Paramount Global Takes $1.3 Billion Charge in Q1 for Content Write-Offs, Layoffs
Amid Paramount Global’s removal of Bob Bakish as CEO and the ongoing uncertainty of a company sale, it was business as usual for the first quarter at the media conglomerate — which included a $1.3 billion charge for content write-offs as well as layoffs.
Paramount Global reported Q1 2024 earnings Monday, announcing Bakish’s exit and the installation of an unusual three-in-a-box “Office of the CEO”: CBS’s George Cheeks, Chris McCarthy, Showtime/MTV Entertainment Studios and Paramount Media Networks, and Paramount Pictures’ Brian Robbins. The committee of three made brief remarks on the earnings call but didn’t take questions from analysts. The call, which lasted less than 10 minutes, concluded with the theme music to “Mission: Impossible.”
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During the first quarter of 2024, Paramount Global took a total of $1.12 billion in content charges, including $909 million for the impairment of content to its estimated fair value as well as $209 million for development cost write-offs and contract-termination costs. In its 10-Q filing, the company disclosed that it may incur an additional programming charge of $250 million later in 2024 “related to the termination of an international programming agreement.”
By writing down or writing off content assets, companies reduce the value of those assets on their balance sheets to reduce their taxes owed and to avoid having to pay ongoing residuals.
Paramount Global said the Q1 charges were “in connection with our continued review of our content strategy” and the decision to focus on content with “mass global appeal.” As such, Paramount Global has removed “select content” from its platforms and has opted to scrap some development projects and terminate certain programming agreements.
In Q1 of 2023, Paramount took a $1.67 billion programming charge, which stemmed from its plan to subsume Showtime into Paramount+ as well as efforts to “rationalize and right-size our international operations to align with our streaming strategy and close or globalize certain of our international channels.”
For the most recent quarter, Paramount Global also recorded restructuring charges of $186 million, including $155 million in severance costs for layoffs – mostly affecting the TV media division – as well as for the impairment of office lease assets. The company eliminated about 800 jobs, estimated to be 3% of its headcount, in the quarter.
Paramount Global CFO Naveen Chopra had previously told investors the company expected to take a $1 billion charge in the first quarter, about $200 million related to restructuring and $800 million for content impairments.
During Q1, Paramount+ gained 3.7 million net subscribers, helped by CBS’s telecast of the Super Bowl carried on the streaming platform, to stand at more than 71 million total. Revenue from the company’s streaming businesses rose 24% to $1.88 billion and the direct-to-consumer division cut operating losses by 44%, to $286 million from $511 million in the year-earlier period.
Revenue from the company’s TV operations, its largest business, rose 1% to $5.2 billion, due in part to a 14% uptick in ad revenue lifted by the Super Bowl LVIII broadcast. Revenue from film operations rose 3% to $605 million due to box office from “Mean Girls,” “Bob Marley: One Love” and “The Beekeeper.”
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