When Growing Your Media Business -- With Expected Losses -- Isn't Enough

ViacomCBS -- now Paramount Global -- can't get a break.

It posted a 48% gain in streaming revenue and better-than-expected Paramount+ and Showtime streaming subscribers, now at 56 million globally, projected to go to 100 million by 2024 -- but analysts are still cynical.

A Bank of America analyst downgraded the stock, partly because it now appears that ViacomCBS is no longer thinking the company is for sale. An acquisitions deal would, of course, mean a higher stock price.

There also is concern from analysts about streaming losses - no doubt an issue for all wannabe premium streamers from major TV-media companies. Paramount Global says there was $1 billion in streaming costs and expenses for 2021.

And it now plans, just like every other premium streaming service, to spend a lot of money to produce content -- like $6 billion. In perspective that number is actually modest by comparison to other big name streamers like Netflix, Disney+ and HBO Max efforts around producing TV and movie content -- which can be $10 billion to $15 billion or more per year.



For sure, Paramount Global is a company still looking to get its footing for the future -- now just two years after the Viacom and CBS merger. The BofA analyst's downgrade, as well as concerns from MoffettNathanson Research, put the company's stock in a big hole when the market opened on Wednesday morning -- down a massive 20%.

Perhaps not so surprisingly, another modest size cable TV network group, AMC Network, also offered up a fourth-quarter earnings report on Wednesday, and also got hammered. While it rose in streaming subscribers, now at 9 million overall, many see AMC+ as a modest, niche performer looking to survive -- perhaps until AMC becomes a media-buying target.

Is this all some coincidence?

Analysts have mulled that ViacomCBS and AMC Networks should, in fact, merge. At the same time others have floated the idea that perhaps Netflix should buy ViacomCBS -- all this to get themselves into the advertising-supported revenue business without attaching TV commercials to the Netflix name. No doubt the soon-to-be-closed Discovery Inc deal to buy WarnerMedia is a big factor in all these marketplace machinations.

What's the bottom line? Well, you know, business analysts are about making money for investors who follow them. And if they are public with a target price for a specific company, the hope is that everyone makes it to the finish line in one big piece.

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