By Eva Mathews and Helen Coster
(Reuters) -Paramount Global Inc will raise prices for its flagship streaming service in some markets this year, the CBS network owner said on Thursday, amid an extended weakness in the advertising market that has pressured revenue.
Shares in Paramount, formerly known as ViacomCBS, were down 1.5% in a broadly weak market. They had tumbled as much as 8% in premarket trading.
The Tom Cruise-blockbuster “Top Gun: Maverick” had provided the ad-reliant media company some respite in 2022, but it now faces companies and consumers looking to further rein in spending to prepare for a likely recession.
Still, Chief Executive Bob Bakish said the company was seeing “some early signs of stabilization in advertising.”
TV advertising revenue fell 7% in the October to December period, Paramount said, despite a lift from political ads on the back of U.S. mid-term elections in November.
Paramount is betting on the latest installments of spy film “Mission Impossible” and horror flick “Scream” later this year to help offset the slump in advertising.
The company will increase the prices of premium and essentials tier of its streaming service Paramount+ in some markets. Prices will rise to $11.99 per month from $9.99 for the premium tier that includes Showtime, and to $5.99 from $4.99 for the essentials tier without Showtime.
Paramount+ is set to integrate with the company’s other streaming platform Showtime – home to popular shows such as “Billions” and “Dexter” – later this year. It expects impairment charge of $1.3 billion to $1.5 billion in the current quarter from the integration.
“Raising prices for Paramount+ is good for the ARPU (average revenue per user) numbers but might slow the rate of growth (of users) to some degree,” said Huber Research analyst Craig Huber.
Paramount+ raked in 9.9 million new subscribers for the quarter ended Dec. 31, but the direct-to-consumer unit continues to grapple with losses due to huge investments in content.
Overall, Paramount earned 8 cents per share profit on revenue of $8.13 billion, compared with expectation of a profit of 23 cents on revenue of $8.16 billion, as per Refinitiv data.
(Reporting by Eva Mathews in Bengaluru and Helen Coster in New York; Additional reporting by Yuvraj Malik; Editing by Sriraj Kalluvila)