Paramount Earnings: Many Positive Trends While Industry Headwinds Hinder Sales and Profits

Steep declines in no-moat Paramount Global’s fourth-quarter sales and adjusted EBITDA were unsurprising as the firm faced the same environment as peers in its traditional linear television and licensing businesses. A very weak television advertising market and the lack of new shows resulting from the actors and writers strikes exacerbated the ongoing decline in pay-TV subscribers for all network owners. However, news on the direct-to-consumer segment, which includes the Paramount+ streaming service, was universally positive, though vague. We think the company is on the right track and remains materially undervalued relative to our unchanged $20 fair value estimate.