By
Steve Muchoki
December 21st, 2023
The overall slowdown in the ad industry is hurting Paramount’s profits to a considerable extent. The company also plans to bring together the streaming infrastructure for Paramount+ and Showtime.
On Tuesday, December 6, Robert Bakish, the CEO of Paramount Global (NASDAQ: PARA), lowered the revenue forecast from advertising sales during the fourth quarter.
Paramount Q4 Ad Revenue Forecast
During the recent quarterly earnings call, Bakish said that the advertising market is turning from bad to worse. This has also impacted Paramount’s business to an extent.
As a result, Bakish revised the company’s previous forecast to down “a bit below” that of the third quarter. Earlier, it was supposedly in line with the prior results. Speaking at the UBS Global TMT Conference in New York, the Paramount CEO said that “the current market is challenging and we’re in it every day. That challenge is both on the linear side and the digital side. We had looked for some improvement in some sectors, but we haven’t seen that.”
During the third quarter, Paramount’s ad revenue dropped by 2%. However, the company is citing a greater decline in the ad revenue during the fourth quarter. Along with its portfolio of cable-TV channels and broadcasting network, Paramount’s streaming service Paramount+ also has an ad-supported tier. The company also owns the free ad-supporting streamer Pluto, which also faces a revenue downturn.
Paramount is not the only player facing the heat of the rough and declining ad market. NBCUniversal is also facing a similar challenge over the last six months. But Paramount CEO remains optimistic that the marketing trend will reverse. Bakish said:
“A challenging advertising market is cyclical. We managed through a number of these cycles, as recently as the beginning of the decade. This too is a cycle and will turn. And when it does turn, you really see the power of the portfolio of assets we have.”
Paramount to Bring Changes to Its Showtime
In further development, the Paramount CEO said that it doesn’t make sense in running the Showtime premium cable network as a standalone operation.
Citing the rising financial challenges for the TV industry, Bakish said that Paramount will follow the “consolidation economics” at Showtime. Meaning, Paramount will “unlock synergies” between the channel and the company’s broader portfolio.
The company is now planning to bring together the streaming infrastructure for Paramount+ and Showtime. Bakish said that offering Showtime within the Paramount+ app “really works well”.
Bakish added:
“We’ll continue to look for a way to create value there. It’s transformation. It does affect people.”
Soon after yesterday’s update, the Paramount (NASDAQ: PARA) stock price tanked by 7% ending up the trading session at $18.15. The PARA stock price is already down by more than 43% year-to-date against the drop of 17% at the S&P 500 index.