Taking the mic for the second time in a week, Paramount Global CEO Bob Bakish explained why the company slashed its dividend and talked streaming, advertising and weathering a WGA strike.
He told the (virtual) annual meeting of shareholders Monday that uncertain macroeconomic factors (interest rates, inflation) require prudent cash management and reducing the dividend by 80% will save the company $500 million a year — echoing what he told disgruntled financial analysts on last Thursday’s earnings call.
Par is highly exposed to advertising and a shaky market is colliding with peak investment in streaming this year. S&P Global in late March downgraded the company’s investment rating (to BBB- from BBB) “due to the weakening macroeconomic environment, higher peak losses in its direct-to-consumer (DTC) segment, and worsening trends for linear television.”
Bakish promised an improving ad market plus reduced streaming investment will bring the company earnings and free cash flow in 2024. The stock is off about 0.5% today at $16.77. It’s fell sharply last week.
On the strike, the CEO reiterated his comments from last week, noting that the two sides are still far apart.
“I’d start with the fact that writers are really an essential part of creating content that our audiences enjoy across all our platforms. So, with that as an umbrella statement, we do hope we can come to a result that works for everyone fairly quickly.”
“Now, obviously, we have been planning for that and we have many levers to pull and that will allow us to manage though a writers’ strike even for an extended duration. And just so you understand, in terms of levers, we have a lot in the can, produced and ready to go. Add to that, we have a broad range of reality and unscripted programming that’s not affected by the strike, and also sports that’s not affected by the strike. Add to that, offshore production…Plus, we have one of the largest libraries in media. That’s true across film, that’s true across television series. So, we can really pull from that library to fill the schedule should we need to. So, we are well positioned to navigate the writers’ strike if we need to. But I hope we can come to a resolution in very short order that works for everyone.”
Picketing by the WGA that started last Tuesday in NY and LA and has been extremely disruptive, pausing productions and delaying shoots, most recently Apple’s Severance (and Loot); the Disney Channel’s Bunk’d Paramount+ Evil and the last seaon of Netflix’ Stranger Things. Yellowjackets, on Paramount+, shut its Season 3 writers’ room down last week after one day.
The annual network upfront presentations scheduled for next week in New York are being rethought and the strike is having a big impact on pickup decisions as the networks are faced with the possibility that no newly ordered or renewed scripted series could go into production for months if the impasse between the writers guild and the studios continues, as Deadline reported.
Paramount’s executive vice chair Shari Redstone, whose family trust National Amusements, is Par’s majority shareholder, also weighed in on the company’s general outlook today: “Just to build on what Bob said, I firmly believe in the strategy we are executing and the team driving it forward. We are now in a challenging macroeconomic environment [but as that] improves, we will be incredibly well positioned to capitalize on the investments we have made and to deliver substantially improved results and value creation for shareholders.”