Paramount Global (NASDAQ:PARA) is set to release its second-quarter earnings report after market close on Thursday. This will be the company’s first earnings announcement since revealing its plan to merge with Skydance Media, a move that signifies the end of the Redstone family’s control over the company.
For Q2, analysts anticipate that Paramount will report a direct-to-consumer (DTC) loss of $267 million, according to Bloomberg consensus estimates. This loss is expected to be smaller compared to the $286 million loss in the first quarter and the $424 million loss from the same period last year.
The company has previously projected that it will achieve domestic profitability for Paramount+ by 2025. The streaming service currently has 71.2 million total subscribers, with shares down 30% year-to-date.
Wall Street Expectations
Bloomberg consensus estimates for Paramount’s Q2 performance include:
- Revenue: $7.24 billion, down from $7.62 billion a year ago
- Adjusted earnings per share (EPS): $0.13, compared to $0.10 a year earlier
- Paramount+ subscribers: 572,000 net additions, versus 700,000 net additions a year ago
Linear advertising revenue is expected to decrease by double digits this quarter. Consensus estimates predict a 10% decline from the previous year, following a 14% increase in Q1 due to record Super Bowl ad sales. Linear profits are expected to continue their decline amid increasing cord-cutting trends, and Paramount’s streaming segment is projected to remain unprofitable for at least the next year. Wall Street anticipates a 5% drop in EBITDA for Q2.
Implications of the Skydance Deal
Despite these financial challenges, the impending Skydance takeover might overshadow the current financial results. The all-stock deal is anticipated to close in Q3 2025, with Skydance valued at $4.75 billion upon completion. The deal includes an injection of $6 billion into Paramount, with $1.5 billion allocated to address its debt issues.
Skydance CEO David Ellison will become chairman and CEO of the newly combined entity, while former NBCUniversal executive Jeff Shell will serve as president. The new leadership has outlined a strategic vision for Paramount, which involves $2 billion in cost cuts to be implemented swiftly.
Bloomberg Intelligence media analyst Geetha Ranganathan noted that while the Skydance transaction is strategically significant for Paramount, positive catalysts might not emerge immediately. The focus will likely remain on cost-cutting, with future success depending on effective execution amidst industry challenges.
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