By Deborah Mary Sophia
(Reuters) – Shares of Paramount Global rose as much as 6% in early trading on Friday as investors cheered strong growth in the media group’s streaming business even as the company joins rival Warner Bros Discovery (NASDAQ:) writing down the value of his TV assets.
Paramount comfortably beat market expectations for earnings late Thursday, driven by its streaming unit posting its first quarterly profit in three years. The company also said it would cut 15% of its U.S. workforce.
The streaming gain overshadowed Paramount’s nearly $6 billion writedown in the value of its cable networks, a move that highlights the erosion of traditional TV businesses in the streaming era.
“Results in the rest of Paramount’s businesses were unsurprisingly weak, but at Paramount’s current market value it wouldn’t take much good news to generate enthusiasm,” said Morningstar analyst Matthew Dolgin.
Paramount shares were last up about 3%. They are down more than 30% this year, giving the company a market cap of $7.33 billion after the last close.
The stock has lost about 75% of its value since the company was founded during the 2019 reunion of CBS and Viacom.
Legacy media groups, including Paramount and Walt Disney (NYSE:) have struggled to stem the decline in their TV business as consumers abandon cable TV in favor of streaming, resulting in declining viewership and declining revenues.
Earlier this week, Warner Bros Discovery announced a $9 billion charge on its TV assets.
Paramount’s television division saw a 17% decline in revenue in the second quarter. Meanwhile, revenue at Paramount+, the company’s streaming service, rose 46%, helped by annual subscriber growth and higher prices.
“There will always be concerns among traditional media giants as they focus on a streaming TV future,” said Paolo Pescatore, analyst at PP Foresight.
“For Warner Bros, it looks like a bigger car crash than most, but Paramount, along with Disney, are leading the way for Hollywood giants as they navigate this complex journey to streaming.”
