© Reuters. Toy figures of people are seen in front of the displayed Paramount + logo, in this illustration taken January 20, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
(Reuters) – Media company Paramount Global beat third-quarter revenue and profit estimates on Thursday and said costs at its streaming division have peaked, sending its shares surging 10% in extended trading.
The integration of Paramount+ with Showtime has helped the company boost its subscription numbers, as well as advertising revenue from its streaming service, while creating room for it to keep costs in check.
Paramount+ added 2.7 million subscribers in the third quarter, beating analysts’ estimates of 2.02 million additions, according to Visible Alpha estimates.
Despite expenses at the streaming division jumping 23% to $1.93 billion, the company managed to narrow its adjusted operating loss to $238 million from $343 million a year earlier, partly due to benefits from price hikes.
“We now expect DTC losses in 2023 will be lower than in 2022 – meaning streaming investment peaked ahead of plan,” CEO Bob Bakish said.
While streaming is the chief driver of revenue growth for the company, it remains unprofitable. That has forced it to juggle growth with cost controls at that unit because the highly profitable cable division is suffering from a rapid sales decline.
Revenue at its TV media division fell 8% to $4.57 billion, driven by a 14% drop in advertising revenue due to softness in the global advertising market and lower political advertising, Paramount said.
The decline also reflected a drop in licensing revenue from third parties. The Hollywood strikes shut down production, resulting in less content available for licensing.
Revenue was $7.13 billion for the quarter ended Sept. 30, compared with analysts’ estimate of $7.10 billion, according to LSEG data. The company’s adjusted earnings per share were also above estimates.
Quarterly revenue from its filmed entertainment business rose 14% to $891 million, thanks to releases including “Mission: Impossible – Dead Reckoning Part One” and “Teenage Mutant Ninja Turtles: Mutant Mayhem.”
However, the filmed entertainment group reported an operating loss of $49 million, citing the timing of theatrical releases, as well as costs associated with strike-related production shutdowns.