Entertainment giant Paramount Global has reported a steep loss in the first quarter of the year, leading to a considerable drop in its stock prices. The company, which owns CBS, MTV, and other channels, declared an adjusted loss per share of $1.81 from continuing operations for the first quarter, while Wall Street had been projecting a profit of 14 cents a share. As a result, Paramount Global's shares have plummeted by 19% to $21.17 in premarket trading. The company has also reduced its quarterly cash dividend to 5 cents a share from 24 cents, a decrease of 79%.
One of the primary reasons behind Paramount's disappointing financial results is the loss of viewers to streaming outlets. As more and more customers switch to streaming services, the company's revenue from cable and satellite TV subscriptions has been significantly affected. The company has invested heavily in programming for its Paramount+ streaming service, which added 4.1 million subscribers in the first quarter, bringing the total to 60 million.
Despite the growth of Paramount+, the company's revenue declined by 1% to $7.27 billion in total sales in the three months ended March 31, lower than the expected $7.43 billion. Bloomberg Intelligence analyst Geetha Ranganathan noted that "Paramount’s direct-to-consumer pivot is turning out to be extremely challenging given the heavy $511 million streaming losses in 1Q, which suggest well over $2 billion for the full year and led to a 40% decline in total Ebitda."
In summary, Paramount Global's stock prices have taken a significant hit following its announcement of a steep loss in the first quarter of the year. The company's struggle to keep up with the shift towards streaming services has resulted in a decrease in revenue from traditional cable and satellite TV subscriptions. Paramount's investment in its streaming service, Paramount+, has shown growth, but it was not enough to offset the overall decline in revenue.