Paramount Global (PARA) Shares Plunge as Media Giant Misses Estimates and Slashes Dividend
May 4, 2023
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.
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.
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.
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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