(Reuters) -Paramount Global Inc fell short of Wall Street estimates for quarterly revenue on Thursday, as a broader slump in the advertising market hit the CBS network owner even as its streaming service added millions of subscribers.
Shares in the media company fell about 8% before the bell. The stock has gained about 45% since the start of 2023 to Wednesday’s close.
Rising prices, higher borrowing costs, easing consumer demand across products and services, and geo-political unrest in certain regions have forced companies to pull back on advertising spending.
TV advertising revenue fell 7% in the three months to December, despite a lift from political advertising on the back of U.S. mid-term elections in November.
Paramount+ added a record 9.9 million subscribers, partly due to the streaming release of hit film “Top Gun: Maverick”, as the business cushions the company in the face of increased cord-cutting.
The company last month said it would integrate Showtime, known for popular shows, including “Billions,” “Yellowjackets” and “Dexter”, with Paramount+ across platforms later this year as it prioritizes streaming services.
Total revenue rose 2% to $8.13 billion in the quarter, but missed expectations of $8.16 billion, according to Refinitiv data.
Operating losses in the company’s direct-to-consumer unit, which houses its streaming services like Paramount+ and PlutoTV, rose to $575 million from $502 million. Investors have focused on the service as the company has outlined plans to spend aggressively on content to fend off competition.
“Our content and platform strategy is working and, with even more exceptional content coming this year, we expect to return the company to earnings growth in 2024,” said Chief Executive Officer Bob Bakish.
Paramount is again looking to sell Simon and Schuster, months after a deal to sell the book publisher to Penguin Random House collapsed, Reuters reported earlier this week.
(Reporting by Eva Mathews in Bengaluru and Helen Coster in New York; Editing by Sriraj Kalluvila)