Group 1 - Paramount Global (NASDAQ: PARA) is significantly undervalued compared to its assets and peers due to management issues and cord-cutting trends [1] - The recent Skydance deal, while not ideal, has the potential to unlock value for Paramount in the near future [1] Group 2 - The focus is on analyzing undervalued companies with strong fundamentals and cash flows, particularly in sectors like Oil & Gas and consumer goods [2] - There is a preference for long-term value investing, with occasional interest in deal arbitrage opportunities [2]

NEW YORK and PHILADELPHIA, Jan. 7, 2025 /PRNewswire/ -- Paramount Global (NASDAQ: PARA) (NASDAQ: PARAA) and Comcast (NASDAQ: CMCSA) today announced the renewal of their comprehensive distribution agreements to continue delivering Paramount's leading portfolio of broadcast, entertainment, news and sports brands across Xfinity platforms. The multi-year deals feature ongoing carriage of Paramount's networks, including CBS, BET, Comedy Central, MTV, Nickelodeon, Paramount Network and more. Comcast subscribers w ...

Core Viewpoint - Nickelodeon and CBS Sports are collaborating to present a special alternate telecast of the NFL Wild Card Game featuring characters from SpongeBob SquarePants, aimed at engaging younger audiences with a unique viewing experience [1][7]. Group 1: Event Details - The NFL Wild Card Game will feature the Los Angeles Chargers vs. Houston Texans, airing on January 11, 2025, at 4:30 PM (ET) [1]. - The telecast will include enhanced graphics, augmented reality, and appearances by various characters from Paramount's portfolio [1][3]. - This event marks the sixth collaboration between CBS Sports and Nickelodeon for an NFL game, following the successful Super Bowl LVIII telecast [7]. Group 2: Character Involvement - SpongeBob SquarePants and Patrick Star will reprise their roles in the virtual booth, joined by CBS Sports analyst Nate Burleson [2]. - Additional characters such as Sandy Cheeks and Dora will participate, with Dora explaining game rules and penalties [2][3]. Group 3: Unique Features - The telecast will include interactive elements like a "Wild Cod" group, a Submarine Blimp, and Teenage Mutant Ninja Turtles launching pizzas [4]. - New features such as clam cannons that fire Slime and an exclusive sneak peek of "Henry Danger The Movie" will be showcased during halftime [4]. Group 4: Viewer Engagement - Fans can participate by voting for the player they think should receive the NVP award through Nickelodeon's website [5]. - Following the game, a special recap show titled "Bikini Bottom Breakdown: NFL Wild Card" will air on January 15, 2025 [6]. Group 5: Streaming Availability - The game will be available for streaming on mobile devices via NFL+, and CBS Sports' broadcast will be accessible through Paramount+ and other digital platforms [8][9].

The third film in the series, Sonic the Hedgehog 3, recently surpassed $100M at the international box office, and has earned over $187M domestically for a cumulative worldwide gross to-date of over $312MHOLLYWOOD, Calif., Jan. 5, 2025  /PRNewswire/ -- Paramount Pictures today announced that its Sonic the Hedgehog film franchise, based on the SEGA video game, has surpassed $1B in total box office receipts worldwide, as Sonic the Hedgehog 3 continues to draw audiences to theatres across the globe. PARAMOUN ...

Paramount Global’s (PARA) shares have declined 31.1% over the past year, underperforming the Zacks Consumer Discretionary sector’s 12.9% return and the Zacks Media Conglomerates industry’s 20.7% growth.The underperformance resulted from a 6% year-over-year revenue dip to $6.73 billion in the third quarter, also lagging the Zacks Consensus Estimate of $6.91 billion. This shortfall was primarily led by weakness in the TV Media and Filmed Entertainment segments.However, Paramount’s prospects are bolstered by t ...

Core Viewpoint - The merger between Paramount and Skydance is anticipated to be influenced by the relationship between Paramount's Shari Redstone and President-elect Donald Trump, which may help navigate potential FCC issues and facilitate a successful deal closure by the first half of 2025 [4][10]. Company and Industry Summary - Shari Redstone, controlling Paramount through National Amusements, is set to receive $1.75 billion from the merger, while Skydance will assume National Amusements' financial obligations and cover Redstone's private jet lease and New York apartment expenses [2][4]. - Skydance has committed $4.5 billion to assist Paramount in buying out approximately 50% of its nonvoting shares, aiming to appease nonvoting investors [2]. - The merger combines Paramount's renowned studio and networks with Skydance's successful productions, including "Top Gun: Maverick" and "Jack Ryan," with plans for over $2 billion in cost cuts [6]. - Management changes are underway, with David Ellison and Jeff Shell leading the integration, and former Netflix executive Cindy Holland likely to oversee streaming operations [6][9]. - Despite the lawsuit from Trump against CBS regarding a "60 Minutes" interview, Redstone has expressed understanding of Trump's frustrations but does not support the lawsuit [7][8].

