The big trend in Q3 earnings this year was streaming growth, and Paramount was no exception.
In a recent call with investors on Friday morning, Co-CEO Chris McCarthy pointed to the success of Paramount’s DTC business as “reinforcing our position as the number four global streaming service.”
DTC revenue came out to $1.8 billion, of which advertising was $507 million – $77 million more than this time last year, at a high growth rate of 18% year-over-year.
Advertising revenue declined 2% YOY to $1.6 billion total. TV media revenue, which includes advertising, licensing, affiliate and subscriptions, decreased 6% YOY to $4.3 billion.
Overall, advertising revenue made up just over a quarter (27%) of Paramount’s DTC revenue and about 38% of its TV media revenue this past quarter.
Paramount also earned $6.7 billion in revenue for Q3 overall, a slight decrease of 6% compared to this time last year.
Thank Pluto for profits
Q3 marked the second quarter of profitability for Paramount’s DTC arm, and streaming platform Paramount+ is on track to reach domestic profitability in 2025 – although international profitability may take 12 to 18 months longer, CFO Naveen Chopra said.
FAST channel Pluto, meanwhile, is already a profitable business, and achieved its highest consumption so far of 5.6 billion viewer hours.
Meanwhile, Paramount+ added 3.5 million new subscribers and grew its revenue 25% YOY (although no specific amounts were mentioned).
McCarthy cited the return of both kinds of football with NFL and UEFA Europa League, popular series like “Mayor of Kingstown” and “Tulsa King,” and theatrical VOD releases like “A Quiet Place: Day One” as drivers of Paramount+ growth.
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Moving forward, he expressed confidence in Paramount’s ability to “remain as a standalone” streaming provider without relying too heavily on bundles or app integration deals, although he did mention recent partnerships with Walmart’s membership benefits package, Walmart +, and with Delta Airlines’ in-flight entertainment.
“We’ve talked for some time [about] the importance of having a diverse subscriber base that spans multiple channels,” Chopra added later on. “We’re able to acquire and keep subscribers very, very efficiently, and that’s really flowing through to the bottom line.”
The Nielsen fallout
While TV has fared a little worse, according to Paramount it’s not a reflection of the company’s success but of “declines in the linear advertising market,” the earnings report reads.
The decline was also offset by higher political advertising, as well as “the recognition of revenue underreported by an international sales partner in prior periods.”
While the international sales partner in question was not named in either the call or report, odds are good that this refers to the UK’s Sky Media, which recently disclosed it would have to recompense partners like Paramount and Warner Bros. Discovery after miscalculating what it owed them.
Another partner that did get a specific mention, though, was Nielsen. Paramount’s contract with the TV measurement company expired sometime at the tail end of September and has yet to be renewed, prompting questions from investors about what comes next.
According to co-CEO George Cheeks, while the two companies are still in talks for an amicable resolution, so far the dispute hasn’t led to an adverse impact on ad revenue, and the company doesn’t expect any further material impact in Q4.
“This really is not about affordability. It’s about getting the value we need for what we pay,” he added, noting that the Nielsen fee for certain networks ideally shouldn’t be greater than the ad revenue those networks generate.
In the meantime, the Paramount execs are looking forward to Q4, which typically yields the strongest advertising revenue for the whole year – and that’s not counting the delayed benefit from political advertising this time around.
