Paramount jumps as steady streaming growth eclipses TV unit writedown
Aug 9 (Reuters) -Paramount Global's PARA.O shares jumped 6% premarket on Friday as investors cheered strong growth at the media group's streaming business, even as the company joined rival Warner Bros Discovery in writing down the value of its TV assets.
Paramount late on Thursday comfortably beat Wall Street targets for earnings, propelled by its streaming unit, which houses Paramount+ and PlutoTV services, posting its first quarterly profit in three years. The company also said it would cut 15% of its U.S. workforce, part of its cost-cutting plans ahead of its merger with Skydance Media.
The streaming profit eclipsed Paramount's writedown of the value of its cable networks by about $6 billion, a move that highlights the erosion of traditional TV businesses as viewership dwindles and revenues decline in the streaming era.
"Results in the rest of Paramount's business were unsurprisingly weak, but at Paramount's current market value, it shouldn't take much good news to generate enthusiasm," Morningstar analyst Matthew Dolgin said.
Revenue at Paramount+ surged 46% in the second quarter, aided by year-on-year growth in subscribers as well as higher prices. Paramount's television unit, meanwhile, saw a 17% decline in revenue.
Earlier this week, Warner Bros Discovery announced a $9 billion charge on its TV assets.
Paramount, like other media companies, has been beefing up its streaming business with plans to grab a wider audience - the company earlier this year signed a deal with U.S. cable giant Charter Communications CHTR.O to give Charter's Spectrum TV customers access to Paramount+ ad-supported service.
"While the viewership of linear networks has declined significantly, and Paramount+ is not currently in the same league as the biggest and most popular streaming platforms, we still see advantages to the menu of distribution that Paramount offers," Dolgin added.
Reporting by Deborah Sophia in Bengaluru; Editing by Maju Samuel
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