Paramount Global (PARA)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue grew 5% year over year to $7.984B; GAAP diluted EPS from continuing operations was -$0.33 and adjusted diluted EPS was -$0.11, with adjusted OIBDA of $406M .
• Direct-to-Consumer momentum continued: Paramount+ added 5.6M subs (77.5M total), revenue up 16%, ARPU +1%, and record engagement; DTC adjusted OIBDA loss improved by $204M year over year to -$286M. Paramount+ ranked #2 domestically for hours watched across original series. Bold: strongest quarterly net adds in two years and #2 SVOD ranking .
• Filmed Entertainment revenue surged 67% to $1.081B on Gladiator II and Sonic 3, but OIBDA fell $66M due to heavy marketing on five releases and timing of Sonic 3’s late-quarter release. Bold: revenue surge with operating loss due to marketing costs .
• CFO guided to full-year domestic profitability for Paramount+ in 2025; expects Q1 2025 adjusted OIBDA to decline year over year (Super Bowl comp, affiliate renewals), but full-year free cash flow to increase in 2025 and strong OIBDA growth ex-Super Bowl/political. Bold: ~$90M above-expected variable compensation in Q4 weighed on results .
• Cash and equivalents were $2.661B; Q4 free cash flow was $56M and FY 2024 free cash flow was $489M. Net leverage improved to 3.8x. Dividend declared at $0.05 per share (paid Apr 1, 2025). Stock catalysts: streaming profitability path, Skydance deal expected to close H1’25, and franchise film slate .

What Went Well and What Went Wrong

• What Went Well

  • Paramount+ growth and engagement: 5.6M net adds in Q4 (77.5M total), ARPU +1%, and record domestic watch-time per user (+22%); ranked #2 domestic SVOD for hours watched across originals .
  • DTC profitability trajectory: Q4 DTC adjusted OIBDA loss improved by $204M year over year; FY DTC loss improved nearly $1.2B, bolstering confidence in 2025 domestic profitability target .
  • Box office and content franchises: Gladiator II and Sonic 3 drove theatrical revenue; Sonic 3 neared $500M global box office and led franchise to $1.2B cumulative; strong multi-platform franchise strategy articulated by management .

• What Went Wrong

  • GAAP EPS and operating income pressure: GAAP diluted EPS -$0.33; operating income fell 68% year over year to $129M amid impairments and corporate items .
  • TV Media headwinds: revenue down 4% year over year; advertising -4% and affiliate/subscription -7% on linear declines and fewer sports events; adjusted OIBDA down 17% .
  • Filmed Entertainment OIBDA down $66M despite revenue growth due to heavy marketing on five releases and late-quarter timing (Sonic 3), highlighting cost intensity of slate .

Financial Results

Segment revenue breakdown (Q4):

KPIs and cash metrics:

Notes: Management disclosed ~$90M higher-than-expected variable compensation impacting adjusted OIBDA in Q4 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “2024 was a transformative year… Total company adjusted OIBDA returned to growth, up 30% year-over-year to $3.1 billion… free cash flow $489 million… gives us great confidence Paramount+ will achieve full year domestic profitability for 2025.” — Co-CEOs and CFO prepared remarks .
• “Paramount+ reached a new high, ranking as the #2 domestic SVOD service for hours watched across all Original Series… subscribers reached 77.5 million, with 5.6 million net additions in the quarter.” — Co-CEOs press release .
• “Adjusted OIBDA was impacted… variable compensation and actions taken to mitigate [280G] exposure… about $90M higher than expected.” — CFO .
• “Theatrical revenues increased $336 million, driven by Gladiator II and Sonic the Hedgehog 3… Filmed Entertainment adjusted OIBDA decreased $66 million as a result of marketing costs associated with five films in the quarter.” — Press release .

Q&A Highlights

• DTC profitability scope clarified: “It is profitability for Paramount+ domestic.” — Co-CEO correction .
• 2025 content spend: “Relatively flat on a total company basis to 2024,” with remixing toward streaming .
• Free cash flow outlook: Expect year-over-year FCF growth in 2025; restructuring dilutes conversion by ~10 percentage points; Q1 cash restructuring ≈ $150M .
• Advertising: D2C ad growth strong (+18% FY 2024); linear pressure concentrated in cable; expect strong slate and positive scatter into upfronts .
• Licensing/windowing: Fewer originals for third parties; innovation in windowing and deal structures to unlock more value .
• Distribution/skinny bundles: Holistic negotiations across tiers; participating in Comcast’s sports/news package; cautious on skinny-bundle value proposition .
• Slate financing (Domain Capital): Long-term alliance to spread production cash outlay; positive free cash flow and OI attributes .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to a Capital IQ mapping issue for PARA; therefore, estimate comparisons could not be provided [SpgiEstimatesError].

Key Takeaways for Investors

• Paramount+ is approaching scale with clear engagement and churn reduction drivers; management reaffirmed full-year domestic profitability in 2025, a key de-risking catalyst for the streaming narrative .
• Short-term headwinds: Q1 2025 adjusted OIBDA to decline YoY due to Super Bowl lapping and affiliate renewals; expect back-half weighted OIBDA growth and full-year FCF up in 2025 .
• Linear erosion persists (affiliate/ad declines), but company expects net growth in total affiliate/subscription revenue when combining streaming with traditional distribution .
• Q4 variance drivers: ~$90M unplanned variable compensation elevated expenses; DTC OIBDA loss seasonality; Filmed OIBDA pressured by heavy marketing despite strong box office — monitor execution on cost discipline .
• Strong content/franchise pipeline (Mission Impossible, Sonic universe, Yellowstone) supports DTC engagement and cross-platform monetization; leverage improved to 3.8x providing balance sheet flexibility .
• Corporate actions: Dividend maintained ($0.05), Skydance transaction on track for H1’25 close; any deal progress, measurement stability (Nielsen), and distribution renewals are incremental sentiment drivers .
• Without consensus estimates, focus on internal KPIs (subs, ARPU, DTC ad growth, free cash conversion) and execution against 2025 profitability and FCF targets to gauge trajectory .