What happened
Paramount Global (PARA -2.22%) was getting booed off the stage today after the media company posted disappointing results in its first-quarter earnings report and cut its quarterly dividend.
As of 12:36 p.m. ET, the stock was down 27.8% on the news.
Image source: Getty Images.
So what
Like most legacy media companies that have jumped into the streaming fray, Paramount is struggling with the transition to streaming, and those challenges were clear in the quarterly results.
Overall revenue was down 1% to $7.27 billion, which missed analyst estimates at $7.42 billion. While the company experienced solid growth in its direct-to-consumer streaming business, where revenue rose 39% to $1.51 billion, linear TV still makes up the bulk of the business and revenue there fell 8% to $5.19 billion.
Additionally, its streaming segment is still unprofitable, posting an operating loss before depreciation and amortization of $511 million, slightly worse than the $456 million it lost in the quarter a year ago. Paramount+, its flagship streaming service, added 4.1 million subscribers in the quarter to reach 60 million.
Overall, the company reported adjusted earnings per share of just $0.09, which was down 85% from the quarter a year ago and below the consensus at $0.17.
Adding to the pain, the company slashed its dividend from $0.24 a quarter to just $0.05 as it seeks to conserve cash to make the streaming business profitable.
CEO Bob Bakish said: "Looking ahead, we are focused on continuing to drive market-leading streaming growth while navigating a dynamic macroeconomic environment. In addition, the updated dividend policy we have announced today will further enhance our ability to deliver long-term value for our shareholders as we move toward streaming profitability."
Now what
Paramount didn't give formal guidance in the quarter, but it said on the earnings call that it was targeting free-cash-flow profitability by 2024.
Still, it faces the same challenges as other legacy media businesses in managing the decline of outlets like CBS while trying to turn its fledgling streaming business profitable.
That won't be easy, and the writers' strike only adds another thorn in the company's side.