Core Points - Paramount Global announced the redemption of all remaining outstanding 4.750% senior notes due May 15, 2025, on December 27, 2024 [1][2] - The redemption price will include 100% of the principal amount, a make-whole amount, and accrued unpaid interest [2] - The total principal amount of the 4.750% senior notes outstanding is $125,561,000, which will all be redeemed [2] Company Overview - Paramount Global is a leading global media, streaming, and entertainment company, known for creating premium content and experiences [3] - The company's portfolio includes well-known brands such as CBS, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Paramount+, and Pluto TV [3] - Paramount Global possesses one of the industry's most extensive libraries of TV and film titles and offers innovative streaming services and digital video products [3]

Shari Redstone's Financial Situation - Shari Redstone paid off a $186 million debt owed by National Amusements, the holding company controlling 77.5% of Paramount's voting stock, using cash mostly fronted by Larry Ellison [1][2] - The debt carried an 11.5% interest rate and was not due until May 2025, but Redstone paid it off early [5] - Redstone was reportedly in a cash crunch as Paramount struggled with weak performance across its business units [6] - National Amusements had previously sold real estate assets to make a $40 million debt payment in February [6] Skydance-Paramount Merger Deal - Skydance and its partners agreed to pay $2.4 billion for National Amusements' stake in Paramount as part of an $8 billion deal that will lead to a merger [4] - The deal values Skydance at 1,600 times its EBITDA of $3 million for the 12 months ending June 30, 2024 [11][12] - Skydance will pay $15 per share for up to $4.3 billion of Paramount's common shares, about half of Paramount's market cap [14] - The merged company is projected to have EBITDA of $258 million in 2025, driven by the release of new films [15] Financial Projections and Concerns - Paramount's revenue is expected to grow from $974 million in 2024 to $2.3 billion in 2025 [19] - Some Paramount shareholders and analysts expressed concerns about the deal, with one analyst calling it "a bad deal" [16][17] - Paramount's second-largest shareholder urged the FCC to review Skydance's finances, which could delay the deal's closing [17] Industry Context - The Skydance-Paramount deal contrasts with Amazon's acquisition of MGM, which was valued at 27.5 times EBITDA [16] - Skydance is known for co-producing major film franchises like "Mission: Impossible" and "Top Gun" [2][13]

Financial Data and Key Metrics Changes - Adjusted OIBDA for Q3 2024 was $858 million, reflecting a 20% year-over-year increase, driven by improvements in the D2C business [40] - Total company advertising grew by 2%, with D2C advertising showing strong growth of 18%, an acceleration from 16% in Q2 [41][42] - Affiliate and subscription revenue declined by 1% in Q3, but grew by 1% when excluding the impact of Showtime pay-per-view events [45][46] Business Line Data and Key Metrics Changes - D2C achieved profitability for the second consecutive quarter, with adjusted OIBDA improving by over $1 billion over the past four quarters [8] - Paramount+ added 3.5 million subscribers in Q3, reaching a total of 72 million subscribers, with a year-over-year revenue growth of 27% [47][40] - Pluto delivered its highest consumption ever, with 5.6 billion viewing hours, up 5% year-to-date [18] Market Data and Key Metrics Changes - The NFL on CBS averaged over 20 million viewers in the first five weeks of the season, a 5% increase from the previous year [28] - CBS News 24x7 streaming network saw total minutes watched grow by 56% over 2023 [30] - International advertising revenue benefited from the recognition of previously underreported revenue, contributing approximately $50 million in Q3 [68] Company Strategy and Development Direction - The company is focused on transforming D2C and streamlining operations to achieve $500 million in annual run rate savings [9][19] - The Skydance transaction is expected to close in the first half of 2025, subject to regulatory approvals [10] - The company aims to reach domestic profitability for Paramount+ by 2025, with a focus on content streaming and advertising as key growth levers [49][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position as a standalone entity, driven by hit content and strategic execution [60] - The company anticipates continued top-line growth in Q4, despite expected higher content expenses [86] - Management remains optimistic about the trajectory of the business, particularly in D2C profitability and overall financial goals for 2024 [55][54] Other Important Information - The company is evaluating potential partnerships in streaming to create long-term value for shareholders [18] - The ongoing dispute with Nielsen is being addressed, with management hopeful for a resolution [16] - The company has executed 90% of its planned workforce reductions, aiming to right-size its cost base [19] Q&A Session Summary Question: Discussion on D2C partnerships and profitability timeline - Management highlighted the importance of strategic partnerships and expressed confidence in achieving domestic profitability in 2025, with Pluto already profitable [62][60] Question: Clarity on international market strategy for Paramount+ - Management indicated a market-by-market approach to maximize content value, with various strategies including owned operations and licensing [66] Question: Impact of Nielsen data on advertising sales - Management stated there has been no adverse impact on ad revenue to date and does not expect material impact in Q4 [72] Question: Details on DTC trends and Charter partnership impact - Management noted that the Charter partnership contributed to subscriber growth, with expectations for continued growth over time [82] Question: DTC efficiencies and marketing costs - Management explained that marketing efficiencies are driven by a diverse subscriber base and that programming charges taken earlier in the year have potential benefits for cost amortization [92][93]

