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Paramount beats Q2 earnings, advertising revenue sees declines

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Yahoo Finance Live anchors discuss second-quarter earnings for Paramount.

Video Transcript

JULIE HYMAN: All right. We are just a bit from the opening bell here on this Thursday morning. Seeing a little bit of a pullback in stocks here, but not really that much movement. That's in part because we're seeing reactions to these individual earnings reports. None of them is sort of big enough to set the tone for the overall market.

BRIAN SOZZI: I want Clorox.

JULIE HYMAN: I know you want Clorox.

BRIAN SOZZI: Oh, I could just keep going on Clorox, Julie.

JULIE HYMAN: Well, no. But too-- but you made the point that it's partly the management teams miss execution here, so you can't apply that to every company in this environment.

BRIAN SOZZI: I went into target last week and there's wipes almost down every single aisle. I don't want to go down the toilet and find wipes, but it says a lot about Clorox.

JULIE HYMAN: I guess it does say a lot about Clorox. I love like always channel checking.

BRIAN SOZZI: Always.

JULIE HYMAN: Brain Sozzi--

BRIAN SOZZI: [INAUDIBLE]

JULIE HYMAN: --always channel checking. Look, FiscalNote is ringing the bell there.

BRIAN SOZZI: Is this the cover?

JULIE HYMAN: It just went public, so that explains the ringing that it is doing this morning. And then, tomorrow, of course, we have the jobs report coming to us. So maybe that will set a little bit more of a decisive tone for these markets, because we don't have one today.

BRIAN SOZZI: All right. Well, let's stay on these earnings here. We're looking at Paramount ticker symbol PARA, another top trending ticker on the Yahoo Finance platform. Good quarter for them. Perhaps not really getting rewarded out of the gate by Paramount, but Paramount Plus subscribers, relatively new service, they're now at 43 million. It looks like they added 4.9 million new subscribers. That was pretty good.

But of course, this quarter looks to be all about the "Top Gun" effect in that film and movie-- that film division. And that really helped that segment out a lot.

JULIE HYMAN: Yeah. $1.3 billion in sales for "Top Gun," which is big. It looks like the reason that the stock is down this morning, even though overall numbers beat, is what's going on with ad sales. Drop in advertising revenue, which is mirroring what we're seeing at very different kinds of companies. So ad sales down about 5.6% to $2.17 billion. Decline in TV viewership is what looks to be behind that drop there. So that seems to be why the shares are down.

BRIAN SOZZI: It did another double pen morning, Julie. This is another double pen.

JULIE HYMAN: Uh-oh.

BRIAN SOZZI: But also, I don't think the market likes-- you got the sense from Paramount that they are going to continue to invest very aggressively in streaming. So no pullback in investment in streaming like the likes we've seen from-- over at Netflix. Operating profits under pressure for this business. So interesting to see.

And now, you know, in this context, I believe it's, what, tomorrow, where Discovery, Warner Brothers Discovery is going to report results, or is that this evening? All I know is our very own Allie Canal has been all over this story. You're likely to hear a lot of layoffs coming from that company as well. And what impact does that have on the likes of Paramount, Netflix, Roku, and other streamers? It sounds like a major restructuring is about to be announced for that company.

JULIE HYMAN: Yeah. I think you're right. It's right after the close today. I think investors here are trying to figure out where these streaming services kind of fit in and which one is going to be the most competitive. You have Netflix coming to market with its ad supported tier, right? So how many ad dollars is Netflix going to draw away from an already weak ad market, which is reflected in these Paramount numbers? Not to mention, you know, a lot of the online numbers that we heard from.

So I think that's something people are trying to figure out. Yes, they added subscribers at a higher pace than expected to 43 million. But 43 million, even though-- I mean, I get it's a new service. But it's still a lot smaller than--

BRIAN SOZZI: Sure.

JULIE HYMAN: So if I'm an advertiser and I want to get the most eyeballs, am I going to look at a Netflix? Not all of them will-- their subscribers will be ad supported. But nonetheless, like if you're trying to make these decisions as an advertiser, where are you going to be putting these ad dollars? And I imagine analysts are trying to figure that out as well.

BRIAN SOZZI: Did you see "Top Gun 2?"

JULIE HYMAN: I still have not seen it.

BRIAN SOZZI: Oh, you have to see it. It's so good. It's so good.

JULIE HYMAN: "Bullet Train" is the next one that--

BRIAN SOZZI: OK.

JULIE HYMAN: --is on the list, right?

BRIAN SOZZI: I'll note it down. All right.

JULIE HYMAN: No? Do you know about "Bullet Train?"

BRIAN SOZZI: I don't know.

JULIE HYMAN: OK. We'll talk about it.

BRIAN SOZZI: All right, fair enough.