Paramount shares tank 28% after posting Q1 loss of $1.1B

Paramount Global missed first-quarter revenue estimates on Thursday amid a weak advertising market in its TV business and cut its dividend.

The company incurred a $1.7 billion charge in connection with its plan to integra𒀰te Showtime into its Paramount+ streamin✨g service and remove certain programming.

Shares of the New York-based company, formerly known as ViacomCBS, fell 28% to close at𒁃 $16.40.

Prior to Thur𒊎sday, they had gained more than 35% this 𝕴year.

Chief Executive Officer Bob Bakish in a call with investors said the company is “navigating a challenging and uncertain macroeconomic environment, and you see the impact of that on our financials, as the combination of p♛eak streaming investment intersects with cyclical ad softness.”

The company is 🦩seeing signs of stabilization in the ad market, Baki♕sh said.

Paramount Global said its dividend cut to 5 cents per🦂 share will result in approximately $500 💞million in annualized cash savings.

“The company’s 79% dividend cut is not encouraging, but it was necessary,” said Huber Research analyst Craig Huber. “They should have done it years ago, but better late than never.”

Paramount invested in original content to try to attract subscribers to its streaming platform but is up against competition from established players such as Netflix and Walt Disney’s Disney+.

Paramount+, the company’s flagship streaming platform, added 4.1 million subscribers during the quarter, compared with 9.9 million in the preceding quarter. 

It did beat the Wall Street estimate of 3.1 million new subscribers, according to data from Visible Alph🃏a.

Sales for its TV media segment declined by 8% from a year earl💃ier and advertising revenue fell by 11%.

Severa♐l factors, including higher prices, lower consumer demand across products and servi🎀ces, and weak markets have forced companies to reduce advertising spending.

Revenue at the company was $7.27 billion in the first quarter ended March 31 compared with analysts’ average estimate of $7.42 billion, according to Refinitiv IBES data.

Revenue in the company’s direct-to-consumer unit, which includes streaming platforms Paramount+ and PlutoTV, grew 39% in the first quarter.

Revenue🐎 from its filmed entertainment business fell 6%.

The operating loss was $1.23 billion for the quarter compared with an operating income of $775 millio💝ꦗn a year earlier.  

Paramount swung to a loss of $1.1 billion, or $1.74 a share, compared with earnings of $433 🌳million,🌠 or 65 cents a share, a year earlier.

The company earned 9 cents per share on an adjusted basis, below Wall Street’s estimate of 17 cents per share, Refinitiv IBES data showed.