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ViacomCBS shares fall amid rebrand, greater focus on streaming

The media giant, now called Paramount Global, expects its global streaming base to eclipse 100 million subs by 2024 as losses deepen. Some analysts aren't convinced investors are willing to underwrite the company's streaming business.

Jeff Baumgartner

February 16, 2022

4 Min Read
ViacomCBS shares fall amid rebrand, greater focus on streaming

ViacomCBS intends to be a key player in the streaming big leagues as the media giant pushes ahead with a rebrand as Paramount Global and a plan to spend lavishly on a direct-to-consumer (DTC) business expected to eclipse 100 million streaming subs worldwide by 2024.

"Our strategy has always been to harness the strength of our traditional business to build something new," chairwoman Shari Redstone said Tuesday at the company's investor day that took place more than two years after Viacom and CBS completed their merger. "Paramount was always at the core of this vision. Today we are thrilled to announce that ViacomCBS has become Paramount Global, or simply Paramount."

Figure 1: Giving a nod to its globally-known brand, ViacomCBS is rebranding as Paramount Global as it pumps up its streaming play. (Source: ViacomCBS/Paramount) Giving a nod to its globally-known brand, ViacomCBS is rebranding as Paramount Global as it pumps up its streaming play.
(Source: ViacomCBS/Paramount)

But some analysts and investors aren't fully convinced that the strategy of the rebranded company (Paramount will begin trading on the Nasdaq under the symbol "PARA" on February 17) will bear fruit. ViacomCBS shares dropped more than 20% in mid-day trading Wednesday, the day after the company presented its big streaming plans and a financial outlook that sees some deeper streaming-related losses out on the horizon.

According to MoffettNathanson analyst Michael Nathanson, Paramount will continue to face a familiar questions even as it broadens its streaming play: Can the company grow EBIDTA and free cash flow to match prior levels? If those numbers come up short, will that limit Paramount's ability to fully invest in its streaming efforts?

"In short, unfortunately, we still did not learn anything to help us believe the answer will be yes, at least for the foreseeable future," Nathanson wrote in a research note. Even as a premium streaming service such as Paramount+ fleshed out its offering, "we have a hard time looking at the DTC revenues and investments on a standalone basis," he added.

Vijay Jayant, analyst with Evercore ISI, has similar concerns, wondering if investors are willing to underwrite Paramount's streaming strategy. "We think it will be a challenging proposition," Jayant wrote in a research note.

DTC-related losses at ViacomCBS/Paramount are expected to rise from $1 billion in 2021, to -$1.5 billion in 2022, and go even higher in 2023. Meanwhile, Paramount expects DTC-related expenses to balloon from about $2.2 billion in 2021, to about $6 billion in 2024.

Driving streaming subscriber growth

But Paramount does expect higher spending to drive streaming subscriber growth. The company is now forecasting 100 million streaming subs worldwide by 2024, up from previous guidance in the range of 65 million to 75 million.

ViacomCBS/Paramount ended 2021 with 56 million streaming subs worldwide, adding a record 9.4 million in Q4 2021. Paramount+, the super-sized streaming service formerly known as CBS All Access, added 7.3 million subs in the quarter, raising its grand total to 32.8 million.

Drilling down further, Pluto TV, the company's free, ad-supported streaming service acquired in 2019, is expected to reach 100 million to 120 million monthly active users by 2024. Pluto TV exceeded $1 billion in revenues in 2021, up from $560 million in 2020.

Paramount expects overall growth from its subscription and ad-supported streaming business to help generate DTC revenues of $9 billion by 2024, up from prior guidance of $6 billion.

Here's a snapshot of other moves and announcements that ViacomCBS/Paramount made at this week's investor day:

  • Global expansion of Paramount+ will continue in 2022, including a debut in France as an exclusive bundle with Canal+ Group. Paramount+ will also be sold as a standalone, direct-to-consumer service in France. The company expects to launch the service in parts of Asia, Africa and the Middle East in 2023.

  • Starting this summer in the US, the company will launch a new bundle that ties together Paramount+ and Showtime. A pairing of the ad-supported Paramount+ Essential tier and Showtime will run $11.99 per month, and a combo of the ad-free Paramount+ Premium tier with Showtime will fetch $14.99 per month. Paramount will still offer Showtime as a standalone premium streaming service and through its various third-party pay-TV distribution partners.

  • Paramount+ will become the streaming home for all of Paramount's theatrical releases, starting in 2024.

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— Jeff Baumgartner, Senior Editor, Light Reading

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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