Paramount Global wrote down the value of its cable networks by nearly $6 billion and announced it would cut 15% of its jobs on Thursday, even as the company’s broadcast business reported its first quarterly profit. Paramount shares rose more than 5% in extended trading.
The loss reflects a shrinking audience for cable TV networks such as Nickelodeon, MTV and Comedy Central, a decline that translates into lower advertising revenue. The announcement comes a day after Warner Bros. Discovery took a $9 billion write-down on its television assets.
The pending merger with Skydance Media forced Paramount to reassess the value of each of its units to better reflect their value to the company, resulting in the write-off. The size of the settlement dragged Paramount into an operating loss of $5.3 billion for the second quarter.
The job cuts will take place in the coming weeks and will focus on marketing, finance and legal positions, executives said on a conference call with investors and analysts. That would come to roughly 3,200 positions, based on the 21,900 full- and part-time employees Paramount reported late last year, and executives said it would lead to charges of $300 million to $400 million in the third quarter.
In addition, Paramount is looking at a number of additional cost-cutting plans, Chief Financial Officer Naveen Chopra said.
Paramount also reported second-quarter adjusted operating profit ahead of Wall Street targets, with revenue of $867 million, or 54 cents a share, beating the consensus of 12 cents a share, according to LSEG.
The company’s streaming business, which includes subscription service Paramount+ and its free, ad-supported sibling PlutoTV, posted its first quarterly profit, driven by growth in subscription and advertising revenue. The direct-to-consumer unit reported operating income of $26 million in the second quarter, compared with a loss of $424 million a year earlier.
“We are on track to achieve internal profitability for Paramount+ in 2025,” Paramount co-CEOs George Cheeks, Chris McCarthy and Brian Robbins said in a joint statement.
The company reported revenue of $6.8 billion, down 11% from the same period a year ago. That missed analysts’ forecasts of $7.2 billion for the quarter ended June 30.
The television unit, which includes top-rated prime-time network CBS as well as the company’s cable networks, reported quarterly revenue of nearly $4.3 billion. The 17% drop in revenue from a year ago reflects lower advertising revenue and fees paid to license its shows. Operating income for the TV group fell 15% to $1 billion.
“The Paramount and Warner Bros. Discovery releases this week add a nail to (traditional) TV’s coffin,” said Ross Benes, TV and broadcast analyst at Emarketer. “Paramount’s best chance for an exit is through Skydance. The longer they wait, the less the company will be worth.”
Paramount’s film business reported a loss of $54 million, despite shows like “IF” topping the box office in its domestic debut and “A Quiet Place: Day One” recording the best financial performance for the horror franchise.
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