The ongoing military conflict between Russia and neighboring Ukraine is expected to cost Paramount Global upwards of 3 million direct-to-consumer subscribers in the current second quarter, ending June 30.
Speaking on the May 3 fiscal call, CEO Bob Bakish said the sub losses are due to the company’s decision to withdraw all business operations from Russia in response to the government’s unprovoked invasion of Ukraine — a conflict that has resulted in the destruction of Ukraine cities, deaths of thousands of soldiers on both sides, in addition to thousands of innocent Ukraine civilians.
Bakish said the decision to suspend business in Russia would negatively affect full-year pre-tax earnings by $70 million to $80 million, the largest component of which will fall to the TV Media segment.
The executive said Paramount is in the process of reviewing existing streaming bundle relationships in Russia. And starting in the current quarter, Bakish said he expects Russian subscribers will be removed from reported D2C subscribers.
“This change will reduce Q2 D2C subscriber growth by approximately 3 million subs, roughly two-thirds of which are subscribers to a non- Paramount+ service specific to the Russian market,” Bakish said.
Except for the removal of subscribers to streaming services in Russia, Bakish said Paramount Global’s full-year D2C sub growth expectations are unchanged.
“Given the nature of the affected services, the financial contribution is immaterial,” Bakish said.
With Paramount+ not available in Russia, the sub loss won’t affect the SVOD, unlike Netflix, which is projecting a two-million sub loss in the current quarter, much of it due to the Ukraine conflcit.