Paramount Global Sees 2022 Streaming Losses Hitting $1.8B – Deadline

Paramount Global CFO Naveen Chopra indicated streaming losses would total about $1.8 billion this year, higher than Wall Street expected, but stuck to the company’s target of peak DTC losses in 2023.

The business lost $901 million in the first half of this year. Chopra anticipated the same in the second half given a choppy advertising market. Adjusted OIBDA — a measure of operating income — was a negative $445 million for the second quarter ended in June.

“We just have to let it play out a bit and manage through some economic headwinds,” he said on a call following first-quarter earnings. Analysts sought but didn’t get any timeline for reaching breakeven/profitability after 2023.

The stock was down a steep 4% earlier today with investors spooked overall by streaming spend and profit visibility across the sector. It’s regained ground, down just hair late morning.

Chopra also reiterated the company’s $6 billion spending target though 2024 but stressed that’s content is leveraged across platforms.

“On contend spend, the most important thing to remember is that when we think about our content investment, we are always looking at it in term of the growth and the return it unlocks.” With streaming revenue and subscriber count growing, “Our content investment is working,” he said. “We don’t want to sacrifice a long-term opportunity.”

A choppy ad market has now become a variable. Auto advertising continues to be squeezed by supply chain issues, the packaged goods sector, managing through inflation, is shutting off the spigot. But travel and tech are strong. Pharmacists are returning and everyone’s talking about major midterm political spending.

CEO Bob Bakish said Paramount is using the current headwinds to increase promotion of in-house assets, especially Paramount+, to boost its visibility with consumers. Paramount Global had a strong upfront and he didn’t seem overly concerned. Chopra reassured the Street that once the ad market settles, he thinks the legacy TV media group can deliver stable growth of advertising and affiliate revenue.

Bakish said he’s confident that Paramount+, which has an ad tier, can hold its own as Netflix and Disney+ prepare to roll out their own ad-supported versions. “Competition is nothing new [and] Our competitive position in the ad market is very strong,” he said. “We have a really diverse [content] across entertainment, sports and news, and our content has been created and formatted with advertising in mind.”

Asked about the possibility of a Paramount+ price increase, CFO Chopra said there are no immediate plans but “they will happen in the future” taking into account what kind of bundles are offered and the value proposition relative to leading services. “We continue to look at pricing, at how we optimize the tiering.”