Paramount Global (PARA); formerly ViacomCBS (VIAC) is learning Mr. Market has no love for streaming video.
In fact, Paramount’s stock lost almost one-third of its value over the past year. Mr. Market paid $96.33 for ViacomCBS (NASDAQ: VIAC) Class B shares on 15 March 2021 and $35.21 for Paramount Global (NASDAQ: PARA) Class B shares on 15 March 2022.
Conversely, Paramount Global is making more money and generating more revenue. For example, Paramount Global’s quarterly operating income grew from $1.083 billion on 31 December 2020 to $2.664 billion on 31 December 2021.
In addition, Paramount’s quarterly revenues grew from $6.875 billion on 31 December 2020 to $8 billion on 31 December 2021. However, the quarterly gross profit fell from $2.562 billion on 31 December 2020 to $2.447 billion on 31 December 2021.
Paramount Doubles Down on Streaming Video
Therefore, Paramount’s doubling down on streaming media is working. Paramount claims its Paramount+ streaming service added 7.3 million subscribers in the fourth quarter of 2021. Hence, Paramount+ could have 32.8 million viewers.
Accordingly, Viacom-CBS (VIAC) changed its name to Paramount Global (PARA). Paramount Global invokes Paramount Pictures, Hollywood’s second-oldest movie studio founded in 1912.
Paramount Pictures was one of the Big Five companies that comprised Hollywood’s Golden Studio system. Legendary Paramount movies include The Godfather, Titanic, Forrest Gump, Shrek, Ghost, The Ten Commandments, Rosemary’s Baby, Chinatown, Saturday Night Fever, Grease, The Bad News Bears, Beverly Hills Cop, Crocodile Dundee, and Raiders of the Lost Ark.
Can Star Trek Drive Paramount’s Success?
In addition, Paramount owns one of most successful TV franchises of all Star Trek. Paramount has produced several Star Trek series and films. The new series Star Trek: Picard and Star Trek: Discovery are driving the success of Paramount+.
Sensibly, Paramount has moved four classic Star Trek series from Netflix (NFLX) to Paramount+. Those shows include Star Trek: The Next Generation, Star Trek, Star Trek: Voyager, and Star Trek: Deep Space Nine.
By becoming the place for Star Trek, Paramount is adopting Disney’s successful strategy of leveraging popular franchises with large fan bases. For example, Marvel and Star wars are driving the success of Disney+.
Notably, Disney (DIS) is moving all of the Marvel TV series to Disney+. Hence, Disney wants to be the only place for Marvel, just as Paramount wants to be the only place for Star Trek.
Disney+ grew into the world’s fourth largest streaming service with 118 million subscribers in January 2022, Statista estimates. Disney+ added 42 million subscribers in Summer 2021, Statista claims.
Furthermore, Paramount (PARAA) is trying to diversify from Star Trek by producing more episodes of its popular western Yellowstone, The Wall Street Journal reports. They also plan several new streaming shows from Yellowstone co-creator Taylor Sheridan. Paramount is also planning new South Park movies.
Other popular programming on Paramount Plus includes the National Football League (NFL), the Champions League, and thousands of episodes of CBS TV shows such as I Love Lucy, Gunsmoke, Dallas, and NCIS.
How Much Cash is Paramount Generating?
Many people will wonder if Paramount Global (PARA) is a value investment because it is growing, money-making company with a falling stock price.
I think Paramount is not a value investment because it burns cash. For example, Paramount reported a negative quarterly operating cash flow of -$699 million on 31 December 2021. The quarterly operating cash flow fell from $1.723 billion on 31 March 2021 and -$139 million on 30 September 2021.
Similarly, Paramount’s quarterly cash flow fell from $5.632 billion on 31 March 2021 to $1.441 billion on 31 December 2021. Thus, Paramount has cash, but it borrows money to finance its operations.
For example, Paramount reported a quarterly financing cash flow of $723 million on 31 March 2021. The good news is that Paramount is paying off its debts. Paramount’s total debts fell from $21.622 billion on 31 December 2020 to $19.632 billion on 31 December 2021.
Thus, Paramount can expand without borrowing heavily, which means it could make more money in the future.
What Value Does Paramount Have?
Paramount’s value is growing. For example, Paramount Global’s cash and short-term investments grew from $2.984 billion on 31 December 2020 to $6.297 billion on 31 December 2021.
Similarly, Paramount’s total assets grew from $52.663 billion on 31 December 2020 to $58.62 billion on 31 December 2021. Therefore, Paramount’s value is growing as its stock price shrinks.
Unlike Netflix (NFLX), Paramount Global Class B (PARA) pays a dividend. Paramount Global has scheduled three 24₵ dividends for 2023. Overall, Paramount offered a 96₵ forward dividend and a 2.68% dividend on 15 February 2022.
Is Paramount Global a Value Investment in Streaming Video?
I think Paramount Global (PARA) is a value investment because it owns a growing streaming video platform. If you are seeking a value investment in streaming that could become a cash-cow, Paramount could be it.
I think Paramount Plus could become a cash cow because it has 118 million subscribers willing to pay $4.99 or $9.99 a month to see Star Trek or the Champions League. In contrast, Disney+ costs $7.99 a month. Hence, Paramount Plus could generate enormous amounts of cash from subscriptions.
Moreover, I think Paramount’s subscriber base could grow if the Ukraine leads to high gas prices that keep people at home. All the people stuck at home will want something to watch and Paramount+ is providing lots of stuff to watch, possibly at a lower price than Disney+.
Originally published at https://marketmadhouse.com on March 15, 2022.
 make money from Streaming Video?){kind=link}