Paramount set to report Q3 earnings on Wednesday, Amazon Music now free for Prime members
Media reporter Allie Canal joins the Live show to break down Paramount's earnings expectations ahead of its earnings report, in addition to YouTube's new "primetime channels" feature and Amazon's latest move in offering Amazon Music for free to Prime members.
Video Transcript
DAVE BRIGGS: Paramount releases third quarter results tomorrow with the group's penetration in the streaming market front of mind for investors. Joining us now with what we should expect from those results is Yahoo Finance's Allie Canal getting set for World Series. But Allie, first, Paramount--
ALLIE CANAL: Wearing my Phillies red, Dave, wearing my Phillies red.
DAVE BRIGGS: I know you're a little bit more excited for the series. But tell us what do you expect from Paramount.
ALLIE CANAL: Yes. Yes. Paramount earnings before the bell tomorrow, here's what Wall Street expects. Right now, revenue estimates coming in at just over seven billion. That's the estimate with adjusted earnings set at $0.46 per share. Paramount Plus subscriber net additions are expected to surge by 3.25 million this quarter. But there is caution on the street.
Wells Fargo analyst Stephen Cahall downgraded the stock from equal weight to underperform, citing concerns surrounding increased cord cutting and streaming profitability. He suggested that Paramount become an arms dealer of sorts, similar to what we've seen from Sony, maybe license that content to third parties, or even sell off some of those assets. And the company did warn that streaming losses will accelerate. It's expected to reach 1.8 billion in 2022. The potential for that number to surge even more in 2023.
Nevertheless, I did have the chance to speak with CEO Bob Bakish during Yahoo Finance's All Markets Summit a couple weeks ago. And he struck a pretty bullish tone. Take a listen to what he had to say.
BOB BAKISH: We've always had a plan to build a robust streaming business, but a profitable streaming business. Our business is only a year and a half old, takes a little while. We always said peak investment year is 2023. It still is. But we are building a business that we see as over time having TV media like margins.
ALLIE CANAL: So he's optimistic. I will say that direct to consumer does seem to be top of mind at this company, especially amid recent advancements in the landscape overall. Just earlier today, we heard that YouTube will launch a new feature called prime-time channels. That will allow consumers to subscribe to over 30 services within the YouTube app. So very similar to Roku. Paramount Plus is part of that rollout. And it's currently the most subscribed to service on the platform. So the company really trying to take advantage of what they can to grow a subscriber base. But the big question on Wall Street is, will that be enough?
RACHELLE AKUFFO: And Allie, of course, another story in the streaming space, music streaming. But Amazon, now they had a big announcement today.
ALLIE CANAL: Yeah, Amazon announced that Prime members can access for no additional cost a full music catalog with 100 million songs, up very significantly from the previous two million members. We'll also have access to top podcasts without ads. And that's key here. It seems to be a big shot directed at Spotify, which we know has been steadily increasing its podcast offerings, although ads do interrupt a lot of those shows, which has been frustrating to users.
I think overall, this makes it pretty clear that Amazon is looking to increase that platform stickiness, keep consumers within that ecosystem. We know that revenue growth has slowed at the company. And when you offer incentives, like Thursday Tonight Football on Amazon Prime, or even original content like "Lord of the Rings", those sign ups will come. So this is just another example of that strategy.
