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Paramount Global (PARA) to Sell Viacom18 Stake for $517M
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Paramount Global (PARA - Free Report) has made waves in the media industry with a binding agreement to sell its 13% ownership stake in Viacom18, a prominent Indian TV and streaming company, to Reliance Industries for a substantial $517 million, according to a filing with the SEC report.
This move marks a significant shift in the dynamics of India's media landscape, especially considering Reliance's already-established majority ownership in Viacom18.
The agreement between Paramount Global and Reliance comes hot on the heels of another major deal in the Indian media sector. At the end of February, Disney (DIS - Free Report) and Reliance announced a monumental $8.5 billion merger, consolidating their extensive TV and streaming businesses in India. As part of this merger, Reliance's Viacom18 is set to merge with Disney's Star India, reshaping the contours of the industry.
PARA's decision to divest its stake in Viacom18 aligns with its broader strategy to strengthen its financial position. With a long-term debt of $14.6 billion by the end of 2023, the company has been actively seeking avenues to streamline its balance sheet.
This divestment follows a prior move in August 2023 when Paramount Global sold its Simon & Schuster publishing business to investment giant KKR for $1.62 billion in cash, demonstrating a concerted effort to reduce leverage.
The closing of PARA's sale of the Viacom18 stake is contingent upon customary conditions, including regulatory approvals, and the completion of the joint venture between Reliance’s Viacom18 and Disney’s Star India. After closing the deal, Paramount Global will license its content to Viacom18, ensuring a continued partnership between the two entities.
Declining TV Media Revenues, Competition Create Concerns
Paramount Global has significant exposure to the large but declining linear Pay-TV business and faces the threat of these businesses decreasing faster than expected, as well as risk around the ability to pivot and reinvest linear cash flows into other business lines, such as streaming.
The company remains heavily exposed to Linear TV compared with large Media peers like Disney, Warner Bros. Discovery and Netflix (NFLX - Free Report) . The decline of Linear TV is expected to remain a major headwind.
PARA is facing a decrease in revenues from linear networks as a result of continued weakness in the global advertising market and a fall in theatrical revenues as witnessed in 2023.
Netflix, as the dominant force in the streaming market, has made significant investments in expanding its content library. Its upcoming movies are Irish Wish, Murder Mubarak, SHIRLEY, No Pressure and Rest in Peace among other shows.
Disney's streaming platform is renowned for its specialized content catering to young adults and children, with exclusive franchises adding to its popularity. Upcoming Disney releases include Le Moulin, Photographer and Madu: the Nigerian ballet dancer.
As a streaming giant, Amazon Prime Video provides both complimentary and subscription-based streaming services. Prime Video is set to unveil the new original British high school romantic comedy movie, How To Date Billy Walsh, on Apr 5.
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Paramount Global (PARA) to Sell Viacom18 Stake for $517M
Paramount Global (PARA - Free Report) has made waves in the media industry with a binding agreement to sell its 13% ownership stake in Viacom18, a prominent Indian TV and streaming company, to Reliance Industries for a substantial $517 million, according to a filing with the SEC report.
This move marks a significant shift in the dynamics of India's media landscape, especially considering Reliance's already-established majority ownership in Viacom18.
The agreement between Paramount Global and Reliance comes hot on the heels of another major deal in the Indian media sector. At the end of February, Disney (DIS - Free Report) and Reliance announced a monumental $8.5 billion merger, consolidating their extensive TV and streaming businesses in India. As part of this merger, Reliance's Viacom18 is set to merge with Disney's Star India, reshaping the contours of the industry.
PARA's decision to divest its stake in Viacom18 aligns with its broader strategy to strengthen its financial position. With a long-term debt of $14.6 billion by the end of 2023, the company has been actively seeking avenues to streamline its balance sheet.
This divestment follows a prior move in August 2023 when Paramount Global sold its Simon & Schuster publishing business to investment giant KKR for $1.62 billion in cash, demonstrating a concerted effort to reduce leverage.
The closing of PARA's sale of the Viacom18 stake is contingent upon customary conditions, including regulatory approvals, and the completion of the joint venture between Reliance’s Viacom18 and Disney’s Star India. After closing the deal, Paramount Global will license its content to Viacom18, ensuring a continued partnership between the two entities.
Paramount Global Price and Consensus
Paramount Global price-consensus-chart | Paramount Global Quote
Declining TV Media Revenues, Competition Create Concerns
Paramount Global has significant exposure to the large but declining linear Pay-TV business and faces the threat of these businesses decreasing faster than expected, as well as risk around the ability to pivot and reinvest linear cash flows into other business lines, such as streaming.
The company remains heavily exposed to Linear TV compared with large Media peers like Disney, Warner Bros. Discovery and Netflix (NFLX - Free Report) . The decline of Linear TV is expected to remain a major headwind.
PARA is facing a decrease in revenues from linear networks as a result of continued weakness in the global advertising market and a fall in theatrical revenues as witnessed in 2023.
Shares of this Zacks Rank #3 (Hold) company have lost 21% year to date against the Zacks Consumer Discretionary sector’s 2.5% growth due to competition from Netflix, Disney and Amazon (AMZN - Free Report) Prime Video. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Netflix, as the dominant force in the streaming market, has made significant investments in expanding its content library. Its upcoming movies are Irish Wish, Murder Mubarak, SHIRLEY, No Pressure and Rest in Peace among other shows.
Disney's streaming platform is renowned for its specialized content catering to young adults and children, with exclusive franchises adding to its popularity. Upcoming Disney releases include Le Moulin, Photographer and Madu: the Nigerian ballet dancer.
As a streaming giant, Amazon Prime Video provides both complimentary and subscription-based streaming services. Prime Video is set to unveil the new original British high school romantic comedy movie, How To Date Billy Walsh, on Apr 5.