Paramount loses £5bn as viewers cancel cable TV

Paramount is the latest American broadcasting giant to take a hit over its cable television networks.

The group, which owns Channel 5, Nickelodeon and MTV, took a £4.7bn writedown on its TV business.

This came 24 hours after Warner Bros. Discovery wrote down £7 billion from the value of its cable channels, including CNN, HGTV and Food Network.

Long-standing companies, also known as legacy media companies, have struggled in recent years as consumers increasingly shift from traditional television to streaming services.

This has made it increasingly difficult to generate advertising revenue and has spooked investors. The writedown was triggered by Paramount’s decision to merge with independent film studio Skydance Media last month.

The £22bn deal has prompted the company – one of Hollywood’s oldest – to reevaluate its divisions and resize the business. As part of the changes, Paramount will also reduce its US workforce by 15 per cent.

This will affect marketing, finance and other departments and will affect approximately 2,000 jobs, the company said.

Meanwhile, Warner CEO David Zaslav told investors this week that the television sector remains “tough” for the group and its competitors.

Cable networks have become “anchors around the necks of traditional media companies,” according to Rich Greenfield, an analyst at research firm LightShed Partners.

And streaming services are increasingly seen as the future for businesses. The company’s streaming arm, Paramount+, saw revenues rise 46 percent in the three months to the end of June, boosted by more subscribers and higher prices.

Paramount’s television division reported a 17 percent drop in revenue.

Earlier this week, Disney announced that its streaming service had posted its first-ever quarterly profit. The services include Disney+, Hulu and ESPN.

Netflix also recently posted an excellent second quarter, thanks to series like Bridgerton and Baby Reindeer.

But Paolo Pescatore, an analyst at PP Foresight, says the transition to a streaming future is “no easy task” for companies like Paramount and Warner.

“It’s been harder for the Hollywood giants than, say, Netflix, which paved the way,” he said. “Hollywood is ready for more blockbuster deals to compete with more nimble rivals.”