Paramount loses £5bn as viewers switch from cable TV

Paramount has become the latest US broadcasting giant to suffer a blow to its cable networks.

The group, which owns Channel 5 as well as Nickelodeon and MTV, recorded a £4.7bn write-down on its television business.

This came 24 hours after Warner Bros Discovery wrote off £7bn worth of its cable channels including CNN, HGTV and Food Network.

Traditional media companies, or legacy media, have struggled in recent years as consumers gravitate toward streaming services and away from traditional television.

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

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

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

Meanwhile, Warner Chief Executive David Zaslav told investors this week that the TV business remains “challenging” for the group and its competitors.

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

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

Paramount’s television unit posted a 17 percent drop in revenue.

Earlier this week, Disney revealed that its streaming service had posted its first quarterly profit. Its services include Disney+, Hulu and ESPN.

Netflix also recently posted a strong second quarter, as it capitalized on shows like Bridgerton and Baby Reindeer.

But Paolo Pescatore, an analyst at PP Foresight, said moving toward a streaming future is “no small feat” for companies like Paramount and Warner.

“It’s been tougher for Hollywood giants than, say, Netflix, which has paved the way,” he said. “Hollywood is primed for new blockbuster deals to compete with more agile rivals.”