PARA shares dropped sharply on Thursday after the media company reported a lower-than-expected quarterly profit and its CEO suggested price increases in 2023. The company (ticker: PARA) revealed adjusted earnings of 8 cents per share, far below the 24 cents per share analysts had predicted. Revenue of $8.13 billion was slightly below the anticipated $8.2 billion, attributable to a slump in advertising.
Paramount stated that their advertisement revenue dropped 5% compared to the same quarter the year prior, attributing the decline to the international market and currency fluctuations. Furthermore, domestic advertising experienced a 2% dip as advertisers have been reluctant to invest in a weak economic environment. This downturn has been noted by other companies such as Snap, who also reported losses in 2022. CEO Robert Bakish pointed out the cyclic nature of the ad market, but stated that early signs of stabilisation have been seen.
Last month, Paramount announced the integration of its Showtime cable channel and Paramount+ streaming platform. As a result, the cost of the Premium tier will increase to $11.99 from $9.99, while the Essential tier (without Showtime) will cost $5.99 instead of $4.99. These price hikes apply to both existing and new customers. The move follows Paramount’s record subscriber growth of 9.9 million in the fourth quarter, mainly attributed to its streaming service. Despite arriving late to the streaming world, this shift has reduced the company’s exposure to the declining linear-TV business, though at the expense of hefty content costs. Subsequently, Paramount’s share price fell by 3% to $23.77 when markets opened on Thursday, likely influenced by these elevated expenses. In the previous quarter, the company’s costs and expenses increased by 5.2%, reaching $8 billion.
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