ViacomCBS on Monday announced its intention to sell a total of $3 billion in stock, with the proceeds earmarked “for general corporate purposes, including investments in streaming.”
The company, which replaced its CBS All Access streaming service with Paramount+, launched March 4, spent about $15 billion on content and sports rights in 2020.
In a Paramount+ pre-launch presentation last month, CFO Naveen Chopra said the company expects to spend an additional $5 billion on streaming content by 2024, or about $1 billion per year — including some content to be distributed on linear as well as streaming platforms.
The stock offerings include $2 billion of Class B common stock and $1 billion of Series A Mandatory Convertible Preferred Stock, which automatically converts to Class B common shares no later than April 1.
ViacomCBS intends to list the convertible stock on the Nasdaq Global Select Market under the symbol “VIACP.”
Morgan Stanley and J.P. Morgan, which underwrote the offerings, were given 30-day options to purchase up to an additional $450 million in stock, reports Variety.
That report also notes that the company’s decision to raise funds through a stock sale rather than issue debt may reflect its long-term debt of $19.7 million as of year-end 2020 — “which is relatively high, given that it reported adjusted operating income of $5.1 billion and free cash flow of $1.9 billion for full-year 2020.”
ViacomCBS hopes to differentiate Paramount+ in part through its significant live linear TV offering. It also owns free, ad-supported livestream-and-VOD streamer Pluto TV, and premium streaming services Showtime and BET Plus.
The dual revenue-stream strategy, as laid out by ViacomCBS executives, is to use Pluto to monetize the company’s content archives and to attract consumers who can then be upsold on the paid offerings.
As of year-end 2020, the company had 29 million total users worldwide across its streaming platforms, and said it was aiming for 65 million to 75 million by 2024.
ViacomCBS’s share price -- which has more than doubled so far this year -- ended regular trading on Monday up 3%, to $100.25, but saw the price dip 4.3% in after-hours trading following its stock sale announcement, reports CNBC.