COMMENTARY

Uneasy Premium Streaming In 2023: Profitability, Revenue, Sub Growth - Moving Fast and Slow

• by Wayne Friedman , Staff Writer, February 23, 2023

Paramount Global offers a clearer picture of what legacy TV-based companies are up against in the streaming world.

But the pacing seems to be all over the map -- in terms of positive and negative measures, both quick and slow-moving.

For sure, there are growing streaming revenues, but soaring costs as well -- all while the overall marketplace seems to be contracting, with consumers weeding out what they really want. That is the ‘quick’ piece.

At the same time, most platforms -- including Paramount -- intend to raise prices. Profitability is still a few years out. That's the "slow" piece.

Paramount's fourth-quarter 2022 results shows its TV media -- the company's main TV business -- posted $5.9 billion in revenue, down 7% versus a year ago. Revenue for its direct-to-consumer business (D2C) came in at $1.4 billion  -- nicely up 30% versus a year ago.

The bottom line, of course, comes with traditional cash flow: TV media is at $1.3 billion in revenue (rising 5%), while D2C cash flow is now expanding losses -- negative cash flow -- by 15%, at $575 million.

Paramount is in a range similar to other companies -- with a huge $1.7 billion to $2.3 billion in annual net losses for D2C.

The sliver of good news is that Paramount seemingly was able to rapidly grow 10 million subscribers to 56 million. Some other glimmers of hope: overall company-wide cash flow was 10% higher to $614 million -- all because of continued good news at its traditional TV media networks/stations.

Shareholders? Well, year-over-year, diluted earnings per share dropped nearly 70% to just 8 cents. Oooh..

This is, of course, a static picture in time. Paramount+ will soon merge with D2C app Showtime. There will be cost savings and the company will benefit.

But what happens after that -- long term? Paramount's TV media business -- as well as others -- is declining, though ever so slowly. It will still be around for many years to come.

Will traditional TV-based media companies just let their legacy business languish?

Think more like other media, which has been pushed aside by legacy media companies -- newspapers, radio, publishing, out-of-home, and yellow pages.

TV networks seemed destined to join that group of media also-rans -- now amid semi-fond memories of the past.

Are we in a sprint.. or a marathon?