Paramount's streaming triumph fuels investor optimism amid traditional TV turbulence

Shares in Paramount Global jumped 6 per cent premarket Friday after investors cheered the strong growth of the media group's streaming business, even as the company joined its rival Warner Bros Discovery in writing down the value of its TV assets.

Late Thursday, Paramount blew past Wall Street targets for earnings, driven by its streaming unit, which houses Paramount+ and PlutoTV services, posting its first quarterly profit in three years. The company further announced that it would cut 15 per cent of its US workforce as part of cost-cutting plans before its merger with Skydance Media.

The streaming profit eclipsed the write-down of the value of Paramount's cable networks by about $6 billion, a move that puts in the front and centre of the denting of traditional TV businesses as viewership is fading and revenues are sliding in the streaming era.

"Results in the rest of Paramount's business were unsurprisingly weak, but at Paramount's current market value, it shouldn't take much good news to generate enthusiasm," Morningstar analyst Matthew Dolgin said.

Revenue at Paramount+ jumped 46 per cent in the second quarter, boosted by year-on-year growth in subscribers and higher prices. The revenue generated by its TV unit fell 17 per cent.

Earlier this week, Warner Bros Discovery announced a $9 billion charge on its TV assets.

Like other media companies, Paramount has also been taking initiatives to enhance the streaming business to gain an expanded audience. The company had reached an agreement on a deal earlier in the year with US cable giant Charter Communications to enable Charter's Spectrum TV subscribers to have access to the ad-supported version of Paramount+.

"While the viewership of linear networks has declined significantly, and Paramount+ is not currently in the same league as the biggest and most popular streaming platforms, we still see advantages to the menu of distribution that Paramount offers," Dolgin added.