Paramount Global writes down value of cable networks by $6 billion

By Dawn Chmielewski

(Reuters) – Paramount Global wrote down the value of its cable networks by nearly $6 billion Thursday, in another sign of how significantly the television market has deteriorated in the era of streaming video.

The impairment reflects the shrinking audience for cable TV networks like Nickelodeon, MTV and Comedy Central, a decline that translates to lower advertising revenue. The announcement comes a day after Warner Bros Discovery (NASDAQ:) took a $9 billion write-down of its TV assets.

The pending merger with Skydance Media forced Paramount to re-assess the value of each of its units to better reflect their worth to the company, resulting in the writedown. The magnitude of the reconciliation dragged Paramount into an operating loss of $5.3 billion for the second quarter.

Absent this charge, the media company would have reported an adjusted operating income of $867 million, or 54 cents a share, ahead of Wall Street’s forecasts of per-share earnings of 12 cents, according to LSEG.

Paramount reported revenue of $6.8 billion, down 11% from the same period a year ago. That missed analyst forecasts of $7.2 billion for the quarter ended June 30.

The company’s streaming business, which includes the Paramount+ subscription service and its free, ad-supported sibling, PlutoTV, posted its first quarterly profit, fueled by growth in subscription and ad revenue. The direct-to-consumer unit reported an operating income of $26 million in the second quarter, versus a loss of $424 million a year ago.

“We are on track to reach 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 primetime’s top-rated network, CBS, as well as the company’s cable networks, reported quarterly revenue of nearly $4.3 billion. The 17% decline in revenue from a year ago reflects a lower ad revenue and fees paid to license its shows. Operating income for the television group fell 15% to $1 billion.

Paramount’s film business reported a loss of $54 million, despite releases like “IF” topping the box office in its domestic debut, and “A Quiet Place: Day One” recording the best financial performance for the horror franchise.