Paramount Fourth Quarter Ad Revenues Decline by 9%, Streaming Drops by 4%

Paramount Skydance is currently navigating a turbulent time as it vies for the acquisition of Warner Bros. Discovery. Despite this, the company is facing challenges with its core advertising revenues across its major platforms. Total core advertising revenues dipped by 4%, totaling $3.8 billion. When factoring in political advertising, the decline was steeper, at 9% overall.

The company’s linear TV networks and stations experienced a 10% year-over-year drop in advertising revenue, amounting to $2.95 billion, with a 3% decrease in core advertising, excluding political ads. Direct-to-consumer (D2C) streaming advertising results for Paramount+, Pluto TV, and BET+ also saw a decline of 4%, reaching $853 million. Specifically, Pluto TV saw a significant 16% decrease due to what Brian Wieser of Madison and Wall attributes to under-investment in content and monetization in the maturing streaming market.

On a more positive note, Paramount’s affiliate fees and subscription fees dropped by 2.9% to $5.4 billion. Looking at TV media’s affiliate revenue alone, distribution fees were down by 7%, totaling $2.8 billion. In contrast, D2C streaming fees, including Paramount+, showed a 16% increase, with subscribers growing by 4% to 78.9 million.

Despite these challenges, one promising financial indicator is a decline in fourth-quarter content costs for TV Media and the streaming business by 8.5%. TV Media content costs were reported at $3.5 billion, while streaming costs totaled $1.8 billion. However, Wieser expresses concern, noting that as the industry invests more in content, an under-performance in ad sales is not surprising.

Moving forward, Paramount anticipates growth in D2C advertising throughout the year, alongside modest declines in TV media advertising. The company remains focused on managing its business effectively amidst these challenges.