Paramount Global on Thursday reported it took a $6-billion write-down on its cable television networks business, in yet another sign that Hollywood is reckoning with the ongoing deterioration of the traditional television business.
The disclosure, part of Paramount’s second-quarter earnings filing, comes as the company prepares to be taken over by David Ellison’s Skydance Media in the first half of next year. Paramount has for years been grappling with the erosion of its media network portfolio, which includes Comedy Central, MTV and Nickelodeon.
The once hugely profitable business has suffered from declining relevancy and an acceleration of cord-cutting as audiences increasingly gravitate toward streaming services.
The company is in the process of cutting its workforce by 15%, executives said during Thursday’s earnings call with analysts.
It also is trying to transition to streaming through its Paramount+ service, which is growing but has lost money for years. During the second quarter, Paramount’s streaming business, which includes the free ad-supported service Pluto TV and Paramount+, reported a narrow profit, with operating income of $26 million. It was the streaming unit’s first-ever profit.
The company plans to roll out Paramount+ price increases for new customers to boost profitability.
On Wednesday, rival Warner Bros. Discovery made a similarly dire admission, telling investors that its cable assets, including HGTV, Cartoon Network, CNN and Food Network, are now worth $9 billion less than they were two years ago.
Companies periodically take write-downs to reflect when their assets shrink in value for a variety of reasons.
Paramount Chief Financial Officer Naveen Chopra told analysts that the huge write-down was due in part to the continued ravages of cord-cutting. But the larger issue, Chopra said, was that the company needed to align the value of its assets with the valuations that were contained as part of the $8-billion Skydance deal.
Paramount’s stock fell 3% to $10.18 on Thursday. The shares have declined nearly 30% on Wall Street so far this year.
The company reported second-quarter revenue of $6.8 billion, down 11% from the same period a year ago. Its unadjusted operating loss was $5.3 billion, compared to a loss of $250 million during the prior-year quarter.
This is a developing story.