Paramount Global ((PARA)) has held its Q4 earnings call. Read on for the main highlights of the call.
Paramount Global’s recent earnings call reflected a generally positive sentiment, characterized by strong performance in the Direct-to-Consumer (D2C) segment and significant subscriber growth. Despite facing challenges such as declining TV Media revenue and pressures on affiliate revenue, the company demonstrated overall growth in profitability and strategic successes, suggesting a positive outlook moving forward.
Record Increase in Adjusted OIBDA
Paramount Global reported a record increase in Adjusted Operating Income Before Depreciation and Amortization (OIBDA), which rose by 30% year-over-year to $3.1 billion. This growth was primarily driven by significant improvements in the D2C segment and the company’s overall financial health, highlighting its robust operational performance.
Paramount+ Subscriber Growth
The company saw impressive growth in its Paramount+ subscriber base, adding 10 million new subscribers in 2024, with 5.6 million joining in the fourth quarter alone. This surge was accompanied by a 20% increase in global watch time per user, indicating enhanced engagement and a strong content offering.
D2C Profitability Improvement
Paramount’s Direct-to-Consumer segment showed a notable improvement in profitability, reducing losses by $1.2 billion for the year. This significant turnaround sets the stage for future profitability and underscores the effectiveness of the company’s strategic initiatives.
Successful Franchise Strategy
The Sonic the Hedgehog franchise proved to be a major success, exceeding $1.2 billion at the global box office. Sonic 3 emerged as the highest-grossing film in the series, demonstrating the strength of Paramount’s franchise strategy in driving revenue and brand value.
Strong Performance of Original Series
Paramount+ achieved a new milestone, ranking as the second domestic Subscription Video on Demand (SVOD) service for hours watched across all original series. Popular shows like “Landman” and “Lioness” contributed significantly to this achievement, reflecting the platform’s strong content lineup.
Positive Free Cash Flow
The company generated $489 million in free cash flow, marking the highest level in four years. This positive cash flow signals strong financial management and operational efficiencies, providing a solid foundation for future investments and growth.
Decline in TV Media Revenue
Despite the overall positive performance, Paramount faced a 4% decline in TV Media revenue during the fourth quarter. This decline was largely attributed to ongoing challenges in the linear ecosystem, affecting both affiliate and advertising revenues.
DTC Segment Loss in Q4
While the D2C segment showed improvements over the year, it reported a loss of $286 million in the fourth quarter. This was primarily due to content slate seasonality, which impacted the segment’s financial results.
Challenges in Affiliate Revenue
Paramount anticipates an increased rate of decline in affiliate revenue in the first quarter of 2025. This expectation is influenced by recent renewals and changes in the pay-TV ecosystem, which continue to pose challenges for the company.
Impact of Super Bowl and Political Advertising
Looking ahead, Paramount expects a headwind in 2025 from the absence of the Super Bowl and political advertising, both of which significantly boosted 2024 results. This anticipated impact underscores the importance of diversifying revenue streams to mitigate such fluctuations.
Forward-Looking Guidance
During the earnings call, Paramount Global provided guidance for the upcoming year, emphasizing a transformative and profitable year ahead. The company plans to achieve full-year domestic profitability for Paramount+ in 2025, supported by a 33% rise in revenues and an 18% increase in advertising revenue within the D2C segment. Paramount also intends to leverage its content assets, focusing on sports, franchise films, and original streaming content to drive future growth.
In summary, Paramount Global’s earnings call highlighted a mix of strong performance and strategic challenges. The company’s success in the D2C segment and subscriber growth were notable positives, while declines in TV Media and affiliate revenues presented hurdles. Looking forward, Paramount’s guidance suggests a focus on profitability and content-driven growth, positioning the company for a promising future.