Paramount Global (PARA) will report fourth quarter results after market close on Wednesday as investors eye reports on the company’s potential deal-making options.
Paramount is expected to report a direct-to-consumer (DTC) loss of $534 million, according to Bloomberg consensus estimates. That’s wider than the $238 million loss seen in the third quarter but a slight improvement compared to the $575 million loss in the year-earlier period.
The company previously said full-year direct-to-consumer losses in 2023 will be lower than in 2022, with anticipated fourth quarter DTC losses similar to the year-ago period. Paramount+ currently boasts more than 63 million total subscribers.
Here’s what Wall Street expects, according to Bloomberg consensus estimates:
Linear ad revenue will likely continue to be a sore spot, with analysts expecting the segment to once again decline by high single digits to low double digits in the fourth quarter.
Wall Street estimates the company will post a 12% drop compared to the year-ago period after slumping 14% year over year in Q3. Licensing revenue is expected to fall another 14% following a 12% drop in the third quarter.
Free cash flow should once again come in strong due to low content spend amid the since-concluded actors and writers strikes. The metric is expected to come in at $419 million, compared to a $491 million loss seen in the year-earlier period. Free cash flow turned positive for the first time since Q2 2022 in the company’s most recent results.
Paramount shares have struggled so far this year, down about 25% compared to the S&P 500’s (^GSPC) 6% gain during that same time period.
Paramount has committed to various cost-efficiency plans as it works to combat declining TV revenues and a lack of streaming profitability.
Earlier this month, the company laid off about 800 employees, or roughly 3% of its workforce. In an internal memo, Paramount CEO Bob Bakish reiterated previous rhetoric that layoffs were necessary to return the company to earnings growth this year.
In 2023, the media giant raised the prices of its streaming tiers following the Paramount+ with Showtime integration, in addition to committing to various business restructurings and a surprise dividend cut.
Warren Buffett recently trimmed his stake in the company, which has added to investor concerns.
According to a Feb. 14 regulatory filing, Buffett’s Berkshire Hathaway (BRK-A, BRK-B) sold roughly one-third, or 32%, of its stake in Paramount last quarter. Prior to the sale, Buffett was Paramount’s largest owner of nonvoting shares.
Paramount has long been viewed as a potential acquisition target as M&A rumors surround the media giant and its holding company National Amusements.
Most recently, media mogul Byron Allen reportedly offered $14.3 billion to buy all of the company’s outstanding shares.
Outside of Byron Allen, production studio Skydance Media and investment firm RedBird Capital have also expressed interest in a deal. Private equity firm Apollo Global Management and competitor Warner Bros. Discovery (WBD) have also been rumored as potential buyers. (Disclosure: Apollo Global Management is the parent company of Yahoo Finance.)
On Tuesday, CNBC reported Warner Bros. Discovery is no longer pursuing a merger with Paramount while Skydance is still in its due diligence period. Comcast (CMCSA) is not interested in purchasing Paramount assets but would consider commercial partnerships, the report added.
Bakish recently told Yahoo Finance’s Brian Sozzi that the company is open to dealmaking.
“In parallel, we are always looking at alternate ways of creating shareholder value, including potentially through transactions,” the executive said. “We will have to see if anything happens in that regard.”
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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