a 25 percent advertising revenue increase. “Paramount+ revenue grew 120 percent,” the company said. The adjusted OIBDA loss in the streaming division widened by $302 million over the year-ago period though to $445 million, “reflecting increased investment in our direct-to-consumer services.”
Paramount’s film unit released Top Gun: Maverick during the second quarter, with the company on Thursday touting the success of the Tom Cruise movie and other recent releases. Film unit revenue jumped 126 percent in the second quarter to $1.36 billion, “led by the strong performance of current quarter theatrical releases, with theatrical revenue increasing by $630 million, “primarily driven by the releases of Top Gun: Maverick and Sonic the Hedgehog 2 in the quarter.” Licensing and other revenue in the film division grew 27 percent, “primarily driven by the monetization of recent theatrical releases.” Adjusted OIBDA in the film unit increased by $129 million to hit $181 million, “reflecting the strong performance of current year releases.”
Paramount highlighted that Top Gun: Maverick “surpassed Titanic to become the biggest Paramount domestic movie of all time,” also noting that “five Paramount Pictures movies debuted #1 at the box office in the first half of 2022.”
Meanwhile, Paramount’s TV Media unit posted an advertising revenue drop in the second quarter after a 13 percent decline in the first quarter. “Advertising revenue decreased 6 percent year-over-year, as pricing only partially offset the impact of lower linear impressions and foreign exchange,” the firm said. “Affiliate and subscription revenue declined 3 percent year-over-year, driven by lower revenues in international markets, where we restructured key affiliate agreements, resulting in a shift of revenue from our pay television services to our direct-to-consumer services.” But licensing and other revenue grew 27 percent.
That left total TV Media unit revenue up 1 percent at $5.26 billion. Adjusted OIBDA fell 8 percent though to $1.38 billion, “primarily driven by the lower advertising and affiliate revenues.” Paramount highlighted that “CBS was the most watched broadcast network for the 20th consecutive second quarter,” arguing it “dominated the quarter with the top three most-watched programs: NCIS, FBI and Blue Bloods,” seven of the quarter’s top 10 shows, as well as “the top comedies, including Young Sheldon and Ghosts.”
In its earnings update, the company’s CEO expressed confidence in the company’s outlook even as Wall Street analysts have as of late expressed concerns about a likely ad hit it will take amid economic storm clouds. “Paramount continues to build momentum with the assets, strategy and ability to compete — and win,” said Bakish. “In the second quarter, we grew total company revenue by 19 percent and took market share in streaming, in broadcast TV, in box office and in upfront dollars, all while increasing our penetration of the most important growth market in media — streaming. At the heart of that growth was our hugely popular content — from the cultural phenomenon and #1 movie in the world, Top Gun: Maverick, to the most popular show in the country, Yellowstone.”
Concluded the CEO: “Our deep and growing library of valuable IP, coupled with the strength of our best-in-class assets, ensures we are well-positioned to continue to maximize value for our shareholders.”
After being down 3 percent in premarket trading, Paramount shares were up 0.7 percent as of 10 a.m. ET. “Total company advertising was $2.545 billion, in line with us,” but 3 percent below consensus estimates, Cahall noted in a first reaction. “Free cash flow was $81 million and compared to consensus of $85 million.” He summarized his takeaways in the headline of his report: “Good Paramount+ Results, but Ads and Free Cash Flow Will Create New Worries.”
