Paramount to lay off 15% of its US workforce
Paramount Global, a leading entertainment conglomerate, has announced plans to reduce its US workforce by approximately 15%. This decision is part of a strategy to cut costs, in preparation for an upcoming merger with independent film studio Skydance Media. The job cuts will affect around 2,000 positions, and were disclosed during the company's latest earnings call.
Cable TV decline leads to $6B write-down
Paramount Global has been adversely affected by the decreasing popularity of cable TV, resulting in a nearly $6 billion write-down in the value of its cable networks. This depreciation reflects a shrinking audience for cable TV networks like Nickelodeon, MTV, and Comedy Central, leading to reduced advertising revenue. The company's upcoming merger with Skydance Media, has prompted it to reassess the value of each unit within its portfolio.
Operating loss of $5.3B in Q2
The reassessment process has led to an operating loss of $5.3 billion for Paramount Global in the second quarter. However, without this charge, the firm would have reported an adjusted operating income of $867 million or 54 cents a share, surpassing Wall Street's forecasts of per-stock earnings of 12 cents.
Paramount's streaming business posts first quarterly profit
Despite the challenges, Paramount's streaming business, which includes the Paramount+ subscription service, and its free ad-supported sibling PlutoTV, has reported its first quarterly profit. This is due to an increase in subscription and ad revenue. The direct-to-consumer unit clocked an operating income of $26 million in Q2, compared with a loss of $424 million a year ago. "We are on track to reach domestic profitability for Paramount+ in 2025," stated Paramount co-CEOs George Cheeks, Chris McCarthy and Brian Robbins.
Job cuts to focus on marketing, communications, and support functions
The job cuts are part of efforts to realize cost savings identified across the company. The focus will be on functions within marketing and communications, and lowering headcount in finance, legal, technology and other support functions. "These actions will take place in the coming weeks and will largely be completed by the end of the year," McCarthy added. Despite news of job cuts and an 11% drop in second quarter revenue, Paramount shares climbed 5.3% in after-hours trading.
