Paramount Global (NASDAQ: $PARA), formerly known as ViacomCBS, is an American multinational mass media group and multi-industry entertainment company headquartered in Midtown Manhattan, NY. Its portfolio includes iconic brands such as CBS, several television networks, Paramount Pictures, and the streaming service Paramount. With roots tracing back to the inception of National Amusements in Massachusetts, the company has evolved into a formidable force in the entertainment industry.
On Monday, April 29, 2024, Paramount Global reported its financial results for the first quarter of fiscal 2024 to a tepid market reception.
Q1 2024 Financial Highlights
Paramount Global reported revenue of $7,685 million, representing a 6% year-over-year increase and surpassing analysts’ estimates of $7,731.88 million. Despite the revenue growth, the company posted a net loss of $554 million, an advancement from the prior year’s net loss of $1,118 million but falling short of the estimated net income of $226.07 million. The adjusted diluted EPS stood at $0.62, significantly exceeding the estimated EPS of $0.36.On free cash flow, Paramount Global generated $209 million in free cash flow, a substantial recovery from the negative free cash flow of $554 million in the prior year.
Segment Performance
The Global Paramount subscribers recorded 71.2 million versus 69.6 million estimated by three analysts on average. At the same time, the direct-to-consumer segment witnessed a 24% revenue increase to $1,879 million, fuelled by a 22% growth in subscription revenue and a 31% rise in advertising revenue. Revenue in the tv media segment slightly increased by 1% to $5,231 million, with advertising revenue profiting from the broadcast of Super Bowl LVIII.
Revenue on filmed entertainment grew by 2.9% to $605 million, strengthened by the strong box office performances of “Mean Girls” and “Bob Marley: One Love.” In the Theatrical filmed entertainment sector, revenues recorded were $153 million compared to the $143.56 million average estimate based on three analysts, which represented a change of +20.5% year over year.
Strategic Focus and Challenges
Paramount Global’s strategic focus remains on enhancing its content portfolio and operational efficiency to maintain its competitive edge and profitability. The company faces ongoing challenges, including competitive pressures in the streaming industry and the impacts of economic fluctuations on advertising revenues.
Management’s Outlook
Naveen Chopra, Executive Vice President & Chief Financial Officer, commented on the results, stating, “The team delivered another quarter of strong operational and financial performance, including significant growth in total company earnings and free cash flow despite the dynamic environment we continue to operate in.” Chopra emphasized the record-setting quarter for Paramount in engagement and revenue, as well as the substantial narrowing of streaming losses in the Direct-to-Consumer segment.
Looking ahead, Paramount Global’s focus will remain on strategic execution and cost management to sustain growth and enhance shareholder value.
CEO Shake-up and Merger Talks
In an influential development, Paramount Global announced the departure of CEO Bob Bakish on Monday, April 29, 2024, who had been at the helm for eight years. The move comes amidst ongoing merger talks with Skydance Media, with reports suggesting clashes between Bakish and non-executive chair Shari Redstone over the terms of the deal.
Bakish is stepping down from his role as the CEO and from the board of directors. Bakish will be replaced by a newly established Office of the CEO, guided by a trio of senior directors: George Cheeks (CBS president and CEO), Chris McCarthy (Showtime/MTV Entertainment Studios and Paramount Media Networks president and CEO) and Brian Robbins (Paramount Pictures and Nickelodeon president and CEO).
Paramount Stock Performance
As of the market close on April 29, 2024, Paramount Global stock traded at $12.25, up 2.85% for the day. On Tuesday, the stock declined 2.24% a few minutes after the opening bell to $11.98. Its 52-week range is $10.12 to $23.46, reflecting the volatility and challenges faced by the company. Paramount Global’s shares have underperformed compared to rivals like Disney, whose shares have risen 24% over the same period. With a market cap of $8.396 billion, the company’s stock performance will likely be influenced by the ongoing merger discussions and the strategic decisions made by the new leadership team.
Should You Buy Paramount Global in 2024?
Paramount Global stock presents a fascinating scenario for investors in 2024. While the company’s Q1 earnings demonstrated strength and growth potential, particularly in its direct-to-consumer segment, the ongoing merger discussions and leadership changes add uncertainty.
Investors with a high-risk tolerance and a long-term perspective might find value in Paramount Global’s iconic brands and strategic initiatives. However, those seeking stability may want to exercise caution until the company’s strategic direction becomes clearer under the new leadership.
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