Paramount Global's debt rating was cut to junk status by S&P Global
Pressure on cash flow due to decline in broadcast and cable TV business
Studio is battling to replace lost linear TV revenues with streaming and other digital revenues as it responds to fast-changing consumer TV viewing habits
Paramount Global's debt rating was cut to junk status by S&P Global, which cited pressure on cash flow because of the continued decline in the company⟩s broadcast and cable TV business. The studio is battling to replace lost linear TV revenues with streaming and other digital revenues as it responds to fast-changing consumer TV viewing habits.
Paramount Global's credit rating has been lowered to junk status by S&P due to ongoing pay-TV declines and the shift towards a more competitive streaming model.
The company dropped Paramount's rating from BBB- to BB+B, citing accelerating declines in linear media and less certain streaming model.
S&P warned that a downgrade was possible after adjustments it made to its ratings evaluation metrics.
Paramount's ratio of free operating cash flow is not expected to be reason for optimism as it forecasts coming in well below 10% over the next two years.
The media company will need to execute its plan to substantially improve streaming losses over the next two years to mitigate further downside ratings pressure.
Speculation continues about Paramount's future, with controlling shareholder Shari Redstone fielding multiple offers and expressions of interest from private investors and others looking to acquire some or all of the company.
One positive is that S&P assumes streaming losses will improve by more than $700 million due to strong average revenue per user (ARPU) growth from price increases enacted in mid-2023 and ongoing subscriber growth.
The linear TV operation could also stabilize, given that the company will reap a windfall from political advertising this year and is part of the Super Bowl rotation as a long-term NFL rights holder.
If these assumptions don't materialize to the extent S&P is forecasting due to a more competitive streaming environment or an acceleration in declines in linear television, it could reassess its rating or outlook.
Paramount stock climbed 3% Wednesday but still a fraction of where it was when Viacom and CBS merged in 2019.
Several offers for parts of Paramount's portfolio have come in well above its current market value of $8 billion, with Apollo Global Management reportedly offering to pay $11 billion for the company's film and TV studio operation.
Hiving off that part of the company is reportedly a non-starter for Redstone, who views Paramount Pictures as a cornerstone of the company.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(30%)
The article is deceptive in several ways. Firstly, the author uses sensationalist language such as 'downside ratings pressure' and 'accelerating declines', which are exaggerated statements that do not accurately reflect Paramount Global's financial situation. Secondly, the author quotes S&P without disclosing their sources or providing any context for their rating evaluation metrics. This makes it difficult to determine the accuracy of S&P's downgrade and raises questions about bias in the report. Thirdly, while there are some positive aspects mentioned in the article such as streaming losses improving by more than $700 million due to strong average revenue per user growth from price increases enacted in mid-2023, these statements are not supported by any evidence or data provided. Overall, the author's use of sensationalist language and lack of transparency regarding S&P's rating evaluation metrics make this article deceptive.
The toll of ongoing pay-TV declines is a key factor in the downgrade.
Fallacies
(75%)
The article contains several fallacies. The author uses an appeal to authority by citing S&P's downgrade of Paramount Global's credit rating as evidence that the company is struggling. However, this does not necessarily mean that the company is in trouble or that its stock price will continue to decline. Additionally, the article contains a false dilemma fallacy when it presents two options for Paramount Global: either improve streaming losses over the next two years or face further downside ratings pressure. This oversimplifies a complex issue and ignores other factors that may be at play. Finally, there is an example of inflammatory rhetoric in the sentence 'Paramount stock climbed 3% Wednesday to close at $11.70'. The use of words like 'climbed' and '$11.70' creates a sense of urgency and excitement that may not be accurate or appropriate.
The company said Wednesday it dropped Paramount’s rating to BB+ from BBB- due to the “accelerating declines in linear media and the shift toward a more competitive and less certain streaming model.”
S&P warned a month ago that a downgrade would be possible due to adjustments it was making to its ratings evaluation metrics.
The news comes as speculation continues to swirl about the future of Paramount, which began 2024 as the most likely company in the media sector to be part of a major M&A transaction.
Bias
(100%)
None Found At Time Of
Publication
Site
Conflicts
Of
Interest (50%)
The article discusses Paramount Global's credit rating downgrade and the decline of pay-TV. The author is Dade Hayes who has a financial interest in S&P Global as it was responsible for the credit rating cut. Additionally, Shari Redstone, who owns both Paramount Global and S&P Global, is mentioned in the article.
