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S&P World has formally downgraded Paramount World debt to junk standing at BB+, from BBB-, or one degree beneath funding grade.
The credit standing company made the transfer on “weak credit score metrics,” with a secure outlook. The downgrade comes a month after Paramount was placed on a unfavorable watch by S&P World for a attainable credit standing downgrade over weaker money move considerations as the foremost studio pivots from linear TV to the streaming area.
“Paramount might want to execute its plan to considerably enhance streaming losses over the subsequent two years to mitigate additional draw back scores strain. Paramount’s present credit score metrics are weak for the ‘BB+’ score,” S&P World mentioned in commentary accompanying the debt downgrade.
The Shari Redstone-controlled media conglomerate is battling to exchange misplaced linear TV revenues with streaming and different digital revenues because it responds to fast-changing shopper TV viewing habits. The scores company resolved its credit score watch after Paramount World, led by CEO Bob Bakish, unveiled its fourth quarter earnings on Feb. 28, 2024, the place Paramount+ hit 67.5 million subscribers and shrunk its streaming loss to $490 million.
Final yr, the studio’s credit standing was lowered from BBB to BBB- and extra downgrades had been attainable as S&P World began to weigh money move together with leverage metrics when measuring Paramount’s debt worthiness. The credit standing company can be introducing money move metrics when measuring the broader U.S. media sector.
The credit score company mentioned it may decrease its Paramount World debt score additional if the studio was unable to cut back its leverage and enhance its free working money move over the subsequent 12 to 18 months. Paramount World is utilizing NFL video games to enroll new Paramount+ subscriptions, however these stay sport rights are costly.
On Feb. 13, the corporate unveiled plans to chop an estimated 800 jobs as a part of what Bakish known as “streamlining prices.” Shares in Paramount World fell by 30 cents, or almost 3 %, to $11.67 in late day buying and selling on Wednesday.