By Don Chmielewski
(Reuters) – Paramount Global Inc wrote down about $6 billion in the value of its cable networks on Thursday even as the company’s broadcast business reported its first quarterly profit.
The decline reflects shrinking viewership at cable networks like Nickelodeon, MTV and Comedy Central, which translates into lower advertising revenue. The announcement comes a day after Warner Bros. Discovery (NASDAQ: ) cut its TV assets by about $9 billion.
The impending merger with Skydance Media forced Paramount to revalue each of its units to better reflect their value to the company, resulting in their writedown. The size of the reconciliation dragged Paramount to a $5.3 billion operating loss in the second quarter.
Without the charges, the media company would have reported adjusted operating income of $867 million, or 54 cents a share, beating Wall Street expectations of 12 cents a share, according to LSEG.
Paramount shares rose about 2% in after-market trading.
The company reported revenue of $6.8 billion, down 11% from the same period last year. That was below analysts’ expectations of $7.2 billion for the quarter ended June 30.
The company’s streaming business, which includes the Paramount+ subscription service and the free, ad-supported PlutoTV service, posted its first quarterly profit, helped by growth in subscription and advertising revenue. The direct-to-consumer unit reported operating income of $26 million in the second quarter, compared with a loss of $424 million a year earlier.
“We are on track to achieve domestic profitability for Paramount+ in 2025,” Paramount co-CEOs George Cheeks, Chris McCarthy and Brian Robbins said in a joint statement.
The television unit, which includes the top-rated primetime network CBS, as well as the company’s cable networks, reported quarterly revenue of about $4.3 billion. The 17% decline in revenue from a year ago reflected lower advertising revenue and fees paid to license its programming. The television group’s operating income fell 15% to $1 billion.
Paramount Pictures reported a $54 million loss, despite releases like “IF,” which topped the box office in its domestic debut, and “A Quiet Place: Day One,” which had the best financial performance for a horror film series.