VALUATION HIGHLIGHTS

1. TV Media constitutes 79% of the Trefis price estimate for Paramount Global's stock.
2. Direct To Consumer constitutes 16% of the Trefis price estimate for Paramount Global's stock.

WHAT HAS CHANGED?

Paramount Q3 2024 Results

Paramount Global reported weaker-than-expected Q3 2024 results with revenue coming in at $6.73 billion, about 4% short of the consensus estimates. The company saw headwinds in its studio and cable segments, which overshadowed robust growth in the streaming business.

Paramount to merge with Skydance

Paramount will merge with media production company Skydance after a buying consortium which also includes RedBird Capital Partners and private equity major KKR invested more than $8 billion to acquire Paramount's holding company National Amusements. Paramount’s class A shareholders will receive $23 apiece in cash or stock, while class B stockholders will receive $15 per share, per the deal. The deal is expected to close in September 2025, subject to regulatory approvals.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Paramount's value that present opportunities for upside or downside to the current Trefis price estimate for Paramount:

Direct-To-Consumer

• Direct-To-Consumer Revenue: Paramount's direct-to-consumer revenue rose from $1.8 billion in 2020 to $6.7 billion in 2023. Trefis expects the metric to grow to about $12 billion by 2029, driven by stronger uptake of the company's Paramount+ offering. However, if the business outperforms and grows to over $15 billion, there could be a 15% upside to our price estimate. On the other hand, if the metric only grows to about $9 billion, due to higher competition in the streaming space, there could be a 10% downside to our price estimate.
  Direct-To-Consumer Margins: Paramount's EBITDA margins for its direct-to-consumer business deteriorated from -7.2% in 2020 to -20.1% in 2023. We expect the metric to improve to about 14% by the end of our review period. However, if margins grow to about 18%, there could be a 20% upside to our price estimate.

For additional details, select a driver above or select a division from the interactive Trefis split for Paramount at the top of the page.

BUSINESS SUMMARY

Paramount is a leading global media and entertainment company. The company's distribution platforms include broadcast and cable networks as well as a fast-growing streaming operation. The company's portfolio includes well-known brands such as CBS, Showtime Networks, Paramount Pictures, Nickelodeon, and MTV. Paramount also holds among the most extensive library television and film titles in the industry.

SOURCES OF VALUE

TV Media Business is Paramount's most valuable segment, primarily due to its higher revenues and thick margins.

Revenues

TV revenues stood at around $20 billion in 2023, counting as Paramount's single largest segment.

High margins

Furthermore, this business has high EBITDA margins of around 22% compared to negative levels for the streaming business.