Shari Redstone, who owns both Paramount Global and S&P Global, is mentioned in the article.
The author Dade Hayes has a financial interest in S&P Global as it was responsible for the credit rating cut.
With the junk status assigned to its debt, an acquiring party would not need to repay or reissue the debt
Sources familiar with Shari Redstone’s thinking say her preference is to not sell Paramount Global off in pieces and instead favor a deal with David Ellison’s Skydance Media.
Accuracy
Paramount Global's debt rating was downgraded to junk status by S&P Global
The agency expects Paramount Global's free operating cash flow-to-debt will remain below 10% through 2025 and adjusted leverage (debt-to-equity ratio) will stay above 3.5 times through then.
Paramount Global's long-term debt was $14.6 billion as of the end of 2023
The S&P downgrade comes a week after word emerged of an $11 billion bid by private-equity firm Apollo Global Management for Paramount Pictures, which is some $3 billion higher than the current total market cap of the parent company.
Sources familiar with Shari Redstone's thinking say her preference is to not sell Paramount Global off in pieces and instead favor a deal with David Ellison's Skydance Media.
S&P issued a stable outlook for Paramount Global, which reflects its expectation that leverage will decline to around 4.0X in 2024
Paramount Global placed on credit watch negative by S&P after introducing cash-flow metrics into their ratings methodology
Deception
(80%)
The article is deceptive in several ways. Firstly, it states that Paramount Global's debt rating was cut to junk status by S&P Global due to the media conglomerate's ongoing challenges with free cash flow generation relative to its debt. However, this statement is misleading because it implies that Paramount Global has a high level of debt and low levels of cash flow, which may not be entirely accurate. Secondly, the article states that S&P expects Paramount Global's free operating cash flow-to-debt will remain below 10% through 2025 and adjusted leverage (debt-to-equity ratio) will stay above 3.5 times through then. However, this statement is also misleading because it implies that Paramount Global has a high level of debt relative to its equity, which may not be entirely accurate. Thirdly, the article states that S&P cited ongoing deterioration of the linear television ecosystem and elevated investments for its direct-to-consumer (DTC) streaming model as reasons for downgrading Paramount Global's rating. However, this statement is misleading because it implies that these factors are solely responsible for the downgrade, which may not be entirely accurate.
The article states that S&P expects Paramount Global's free operating cash flow-to-debt will remain below 10% through 2025 and adjusted leverage (debt-to-equity ratio) will stay above 3.5 times through then. However, this statement is also misleading because it implies that Paramount Global has a high level of debt relative to its equity.
The article states that Paramount Global's debt rating was cut to junk status by S&P Global due to ongoing challenges with free cash flow generation relative to its debt. However, this statement is misleading because it implies that Paramount Global has a high level of debt and low levels of cash flow.
Fallacies
(80%)
The article contains several fallacies. The author uses an appeal to authority by citing S&P Global's downgrade of Paramount Global's debt rating without providing any context or explanation for the agency's decision-making process. Additionally, the author presents a dichotomous depiction of Paramount Global as being in trouble and facing potential acquisition, while also mentioning that Shari Redstone prefers to not sell the company off in pieces. This creates confusion and contradicts itself by presenting two opposing viewpoints without providing any evidence or reasoning for either position.
The author cites S&P Global's downgrade of Paramount Global's debt rating as an authority, but does not provide any context or explanation for the agency's decision-making process. This is a fallacy because it presents information without providing any reasoning behind it.
The article presents two opposing viewpoints about Paramount Global: that the company is in trouble and facing potential acquisition, and that Shari Redstone prefers to not sell the company off in pieces. This creates confusion and contradicts itself by presenting two opposing viewpoints without providing any evidence or reasoning for either position.
Bias
(80%)
The article reports that Paramount Global's debt rating was downgraded to junk status by S&P Global. The agency cited the media conglomerate's ongoing challenges with free cash flow generation relative to its debt and the elevated investments for its direct-to-consumer (DTC) streaming model as reasons for the downgrade. Additionally, sources familiar with Shari Redstone's thinking say her preference is to not sell Paramount Global off in pieces but rather favor a deal with David Ellison's Skydance Media.
