VALUATION HIGHLIGHTS

1. TV Media constitutes 78% of the Trefis price estimate for Paramount Global's stock.
2. Direct To Consumer constitutes 17% of the Trefis price estimate for Paramount Global's stock.

WHAT HAS CHANGED?

Paramount Q4 2023 Results

Paramount posted a mixed set of Q4 2023 results. Although revenue fell short of estimates, coming in at $7.64 billion, earnings beat expectations standing at $514 million, up from $21 million in the year-ago period. The company's flagship streaming offering, Paramount+, reached 67.5 million subscribers as of the end of December, a net increase of 4.1 million, and recorded 69% growth in revenues.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Paramount's value that present opportunities for upside or downside to the current Trefis price estimate for Paramount:

Direct-To-Consumer

• Direct-To-Consumer Revenue: Paramount's direct-to-consumer revenue rose from $1.8 billion in 2020 to $6.7 billion in 2023. Trefis expects the metric to grow to about $12 billion by 2029, driven by stronger uptake of the company's Paramount+ offering. However, if the business outperforms and grows to over $15 billion, there could be a 15% upside to our price estimate. On the other hand, if the metric only grows to about $9 billion, due to higher competition in the streaming space, there could be a 10% downside to our price estimate.
  Direct-To-Consumer Margins: Paramount's EBITDA margins for its direct-to-consumer business deteriorated from -7.2% in 2020 to -20.1% in 2023. We expect the metric to improve to about 14% by the end of our review period. However, if margins grow to about 18%, there could be a 20% upside to our price estimate.

For additional details, select a driver above or select a division from the interactive Trefis split for Paramount at the top of the page.

BUSINESS SUMMARY

Paramount is a leading global media and entertainment company. The company's distribution platforms include broadcast and cable networks as well as a fast-growing streaming operation. The company's portfolio includes well-known brands such as CBS, Showtime Networks, Paramount Pictures, Nickelodeon, and MTV. Paramount also holds among the most extensive libraries of television and film titles in the industry.

SOURCES OF VALUE

TV Media Business is the most valuable segment for Paramount primarily due to higher revenues and thick margins.

Revenues

TV revenues stood at around $20 billion in 2023, counting as Paramount's single largest segment.

High margins

Furthermore, this business has high EBITDA margins of around 22% compared to negative levels for the streaming business.