Paramount Global stock has been one of the worst-performers in the media industry. PARA has crashed by more than 87% from its all-time high, erasing billions of dollars in market capitalization. Today, the company has a market value of just $8.6 billion. 

Para stock

PARA stock price chart

Paramount Global is at a crossroad

Paramount Global is a leading media company that owns some of the most iconic brands in the US. It owns Paramount Pictures, the creator of popular movies like Star Trek, Instant Family, and Nobody’s Fool.

The company also owns Paramount+, one of the biggest streaming platforms in the world with over 67 million users. Its other brands are television platforms like MTV, Colors, Smithsonion Channel, and Showtime.

Paramount Global’s key businesses are facing many challenges. Its television channels are going through cord-cutting, leading to low advertisement revenue. Cord-cutting is also affecting the amount of money it receives from cable providers.

Its streaming platform is also going through a mountain of challenges. For one, it is competing with the likes of Disney+ and Netflix, which are spending billions of dollars in content production. Paramount cannot match these budgets because of its mountain of debt. It has over $15.1 billion in debt.

Just this month, Fitch downgraded the company’s credit rating to BBB- with a negative outlook. It noted that, while the company has reduced its debt, it still has a 5.6x leverage and the situation could worsen as the advertisement market struggles. The statement added:

“FY24 total revenues increase mid-single digits. TV Media is flat as a slow recovery in linear advertising is offset by continued MVPD subscriber declines. DTC grows in the high teens. Filmed entertainment sees a modest recovery despite relatively weak box office expectations.”

Shari Redstone’s role in this mess

Paramount Global’s mess is mostly because of factors outside no ones control. The TV industry is changing as more people continues consuming content through social media platforms like TikTok and Snap. It is also a victim of cord-cutting.

However, if someone has to be blamed for this mess, it will likely be Shari Redstone, the company’s chairman. Against Sumner Redstone’s wish, Shari Redstone went ahead and merged CBS with Viacom to form Paramount Global.

At the time, CBS was a big brand, with a growing business in the streaming segment. Its eponymous brand is also a leading player in the cable industry to this day. 

However, Viacom was an endangered company, that operated many TV channels that were losing relevance. They include the likes of Nickelodeo, BET, Comedy Central, and MTV. While these companies were leading players in the television industry, they are now no longer relevant, especially among the young people. 

Therefore, the combination of a weak Viacom and a stronger CBS produced a highly-leveraged slow-growing behemoth that started to melt. 

It is unclear to predict the future of Paramount Global as an independent company. What is clear is that the company will either be sold in parts or as a whole. The challenge of the latter option is that not many buyers will want exposure to its TV networks.

Therefore, there are rumours that Apollo Global is considering making a bid for Paramount Studio. In a statement, David Faber, the highly-connected CNBC anchor warned that this deal may not work out.

The other option is where David Ellison and Redbird moves ahead and acquires National Amusements, which controls Paramount Global. This will be a good outcome for the company.

Still, what is clear is that Shari Redstone has played a big role in ruining the company that was launched and ran by Sumner Redstone. At its peak, the company had a market value of over $40 billion. A sale will never fetch that amount.

By Crispus Kanyaru

With a keen eye for market trends and a knack for translating complex financial concepts into engaging narratives, Crispus has established himself as a trusted voice in the world of finance. His work has graced the pages of esteemed publications like Benzinga, Forbes, Invezz, and Banklesstimes, reaching a diverse audience eager to navigate the ever-evolving financial landscape. Crispus's journey began with a deep curiosity about the forces shaping the global economy. This natural inquisitiveness led them to pursue a degree in finance and CPIA, equipping them with a solid foundation in financial theory and analysis. But Crispus knew that knowledge alone wasn't enough. He craved to bridge the gap between dry data and real-world experiences, to make finance accessible and relatable to everyone.

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