• by Wayne Friedman , Staff Writer, May 12, 2023

Media companies want to show investors they are doing well. But drastically cutting the dividend? That takes chutzpah. Was there a better way to deliver this story?

This is something Paramount Global did recently. Its stock crumbled 30% on the day with that news. 

So then news leaked that it was looking (to perhaps make amends?) to cut the workforce of its media businesses by a massive 25%, according to a story in Variety. That pushed its stock down 2% on Tuesday. Hey, it could have been worse. 

So Paramount Global outdoes seemingly lesser headlines at other companies -- the 7,000 intended company-wide Disney layoffs, for instance -- with a mere 3% of its entire workforce. 

Paramount Global should have started with a workforce cut -- then offered up a slight trim to the dividend. Instead, the dividend cut was 80% to $0.05/share. Now investors and analysts might be giving the company a harder, long-term thumbs down.

This is what happens when your endemic 60-year TV business undergoes an earthquake. The cracks are everywhere. Manage the effect of one's effort to be more efficient and cost-effective can be a difficult thing.

For months Wall Street analysts have been propping up Paramount Global as a inexpensive media stock -- versus that of other entertainment companies -- which seemingly have some upside potential.

And now for Paramount Global?  Another cold winter is coming -- for this and other companies -- for the important fall season.
There is a writers' strike. Its stock sank 3% on Tuesday in reference  to the layoff news. Over the last 12 months, the stock is down 40%. Its five-year trend shows shares down 70%.

A recession -- on top of everything else -- will most likely hit the business.  The upfront ad market could be part of this weakness, with marketers somewhat reluctant to commit to a full TV season worth of advertising dollars to a media channel -- live, linear TV -- that will almost assuredly see a steeper viewership drop for the TV season due to fewer new premium scripted  TV shows.

Upending an long-term business, unfortunately, means bringing a lot of pain for all workers. You can write that down.