By Deborah Mary Sophia
(Reuters) -Paramount Global's shares rose as much as 6% in early trade on Friday as investors cheered strong growth at the media group's streaming business, even as the company joined rival Warner Bros Discovery (NASDAQ:WBD) in writing down the value of its TV assets.
Paramount late on Thursday comfortably beat market expectations for earnings, propelled by its streaming unit posting its first quarterly profit in three years. The company also said it would cut 15% of its U.S. workforce.
The streaming profit eclipsed Paramount's nearly $6 billion writedown in the value of its cable networks, a move that highlights the erosion of traditional TV businesses in the streaming era.
"Results in the rest of Paramount's business were unsurprisingly weak, but at Paramount's current market value, it shouldn't take much good news to generate enthusiasm," Morningstar analyst Matthew Dolgin said.
Paramount's shares were last up about 3%. They have slid more than 30% this year, giving the company a market capitalisation of $7.33 billion, through last close.
The stock has lost about 75% of its value since the company was formed through the CBS-Viacom reunion in 2019.
Legacy media groups including Paramount and Walt Disney (NYSE:DIS) have struggled to stem declines in their TV businesses, as consumers ditch cable television in favor of streaming, resulting in dwindling viewership and revenues.
Earlier this week, Warner Bros Discovery announced a $9 billion charge on its TV assets.
Paramount's television unit saw a 17% decline in revenue in the second quarter. Meanwhile, revenue at Paramount+, the company's streaming service, surged 46%, aided by year-on-year subscriber growth and higher prices.
"There will always be concerns of traditional media giants as they pivot towards a streaming TV future," said Paolo Pescatore, analyst at PP Foresight.
"For Warner Bros, it looks like a bigger car crash than most, but Paramount, along with Disney, is showing the way for Hollywood giants in navigating this complex journey towards streaming."