Paramount Global‘s debt rating was cut to junk status by credit-rating agency S&P Global
S&P on Wednesday said it expects Paramount Global’s free operating cash flow-to-debt will remain “well below” 10% through 25, and that adjusted leverage (debt-to-equity ratio) will stay above 3.5 times through then.
The agency cited “the ongoing deterioration of the linear television ecosystem and the elevated investments for its direct-to-consumer (DTC) streaming model” for the downgrade.
Site
Conflicts
Of
Interest (50%)
Todd Spangler has a conflict of interest with Paramount Global as he is reporting on the downgrading of their debt rating by S&P Global. He also reports that Apollo Global Management, which owns Shari Redstone and David Ellison's company ViacomCBS, made a $14.6 billion bid for Paramount Pictures.
Todd Spangler is reporting on the downgrading of Paramount Global's debt rating by S&P Global.
Author
Conflicts
Of
Interest (50%)
Todd Spangler has a conflict of interest on the topics of Paramount Global and direct-to-consumer streaming model as he is an employee of Variety Media, which is owned by Penske Business Media. Additionally, Todd Spangler may have a personal relationship with Shari Redstone or David Ellison who are also mentioned in the article.
The article mentions Paramount Global and direct-to-consumer streaming model
The credit rating agency made the move due to weak credit metrics and a stable outlook.
Paramount will need to execute its plan to substantially improve streaming losses over the next two years to mitigate further downside ratings pressure.
S&P introduced cash flow metrics when measuring Paramount's debt worthiness and could lower its rating further if it is unable to reduce leverage and increase free operating cash flow over next 12-18 months.
The studio's current credit metrics are weak for the BB+ rating, according to S&P Global.
One positive is that S&P assumes streaming losses will improve by more than $700 million due to strong average revenue per user (ARPU) growth from price increases enacted in mid-2023 and ongoing subscriber growth.
If these assumptions don't materialize to the extent S&P is forecasting due to a more competitive streaming environment or an acceleration in declines in linear television, it could reassess its rating or outlook.
The company dropped Paramount's rating from BBB- to BB+B, citing accelerating declines in linear media and less certain streaming model.
Several offers for parts of Paramount's portfolio have come in well above its current market value of $8 billion, with Apollo Global Management reportedly offering to pay $11 billion for the company's film and TV studio operation.
The linear TV operation could also stabilize, given that the company will reap a windfall from political advertising this year and is part of the Super Bowl rotation as a long-term NFL rights holder.
Accuracy
Paramount Global debt has been downgraded to junk status by S&P Global.
S&P warned that a downgrade was possible after adjustments it made to its ratings evaluation metrics.
Paramount Global's ratio of free operating cash flow is not expected to be reason for optimism as it forecasts coming in well below 10% over the next two years.
Deception
(30%)
The article is deceptive in several ways. Firstly, the author uses sensationalist language such as 'junk status' and 'downgrade', which could mislead readers into thinking that Paramount Global's debt has become significantly riskier or less valuable than it was before. However, this is not entirely accurate as S&P Global only lowered its rating by one level to BB+ from BBB-, indicating that the company still maintains some investment-grade creditworthiness. Secondly, the author quotes a statement from S&P Global saying that Paramount's current credit metrics are weak for the BB+ rating, which could be interpreted as an indication of poor financial health. However, this is not entirely accurate as S&P Global also mentioned in its commentary that it was weakening cash flow concerns and leverage metrics when measuring Paramount's debt worthiness. Lastly, the author mentions that S&P Global resolved its credit watch after Paramount unveiled its fourth quarter earnings, which could be seen as a positive development for the company. However, this is not entirely accurate as S&P Global also mentioned in its commentary that it could lower Paramount's debt rating further if the studio was unable to reduce its leverage and increase its free operating cash flow over the next 12 to 18 months.
The author mentions that S&P Global resolved its credit watch after Paramount unveiled its fourth quarter earnings, which could be seen as a positive development for the company. However, this is not entirely accurate as S&P Global also mentioned in its commentary that it could lower Paramount's debt rating further if the studio was unable to reduce its leverage and increase its free operating cash flow over the next 12 to 18 months.
