Paramount Global misses quarterly revenue estimates as cable TV decline bites

By Harshita Mary Varghese

(Reuters) - Paramount Global fell short of Wall Street's fourth-quarter revenue expectations on Wednesday as a continued decline in its cable TV unit clouded higher-than-expected subscriber growth for its Paramount+ streaming platform. 

Shares of the company fell about 2% in extended trading. 

Media giants are reshaping their business strategies in response to the continued erosion of cable TV audiences to streaming platforms. 

According to TD Cowen's analysts, Paramount is highly vulnerable to fluctuations in advertising performance due to its heavy reliance on ad revenue.

The company, which is planning to merge with Skydance Media, reported revenue of $7.98 billion in the quarter, compared with analysts' projection of $8.10 billion, according to data compiled by LSEG. 

Paramount will scrap the diversity, equity and inclusion component of its employee incentive plan, according to a memo seen by Reuters, joining a growing list of major companies, including Disney, that have made similar changes to their DEI initiatives in response to the Trump administration's efforts to dismantle them.

Revenue at its TV media segment fell by 4% from a year earlier, hurt by declines in the linear advertising market and fewer sporting events on CBS.   

Its filmed entertainment division posted an adjusted operating loss of $42 million due to higher marketing costs associated with releases.

However, the company's flagship streaming service, Paramount+, added 5.6 million subscribers during the quarter, its highest addition in two years, compared with expectations for 2.58 million new subscribers, per data from Visible Alpha.

In the fourth quarter, Paramount+ welcomed back the popular American spy thriller "Lioness," while also debuting "Landman," a drama series starring Billy Bob Thornton and Demi Moore.

A strong content lineup, including original productions such as "The Agency," starring Michael Fassbender, helped boost engagement and subscriber growth.

"There are still too many services chasing too few dollars," said Paolo Pescatore, analyst at PP Foresight, adding that partnerships "will be key to success along the long tail of streamers."

Paramount reported an adjusted per-share loss from continuing operations of 11 cents, while analysts were expecting, on average, a profit of 12 cents per share.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Alan Barona)