Revenue Performance - Paramount's Q3 2024 revenue decreased by 6% to $6.73 billion, driven by lower theatrical releases and licensing revenues, partially offset by growth in streaming services led by Paramount+[154][155] - For the nine months ended September 30, 2024, revenue decreased by 4% to $21.23 billion, with streaming growth partially offsetting declines in licensing and theatrical revenues[159][160] - Total revenues for the three months ended September 30, 2024 decreased by 6% to $6,731 million, compared to $7,133 million in the same period in 2023[176] - Total revenues for Q3 2024 decreased by 6% to $6.731 billion, with TV Media revenues down 6% to $4.298 billion and Direct-to-Consumer revenues up 10% to $1.860 billion[220] - Total revenues for the nine months ended September 30, 2024 decreased by 4% to $21.229 billion, with TV Media revenues down 7% to $13.800 billion[223] Operating Income and Adjusted OIBDA - Q3 2024 operating income declined by 46% to $337 million, impacted by restructuring charges, transaction-related costs, and an impairment charge[154][156] - Adjusted OIBDA for Q3 2024 increased by 20% to $858 million, reflecting improved streaming service performance[154][157] - The nine-month operating loss widened to $5.40 billion in 2024, compared to $855 million in 2023, due to significant programming and impairment charges[159][161] - Adjusted OIBDA for the nine months increased by 45% to $2.71 billion, driven by streaming service improvements[159][161] - Operating income (GAAP) for the three months ended September 30, 2024 was $337 million, compared to $621 million in the same period in 2023[167] - Adjusted OIBDA (Non-GAAP) for the three months ended September 30, 2024 was $858 million, up from $716 million in the same period in 2023[167] - Adjusted OIBDA for Q3 2024 increased by 20% to $858 million, driven by a $287 million improvement in Direct-to-Consumer Adjusted OIBDA[222] - Nine-month Adjusted OIBDA increased by 45% to $2.712 billion, driven by an $842 million improvement, with Direct-to-Consumer Adjusted OIBDA improving by $962 million[223] - Adjusted OIBDA improved by $287 million to $49 million for the three months ended September 30, 2024, reflecting revenue growth and lower marketing and content costs[245] - Adjusted OIBDA improved by $962 million for the nine months ended September 30, 2024, reflecting revenue growth and lower marketing and content costs[251] Net Loss and Earnings - Paramount reported a net loss of $4 million in Q3 2024, compared to net earnings of $247 million in Q3 2023[154][158] - Reported net loss from continuing operations (GAAP) for the nine months ended September 30, 2024 was $(5,980) million, compared to $(1,288) million in the same period in 2023[172] - Adjusted earnings from continuing operations (Non-GAAP) for the nine months ended September 30, 2024 was $1,112 million, compared to $359 million in the same period in 2023[172] - The company reported a net loss from continuing operations attributable to Paramount of $4 million for the three months ended September 30, 2024, compared to net earnings of $247 million in the same period in 2023[214] Streaming Services Performance - Adjusted OIBDA for Q3 2024 increased by 20% to $858 million, reflecting improved streaming service performance[154][157] - Direct-to-Consumer revenues grew 10% to $1.860 billion, with subscription revenues up 7% to $1.343 billion and advertising revenues up 18% to $507 million[239] - Paramount+ global subscribers increased by 8.5 million (13%) to 71.9 million as of September 30, 2024, compared to 63.4 million in 2023[240] - Paramount+ revenues grew by $290 million (25%) to $1.428 billion for the three months ended September 30, 2024[240] - Advertising revenues increased by 18% for the three months ended September 30, 2024, driven by growth in impressions for Paramount+ and Pluto TV[242] - Subscription revenues increased by 7% for the three months ended September 30, 2024, driven by Paramount+ subscriber growth and domestic pricing increases[243] - Global Paramount+ subscribers increased by 3.5 million (5%) to 71.9 million during the quarter, reflecting international expansion[244] - Paramount+ revenues increased by $1.239 billion (40%) to $4.332 billion for the nine months ended September 30, 2024[247] - Advertising revenues increased by 21% for the nine months ended September 30, 2024, driven by growth in impressions from Pluto TV and Paramount+[249] - Subscription revenues increased by 13% for the nine months ended September 30, 2024, driven by Paramount+ subscriber growth and pricing increases[250] Advertising Revenues - Advertising revenues increased by 2% to $2,174 million in the three months ended September 30, 2024, compared to $2,133 million in the same period in 2023[176] - Advertising revenues increased by 5% to $7.521 billion for the nine months ended September 30, 