The same analyst who said he believes Paramount should simply shut down its streaming business has further thoughts on the future of Paramount Global: He doesn’t have one.
Wells Fargo bank equity analyst Steven Cahall offers Paramount Corp. ‘1-2 more years’ of rolling ‘good money … after bad’, chasing a streaming profit that may never come and riding the last few gasps of linear television, before ” the break becomes inevitable.
The “good money” inside Paramount Global lies within its studios, which Cahall says are worth an estimated $30 billion in a sale, according to a note he sent to clients Thursday. We got said note; Cahall sees the entire company as currently structured to be worth $22.3 billion. Yes, this is bad. (Paramount itself has an enterprise value of about $28 billion.)
Unlocking value is the trend in the media landscape these days – look no further than Lionsgate for another example of a study that is considered more valuable than the entire umbrella company in which it resides.
An alternative to burning a lot of money for little return? Paramount could pull a Lionsgate and split now. (It hasn’t been long since we wrote that Paramount may be considering acquiring Starz from Lions Gate. Business is changing at a pace that rivals The Flash.) Sure, linear TV channels and direct-to-consumer businesses would be “sold at steep discounts,” but “a rare gem,” in Cahall’s words, are Paramount Studios and CBS studios .
Those pieces could generate “significant” interest from streamers if placed on the sales block. Business Insider Wednesday reported that Netflix was once very much in the market for those bits. The problem was – or maybe still is – that Netflix had no use for Paramount’s other assets.
That’s the general consensus about Paramount Global: It has great studios and an extensive library, but the cable channel suite and other antiquated resources belong in the bargain bin. Even the CBS broadcast network, despite regularly drawing the largest number of viewers on television, is more of a burden than a blessing in potential M&A activity.
For example, NBCUniversal’s Comcast parent would have good reason (and good money) to buy Paramount Global in its entirety — heck, Paramount+ might even be the thing that saves Peacock — but owning both NBC and CBS is an FCC no-no.
Paramount Global has been working to build its balance sheet. The company has been trying to sell publisher Simon & Schuster for years and appears to be closing in on another billion-dollar deal, one that hopefully doesn’t get caught up in regulatory red tape. (Last November, the Justice Department canceled a $2.2 billion sale to Penguin Random House for reasons similar to why the Federal Communications Commission won’t allow two broadcast networks to operate under one roof.)
The company is also offloading its famous New York City headquarters. Paramount’s studio lot in Los Angeles was reportedly among the assets Netflix was interested in acquiring.
A Netflix representative did not immediately respond to IndieWire’s request for comment on the previous talks. Similarly, a Paramount Global spokesperson did not respond to us for this story.
Paramount is currently seeking offers for its BET Group in excess of $3 billion; Tyler Perry, who already owns 25 percent of BET, appears to be the favorite in the auction. Paramount’s preschool brand, Noggin, is also looking for a new owner. And last month, National Amusements Inc., controller of Paramount Global, was awarded a A $125 million cash infusion by the investment bank BDT & MSD Partners.
These sales and investments are purchases only Global Paramount Non-executive chairwoman Shari Redstone – and by proxy, Bob Bakish – more time to delay the inevitable, in Cahall’s eyes. Or in his words: “Keep the destructive course of value.”