Paramount Global Shakes Up Streaming Market Paramount Global Shakes Up Streaming Market

Written By Michael Gary Scott

Paramount Global PARA recently dropped a bombshell by announcing forthcoming price hikes across most of its Paramount+ subscription plans. The ad-free Paramount+ With Showtime tier will see a $1 bump, breaking the $12.99 per month barrier. Meanwhile, the Paramount+ Essential plan, laced with ads, will leap by $2, driving its monthly cost to $7.99 for fresh sign-ups. These new rates are slated to kick in on August 20, heralding change for all new patrons.

For steadfast followers of Paramount+ With Showtime, the revised tariff will unveil itself on the next billing date on or post-September 20. Subscribers hooked to the Paramount+ Essential monthly package will stick to the current $5.99 pricing, with annual subscription rates for both tiers staying unscathed. Legacy Paramount+ Limited Commercial plan disciples shall feel a pinch too, encountering a $1 jolt, propelling their monthly fees to $7.99.

Amidst a tumultuous first quarter, Subscription revenues vaulted 22%, powered by an influx of subscribers and price upswings for Paramount+. Paramount+ loyalists surged to approximately 71 million, amassing 3.7 million pickups in the quarter.

The spirited momentum seems poised to endure the near future. However, the ominous specter of cutthroat streaming market competition looms large over the company’s long-term horizon.

Paramount Global Price and Consensus

Paramount Global Price and Consensus

Streaming Giants Battle in the Streaming Arena

In recent years, the domain of streaming television and movies has bloated with cutthroat competitiveness. Mighty companies have shoveled billions into erecting their platforms and fueling their libraries to take on the hegemonic Netflix NFLX. Thus, navigating the streaming epoch has transmogrified into a pricey proposition.

Subscription fees of a parade of players, encompassing Netflix, Disney’s DIS Disney+, Hulu, Warner Bros. Discovery’s WBD Max, ESPN Plus, Paramount+, have all soared over the years.

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After a decade fixated on inflating subscriber numbers over profitability, streaming behemoths now confront the exigency of minting genuine profits to remain afloat. To shore up bottom lines, companies are wielding a gamut of schemes comprising tariff hikes, clamping down on password partakers, axing shows for tax perks, and vendoring content to alien platforms.

Notwithstanding, the rejiggered price tag for Paramount+ with Showtime continues to undercut the ad-free variants of Netflix, Disney+, and Max.

Recently, Warner Bros. Discovery hoisted the price of Max’s no-ads packages in the U.S. NBCUniversal’s Peacock strata will witness price jolts for nascent registrants in July, just ahead of the Paris Summer Olympic Games.

Inference

Paramount stocks have nosedived 31.4% year to date, trailing the Zacks Consumer Discretionary sector’s 0.3% uptick.

The stock has also lagged NFLX, which galloped by 37.4%, followed by DIS’s 12.9% growth and WBD’s harrowing 30.8% downturn over the concurrent period.

Paramount Global’s recent tariff escalations and swelling subscriber cohort tingle as a shot in the arm for the company. Nevertheless, entrenched competition emerges as a daunting specter for this Zacks Rank #3 (Hold) entity.

PARA’s towering debt load sows seeds of concern. Total indebtedness as of March 31, 2024, weighed in at $14.6 billion with cash and equivalents at $2.38 billion. A leveraged balance sheet coupled with scant liquidity trims the sails for investors.

The Zacks Consensus Estimate for PARA’s Q2 2024 earnings per share stand at 14 cents, tethered by a cent over the last 60 days. Meanwhile, the consensus projection for Q3 2024 earnings hovers at 32 cents per share, flagged by a 3-cent drop in the last 30 days.