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In this photo illustration, the Paramount Global logo is shown on a smartphone screen.
Rafael Henrique | SOPA Pictures | Light Rocket | Getty Images
Paramount Global It fell more than 28% on Thursday after the company reported earnings and revenue that missed analyst estimates and cut its quarterly dividend.
The stock posted its worst day since the merger of Viacom and CBS in December 2019. Shares closed at $16.40, giving the company a market value of nearly $10.1 billion.
Chief Executive Officer Bob Bakish said in a statement that the company cut its dividend to 5 cents per share from 24 cents per share in order to “further strengthen our ability to deliver long-term value to our shareholders as we move toward cash flows.”
It’s the first time since 2009 that Paramount has cut its dividend. Paramount expects annual cash savings of $500 million from the dividend cut. Paramount has a net debt leverage ratio of 6.8 times EBITDA. That balloons to 8.1 times EBITDA if pension liabilities are included, according to research firm Atlantic Equities.
Paramount Global’s traditional television revenue, which is made up of CBS and its cable networks like MTV, Comedy Central and Nickelodeon, fell 8% in the quarter to $5.2 billion. The company’s movie studio division reported a 6% year-over-year decline in revenue.
Media companies are struggling to replace traditional television revenue, where customers cancel each quarter, with revenue streaming in as they create direct-to-consumer business. Bakish said the company plans to divest from non-core assets as it aims to boost free cash flow and stem loss flows by the end of 2024.
This year will mark peak losses for Paramount Global’s streaming business, Bakish said.
Streaming revenue from Paramount+ and Pluto TV, the company’s free ad-supported service, rose 39% to $1.5 billion. But direct losses to consumers increased to $511 million from $456 million a year earlier.
Paramount also charged $1.67 billion in impairment charges in the first quarter for content removed as a result of combining Paramount+ and Showtime into a single US streaming platform.
Here are the quarterly results the company reported, versus analyst estimates, according to Refinitiv:
- he won: 7.27 billion dollars, compared to the expected 7.42 billion dollars
- Earnings per share: 9 cents versus the expected 17 cents
Paramount Global aims to sell a majority stake in BET later this year. I tried to liquidate and merge the publishing company Simon & Schuster last year But the deal was blocked by US regulators.
Bakish said in the phone call that the company had resumed the sale of Simon & Schuster. Chief Financial Officer Naveen Chopra said on the call that Paramount hopes to announce a deal to sell the publisher by the end of the year.
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