Even Tom Cruise can’t fly past the costs of making great content.
Despite seeing strong revenue gains from its streaming operations and from the success of the sequel to Cruise’s “Top Gun” in theaters, Paramount Global saw profit drop in its second fiscal quarter as it increased investment in new content while seeing decreases in advertising and affiliate fees at its main TV businesses.
The owner of the CBS broadcast network, the Nickelodeon cable channel and the Paramount movie studio said operating income fell by 33% in the period, down to $819 million, compared with more than $1.2 billion in the year-earlier period. Revenue during the quarter increased 19% to nearly $7.8 billion, compared with nearly $6.6 billion a year earlier.
Paramount Global said net income attributable to the company fell to $419 million, or 62 cents a share, compared with $1.03 billion, or $1.56 a share, in the year-earlier quarter.
In a statement, Paramount Global CEO Bob Bakish said the company was focused intently on making gains in the streaming market. Paramount Global, he said. ” 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.” Paramount Global said it added 4.9 million subscribers to Paramount+, even though it had to remove 1.2M subscribers in Russia.
Paramount’s TV operations, its biggest business, saw revenue grow just 1%, to nearly $5.26 billion, as advertising fell 6% and affiliate and subscription revenue declined by 3%.
Filmed entertainment was more promising. Revenue was up $630 million in the quarter, driven by the releases of “Top Gun: Maverick” and “Sonic the Hedgehog 2.” Unlike its other divisions, Paramount’s movie business saw an increase in operating income as well.
Direct-to-consumer operations also thrived on the top line, if not the bottom. Revenue increased 56% over the year-earlier period to about $1.19 billion, thanks to increased subscriptions and advertising at Paramount+ and the free, ad-supported Pluto.