May 4, 2023

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Paramount Global, the media conglomerate known for its ownership of CBS, Nickelodeon, Paramount Pictures, and other entertainment properties, experienced a significant drop in stock performance within the S&P 500. The company's shares tumbled after it reported lower-than-expected profits and revenues, coupled with a surprising announcement of a dividend reduction. In this article, we delve into the details surrounding Paramount Global's disappointing financial results and the implications of its dividend cut.

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Weak Financial Performance

Paramount Global's latest earnings report delivered disappointing results, sending shockwaves through the investment community. The company's earnings per share (EPS) plummeted by 85% to $0.09, significantly lower than the prior year and nearly half of what analysts had projected. Moreover, the company's sales declined by 1%, amounting to $7.27 billion, falling short of forecasts by $150 million.

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Segment Analysis

A closer look at Paramount Global's business segments reveals a mixed bag of performance. Traditional TV properties experienced an 8% decline in revenue, reflecting the challenges faced by the industry amid evolving consumer preferences. Similarly, the film studio division witnessed a 6% drop in sales. On a positive note, the direct-to-consumer unit, which includes the popular Paramount+ streaming service, achieved an impressive 39% surge in sales. However, this growth was overshadowed by a substantial 31% increase in expenses, leading to an overall loss of $511 million for the company.

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Dividend Reduction

In an unexpected move, Paramount Global decided to reduce its quarterly dividend from $0.24 to $0.05. This marks the first time in over a decade that the company has lowered its dividend payment. CEO Bob Bakish defended the decision, stating that it would enhance the company's ability to generate long-term shareholder value, particularly as it strives towards achieving profitability in the streaming market. Paramount Global estimates that this dividend cut will result in annualized savings of half a billion dollars.

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Members of LevelFields received the alert of this event on May 4, 8:35 AM ET

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