Paramount Global (PARA) reported second-quarter earnings after the bell on Monday that beat estimates as the company continues to climb back from advertising headwinds and escalating streaming losses.
The difficult TV ad market, which has hit legacy media companies across the industry, continued to be a headwind with linear ad revenue slumping 10% year-over-year, worse than the 8% drop expected. Management has maintained that the second half of the year will see improvements in the ad market.
Paramount reported a direct-to-consumer loss of $424 million in the second quarter compared to a loss of $445 million in the prior-year period. The company has projected over $2 billion of streaming losses this year.
Notably, Paramount announced that it has sold Simon & Schuster to investment firm KKR after the publishing giant's sale to Penguin Random House collapsed late last year. The deal is valued at $1.62 billion.
Shares climbed about 7% in after-hours trading following the results.
Here are Paramount's second quarter results compared with Wall Street's consensus estimates compiled by Bloomberg:
Revenue: $7.62 billion versus $7.43 billion expected versus
Adj. earnings per share (EPS): $0.10 versus $0.00 expected
Paramount+ subscriber net additions: 7,000 versus 1.14 million expected
The company has guided to a return to positive free cash flow and earnings growth in 2024. That should be aided by the recent price hikes of its streaming tiers following the integration of Showtime with Paramount+, layoffs, business restructurings, and a dividend cut last quarter that initially sent shares plummeting nearly 30%.
Paramount launched its Paramount+ with Showtime offering on June 27 at a price point of $11.99 a month. The new offering, which the company described as its "cornerstone" service, is available alongside the ad-supported Paramount+ Essential plan and the free ad-supported service Pluto TV.
As a result of the merger of the two streaming services, the company took a content impairment charge of $1.67 billion in the first quarter but said it expects $700 million in future annual expense savings.
Still, the integration hurt subscriber net additions with the company adding just 7,000 Paramount+ subscribers in the second quarter compared to 3.7 million in Q2 2022.
M&A still top of mind amid financial struggles
Despite the company's financial pressures, its strong slate of assets suggests more M&A activity to come as the macro environment continues to improve.
Paramount has long been viewed as a potential acquisition target due to its small size relative to competitors. The company boasts a current market cap of about $10 billion, compared to Disney's (DIS) $157 billion and Netflix's (NFLX) $193 billion.
"Consolidation has been the rule in business for a long time, certainly been the rule in media," he said at the time. "So, it’s hard for me to bet on anything other than consolidation will happen in the future."
Nevins's proposal was one of many offers the company had received for Showtime over the past several years, the Journal said. The network, which is home to popular shows like "Billions" and "Yellowjackets," was said to be a key driver in unlocking value for the media giant.
In addition to the Showtime offer, the company has tip-toed around recent reports of a potential sale of the company's BET Media Group, which includes cable channels BET and VH1, after producer Tyler Perry and media mogul Byron Allen reportedly expressed interest in purchasing a majority stake.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Read the latest financial and business news from Yahoo Finance
