Paramount Global is actively exploring partnerships for its international TV streaming business, which could significantly increase the scale and profitability of its online service. This strategic direction was announced by co-CEO Chris McCarthy during a Tuesday meeting with employees. McCarthy emphasized that such a partnership could change the economics of Paramount's streaming operations and potentially create a model for similar initiatives in the U.S. market.

 

Creating long-term value

 

In his speech, McCarthy also pointed out from the floor that a strategic alliance could deliver long-term value and profitability to the streaming service. This marks a key step for Paramount as it seeks to leverage its international reach and strengthen its market position amid growing competition in the streaming industry.

 

Recent leadership changes and future direction

 

Earlier this month, Paramount's controlling shareholder Shari Redstone rejected a merger offer from independent producer David Ellison's Skydance Media. In addressing these merger discussions, CEO Brian Robbins acknowledged the ongoing noise in the industry but emphasized a forward-looking plan to ensure success regardless of the company's chosen path.

 

Cutting costs and selling assets

 

The board chairmen outlined several initiatives to bolster the company's financial health. These include cutting costs by $500 million and selling other assets. George Cheeks, the third of the executive directors, said Paramount had engaged investment bankers to facilitate the sale of these assets, with the proceeds going towards debt reduction.

 

Price adjustments for streaming services

 

In an effort to increase revenue, Paramount has recently increased the prices of its streaming services. In particular, the ad-supported version of Paramount+ will increase by 33% to $8 per month for new customers effective August. This price adjustment is part of a broader strategy to improve the financial performance of its streaming services.

 

Potential partnership with Amazon

 

Bloomberg reported in May that Paramount is in talks with Amazon about a potential partnership. Such a collaboration could further expand Paramount's streaming capabilities and provide additional growth opportunities.

 

Stock performance

 

Despite all of these strategic moves, Paramount's stock performance has struggled. Since June, the stock price has declined 25%, but it is important to note that this decline has caused liquidity withdrawals to be below fundamental levels, and thus there is potential for future upside if the company's fundamentals strengthen. Traders and investors who would like to take advantage of this opportunity can currently buy at meagre prices compared to the high of $101.97 per share.*

 

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Paramount Global's stock performance over 5 years. Source: tradingview.com

 

Investor Outlook

 

Paramount's strategic initiatives and potential partnerships present an interesting outlook for investors. The company's initiative to increase profitability and reduce debt are positive steps, but market uncertainty and competitive pressures remain important factors to consider. As Paramount goes through this transformational period, the ability to execute its strategic plans will be critical to its long-term success.

 

* Past performance is no guarantee of future results.

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.