The share price of Paramount Global (fka ViacomCBS) dropped by more than 20% on Wednesday as investors reacted to the media giant’s overhaul of its streaming operations.
The fall came after the company unveiled a major refocus to streaming on Wednesday, unveiling an expansive slate of new international content for its streaming service Paramount+.
As a part of this, Paramount said that it would invest more than $6bn in content by 2024, a jump of $1bn on what it previously had pledged. New content headed to the service includes its first UK commissions and spin-offs from popular franchises including NCIS, Yellowstone, The Shore, as well as a Sexy Beast prequel and new Star Trek and Transformers movies.
This, combined with the company’s earnings miss, has evidently spooked investors, with shares dropping 21% as shareholders cast fresh doubt over Paramount’s ability to stay profitable in the streaming age.
The company has been a relative late entrant into the mainstream streaming market, with Paramount+ only gaining steam now when its rivals like WarnerMedia and Disney are far more established with much larger subscriber bases.
A number of analysts have questioned the strategic shift, including MoffettNathanson analyst Robert Fishman who said that Paramount’s losses will continue to increase until 2023.
He wrote: “Despite the big announcement of ViacomCBS changing its name to Paramount … we are left with a similar question as we had last year: Will the company be able to grow (Earnings Before Interest, Taxes, Depreciation) and FCF (Free Cash Flow) again to match prior levels?”
Bank of America analyst Jessica Reif Ehrlich, meanwhile, downgraded the stock to ‘neutral’, cooling on the company as a potential acquisition target.
Paramount’s upcoming pipeline of content includes the delayed Mission Impossible sequel, 2023’s A Quiet Place: Part III and its big-budget adaptation of iconic video game series Halo as a Paramount+ original, which has just been greenlit for a second season.