Paramount Skydance (PSKY) Stock Rallies 4% on Strong Q1 Earnings Despite Soft Outlook

Key Takeaways

• Paramount Skydance delivered Q1 adjusted EPS of $0.23, surpassing analyst expectations of $0.15; total revenue climbed 2% to reach $7.35 billion
• The Paramount+ streaming platform added subscribers to reach 79.6 million, narrowly missing the projected 79.9 million
• Traditional TV Media segment saw revenue collapse 19% to $3.67 billion, significantly worse than the anticipated 9.5% decrease
• Second-quarter revenue forecast of $6.75–$6.95 billion came in below Wall Street’s $7.07 billion expectation
• The proposed $81 billion merger with Warner Bros. Discovery continues progressing toward an anticipated Q3 2026 completion

Shares of Paramount Skydance (PSKY) climbed as high as 4% during Monday’s extended trading session following a better-than-expected first-quarter performance. By Tuesday’s premarket session, the stock traded 1.5% higher at $11.30, despite carrying a 17% year-to-date decline.

Paramount Skydance Corporation Class B Common Stock, PSKY

The company reported adjusted earnings of $0.23 per share, crushing the Street’s $0.15 consensus estimate. Total revenue increased 2% year-over-year to $7.35 billion, topping the $7.28 billion analysts had projected.

This marked the entertainment giant’s initial quarterly report following its successful February bid to acquire Warner Bros. Discovery.

The streaming division emerged as a clear winner. Direct-to-consumer revenue jumped 11% to reach $2.4 billion. The flagship Paramount+ platform specifically generated revenue growth of 17%, hitting $1.97 billion.

Subscription figures landed marginally below projections. Paramount+ closed the quarter with 79.6 million paying subscribers, representing a 2% annual increase but falling short of the 79.9 million Wall Street forecast. Management highlighted popular programming including “Landman,” “The Madison,” and “Marshals” as key subscriber acquisition drivers.

The filmed entertainment division also delivered solid performance, with studios revenue advancing 11% to $1.28 billion, largely propelled by the theatrical success of “Scream 7.”

Linear Television Continues Downward Spiral

The legacy broadcast and cable operations remain a significant headwind. TV Media revenue plummeted 19% to $3.67 billion — substantially worse than the modest 9.5% contraction Wall Street had anticipated. Both advertising income and affiliate fees contributed to the steep decline.

This underscores the persistent structural headwinds facing traditional media companies. Viewer attention continues shifting toward streaming platforms, with advertising budgets inevitably following.

Second Quarter Outlook Falls Short

Looking ahead to Q2, management projected revenue ranging from $6.75 billion to $6.95 billion. The midpoint of this guidance sits below the $7.07 billion consensus estimate among analysts.

Executives attributed the softer outlook to challenging year-over-year comparisons against exceptionally strong box office results from the prior-year period.

Adjusted EBITDA expectations for the current quarter landed between $900 million and $1 billion, surpassing analyst forecasts of $861.8 million.

Management maintained its full-year 2026 targets: $30 billion in total revenue alongside $3.8 billion in adjusted EBITDA.

Paramount additionally indicated that Paramount+ subscriber counts would remain relatively “flattish” on a sequential basis during Q2. The company is strategically unwinding approximately 2 million international bundled subscriptions as it refines its go-to-market approach.

The pending Warner Bros. Discovery combination, carrying an $81 billion enterprise value, secured shareholder approval on April 23. Company leadership reconfirmed Monday that the transaction remains on schedule to close by the conclusion of Q3 2026, contingent upon regulatory clearance.

CEO David Ellison reiterated in his letter to shareholders that the merged entity intends to distribute 30 theatrical releases annually following deal completion.

Paramount faces direct competition from Netflix and Disney+ in the streaming marketplace, and the Warner transaction would incorporate HBO Max into its content ecosystem.

The merger remains subject to regulatory scrutiny, though Monday’s announcement provided no additional updates regarding the approval timeline.

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