2024, driven by growth from Paramount+ and Pluto TV, higher political advertising revenue, and adjustments from prior period underreporting[178] - TV Media advertising revenues for Q3 2024 decreased by 2% to $1.666 billion, with domestic advertising down 7% to $1.33 billion and international advertising up 24% to $339 million[227] Theatrical and Licensing Revenues - Theatrical revenues decreased by 71% to $108 million in the three months ended September 30, 2024, compared to $377 million in the same period in 2023[176] - Theatrical revenues decreased by 46% to $399 million for the nine months ended September 30, 2024, due to fewer and less successful releases compared to the previous year[183] - Licensing and other revenues decreased by 9% to $1,234 million in the three months ended September 30, 2024, compared to $1,361 million in the same period in 2023[176] - Licensing and other revenues decreased by 22% to $3.462 billion for the nine months ended September 30, 2024, impacted by lower secondary market licensing and reduced content production due to labor strikes[185] - Licensing and other revenues for Q3 2024 decreased by 12% to $760 million, reflecting lower licensing volume in the secondary market[229] Affiliate and Subscription Revenues - Affiliate and subscription revenues decreased by 1% to $3,215 million in the three months ended September 30, 2024, compared to $3,262 million in the same period in 2023[176] - Affiliate and subscription revenues increased by 2% to $9.847 billion for the nine months ended September 30, 2024, with Paramount+ subscribers growing to 71.9 million from 63.4 million in the same period last year[182] - Affiliate and subscription revenues for Q3 2024 decreased by 7% to $1.872 billion, primarily due to linear subscriber declines and the absence of pay-per-view boxing events[228] Content Costs and Operating Expenses - Total operating expenses decreased by 7% to $4.342 billion for the three months ended September 30, 2024, primarily due to lower content costs and distribution expenses[186] - Content costs decreased by 9% to $10.539 billion for the nine months ended September 30, 2024, reflecting lower theatrical and licensing costs, partially offset by Super Bowl LVIII broadcast costs[189] - Selling, general, and administrative expenses decreased by 9% to $4.772 billion for the nine months ended September 30, 2024, driven by lower marketing and compensation costs[196] Impairment and Restructuring Charges - The company recorded a goodwill impairment charge of $5.98 billion for the Cable Networks reporting unit in the second quarter of 2024[198] - Restructuring and transaction-related costs totaled $595 million for the nine months ended September 30, 2024, including severance and exit costs[200] - The company recorded programming charges of $1.12 billion in the first quarter of 2024, primarily for content impairment and development cost write-offs[192] - The company recorded severance charges of $513 million for the nine months ended September 30, 2024, with $288 million recorded in the third quarter, primarily due to strategic workforce changes and the exit of the former CEO[201] Investments and Transactions - Paramount entered into a $6.0 billion investment agreement with Skydance Media, with up to $4.5 billion allocated for cash-stock elections and $1.5 billion remaining at New Paramount[147] - The Skydance transaction includes the issuance of up to 400 million shares of New Paramount Class B Common Stock at $15.00 per share and warrants for 200 million shares at $30.50 per share[147] - The Skydance transaction is expected to close in the first half of 2025, subject to regulatory approvals and customary closing conditions[149] - The company recorded a loss of $4 million from the sale of an investment in the first quarter of 2024, compared to a gain of $168 million in the second quarter of 2023 from the dilution of its interest in Viacom18 from 49% to 13%[206] - The company recorded additional pretax gains of $19 million from the sale of Simon & Schuster during the nine months ended September 30, 2024, with $7 million recorded in the third quarter[215] Debt and Financial Position - The company's total notes and debentures outstanding as of September 30, 2024, were $14.62 billion with a weighted average interest rate of 5.17%, compared to $15.66 billion at 5.11% in 2023[205] - The company's interest expense decreased by 10% to $209 million for the three months ended September 30, 2024, compared to $232 million in the same period in 2023[204] - Total debt at September 30, 2024, was $14.62 billion, slightly up from $14.60 billion at December 31, 2023, with senior debt at $12.99 billion and junior debt at $1.63 billion[280] - The company has a $3.50 billion revolving credit facility maturing in January 2027, with no borrowings outstanding as of September 30, 2024[285] - The maximum Consolidated