The author quotes a statement from S&P Global saying that Paramount's current credit metrics are weak for the BB+ rating, which could be interpreted as an indication of poor financial health. However, this is not entirely accurate as S&P Global also mentioned in its commentary that it was weakening cash flow concerns and leverage metrics when measuring Paramount's debt worthiness.
The author uses sensationalist language such as 'junk status' and 'downgrade', which could mislead readers into thinking that Paramount Global's debt has become significantly riskier or less valuable than it was before. However, this is not entirely accurate as S&P Global only lowered its rating by one level to BB+ from BBB-, indicating that the company still maintains some investment-grade creditworthiness.
Fallacies
(75%)
The article contains several logical fallacies. The author uses an appeal to authority by citing S&P Global's credit rating agency as the source of information about Paramount Global's debt status and future prospects. However, this does not necessarily mean that S&P Global is a reliable or unbiased source of information. Additionally, the article contains several examples of inflammatory rhetoric, such as
Paramount will need to execute its plan to substantially improve streaming losses over the next two years
,
Bias
(85%)
None Found At Time Of
Publication
Site
Conflicts
Of
Interest (50%)
There are multiple examples of conflicts of interest in this article. The author has a financial stake in Paramount Global as they work for the Hollywood Reporter, which is owned by Shari Redstone-controlled media conglomerate.
-BBB+’ rating,
Shares in Paramount Global fell by $3.67 or nearly 3 percent to $11.67 in late day trading on Wednesday.
Author
Conflicts
Of
Interest (50%)
The author has a financial interest in Paramount Global as they are reporting on the company's debt cut to junk status. The article also mentions that S&P Global is considering downgrading Paramount's credit rating due to weaker cash flow concerns and lower streaming losses.
The author has a financial interest in Paramount Global as they are reporting on the company's debt cut to junk status. The article also mentions that S&P Global is considering downgrading Paramount's credit rating due to weaker cash flow concerns and lower streaming losses.
Paramount Global's debt rating was cut to junk by S&P Global Ratings.
S&P reduced its rating on Paramount debt to BBBB from BBB-.
, which cited pressure on cash flow because of the continued decline in the company's broadcast and cable TV business.
The company, the parent of CBS and MTV, had $14.6 billion in long-term debt at year end.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(80%)
The article is deceptive in several ways. Firstly, the author uses sensationalism by stating that Paramount's debt rating was cut to junk which implies a significant downgrade when it was only reduced from BBB- to BB+. Secondly, the author quotes S&P Global Ratings as citing pressure on cash flow because of the continued decline in Paramount's broadcast and cable TV business without providing any evidence or data that supports this claim. This is an example of selective reporting which only reports details that support the author's position. Lastly, there are no sources disclosed in the article.
The lack of evidence or data provided to support S&P Global Ratings claim that pressure on cash flow is due to Paramount's broadcast and cable TV business decline
The use of sensationalism by stating 'Paramount's debt rating was cut to junk'
Fallacies
(85%)
The article contains an appeal to authority fallacy by citing S&P Global Ratings as the source of information. The author also uses a dichotomous depiction when stating that Paramount's broadcast and cable TV business is declining.
>S&P reduced its rating on Paramount debt to BB+ from BBB-, according to a statementBloomberg Terminal Wednesday.<br>The company, the parent of CBS and MTV, had $14.6 billion in long-term debt at year end.
Paramount Global's broadcast and cable TV business is declining.
Bias
(75%)
The article is biased towards Paramount Global's financial struggles. The author uses language that depicts the company as being in a bad position and struggling financially. Additionally, the use of phrases such as 'continued decline' and 'pressure on cash flow' further reinforces this bias.
Paramount Global’s debt rating was cut to junk by S&P Global Ratings
The company, the parent of CBS and MTV, had $14.6 billion in long-term debt at year end.
Site
Conflicts
Of
Interest (50%)
None Found At Time Of
Publication
Author
Conflicts
Of
Interest (50%)
The author has a conflict of interest on the topic of Paramount Global and its long-term debt. The article mentions that Michael Tobin is an analyst at JPMorgan Chase & Co., which owns $14.6 billion in long-term debt for Paramount Global.
Michael Tobin, an analyst at JPMorgan Chase & Co., said the company's financial position has deteriorated since it was acquired by ViacomCBS Inc. last year.
