Paramount+ sees subscriber growth, but higher production costs offset earnings

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Paramount had a mixed bag of results in its last quarter of 2021 that included some good news for streaming — but also a red flag.

On one hand, parent Paramount Global announced its Paramount+ streamer added 6.8 million subscribers during that time period, capping out at about 40 million accounts worldwide.

The company credits series such as “Halo,” “1883,” “Star Trek Picard,” live event specials and the NFL for helping drive that growth. Subscription revenue increased 95% year over year.

Meanwhile, Paramount’s free ad-supported streamer Pluto TV grew to 68 million active users. Advertising revenue in the company’s direct-to-consumer division, which includes both streamers, grew 59%.

While these figures are positive signs of growth and beat Wall Street’s expectations, there’s a catch.

The company said higher costs to run its streaming businesses, including content production and licensing, increased significantly, a significant reason the company’s profits fell significantly in the quarter. In fact, spending in the division rose to $1.5 billion, about twice as much as it did the previous quarter.

Overall, Paramount Global saw revenue drop slightly from $7.38 billion to $7.33 billion and earnings fall from $911 million to $433 million.

While Paramount’s streaming growth is a good sign, investors appear to be spooked by the higher production costs to feed those efforts — especially given the recent news that Netflix lost subscribers for the first time in years and the CNN+ streamer shut down after less than a month even as media companies continue to pour money into streaming.