Total Leverage Ratio was 5.75x for the quarter ended September 30, 2024, and is set to decrease to 4.5x by March 31, 2026[286] - Outstanding letters of credit and surety bonds totaled $675 million at September 30, 2024, with $464 million issued under a $1.9 billion standby letter of credit facility[290] Tax and Equity - The reported effective income tax rate for the nine months ended September 30, 2024 was 5.6%, compared to 30.4% in the same period in 2023[172] - The company recorded a tax benefit of $342 million for the nine months ended September 30, 2024, reflecting an effective income tax rate of 5.6%, primarily due to tax benefits on pretax impairment charges and programming charges[208] - The company's equity in earnings (loss) of investee companies improved by 22% to a loss of $60 million for the three months ended September 30, 2024, compared to a loss of $77 million in the same period in 2023[210] Cash Flow and Dividends - Operating cash flow from continuing operations increased due to lower spending on content, compensation, and marketing, with payments of $198 million in 2024 and $288 million in 2023 for restructuring and transformation initiatives[272] - Net cash flow used for investing activities from continuing operations was $365 million in 2024, compared to $341 million in 2023, with capital expenditures of $151 million in 2024 and $213 million in 2023[274] - Net cash flow used for financing activities was $298 million in 2024, a significant decrease from $744 million in 2023, driven by lower debt repayments and common stock dividends[275] - Total common stock dividends declared were $104 million in 2024, down from $228 million in 2023, with dividends per common share at $0.15 in 2024 compared to $0.34 in 2023[278] Goodwill and Intangible Assets - The company performed an interim goodwill impairment test in Q2 2024, assessing fair value using discounted cash flow, traded values, and transaction values of comparable businesses[296] - Cable Networks reporting unit recorded a goodwill impairment charge of $5.98 billion due to downward adjustments in expected cash flows, primarily driven by linear affiliate market indicators and company market value estimates[298] - CBS Entertainment reporting unit's fair value exceeded its carrying value by 4%, with a goodwill balance of $5.16 billion as of June 30, 2024[300] - Paramount+ reporting unit's fair value exceeded its carrying value by 5%, with a goodwill balance of $1.47 billion as of June 30, 2024[301] - Pluto TV reporting unit's fair value exceeded its carrying value by 4%, with a goodwill balance of $1.26 billion as of June 30, 2024[303] - FCC licenses impairment tests resulted in a $15 million charge for two markets in Q2 2024 and a $104 million charge for five markets in Q3 2024, reducing the carrying value to $1.03 billion[307][309] - A 50 basis points decrease in the long-term growth rate or a 50 basis points increase in the discount rate could reduce the aggregate fair value of FCC licenses by $67 million and $86 million, respectively[310] Legal and Environmental Liabilities - As of September 30, 2024, the company had approximately 19,360 pending asbestos claims, down from 19,970 as of December 31, 2023[320] - Total costs for settlement and defense of asbestos claims after insurance recoveries and net of tax were approximately $54 million in 2023 and $57 million in 2022[320] - The company recorded an accrual for asbestos liabilities based on a 10-year estimable period, considering factors like claim volume, average cost per claim, and disease type breakdown[321] - The company faces potential future liabilities from environmental cleanup costs and personal injury claims related to historical operations, with accruals subject to change based on future circumstances[322] Market Risks and Forward-Looking Statements - No significant changes to market risk since the Annual Report on Form 10-K for the year ended December 31, 2023[327] - Forward-looking statements include risks related to streaming business, advertising revenues, competitive industries, and evolving technologies[325] - Potential risks include asset impairment charges for goodwill, intangible assets, FCC licenses, and content[325] - Risks related to environmental, social, and governance (ESG) matters are highlighted[325] - Cybersecurity, privacy, and data protection risks are evolving concerns[325] - Risks associated with labor disputes and inability to retain key employees or creative talent[325] - Potential conflicts of interest due to ownership structure with a controlling stockholder[325] - Risks related to the Transactions include delays, litigation, and challenges in realizing synergies[325] - Negative effects on stock price due to the announcement or consummation of the Transactions[325] - Forward-looking statements are made as of the report date and are subject to change[325]