S&P Global lowered Paramount Global‘s credit rating on Wednesday to junk status and warned that more downgrades would be forthcoming unless the company “substantially improve[s] streaming losses.”
Paramount’s rating was lowered to BB+ from BBB- due to “accelerating declines in linear media” and the “shift toward a more competitive and less certain streaming model.”
The note from the agency stated, “Paramount will need to execute its plan to substantially improve streaming losses over the next two years to mitigate further downside ratings pressure.”
The news comes as controlling shareholder, Shari Redstone’s National Amusements, considers bids for all or parts of the legacy media company.
S&P’s report noted that with CBS airing the Super Bowl in 2025, Paramount’s linear TV could see a significant boost. The company might also benefit from political advertising in this election year.
However, S&P warned, “If these assumptions don’t materialize to the extent we are forecasting due to a more competitive streaming environment or an acceleration in declines in linear television, we could reassess our rating or outlook. The agency put the company on negative credit watch in February.
Paramount Global CEO Bob Bakish said in February that he was focused on making streaming work.
After releasing its fourth-quarter results, Bakish and CFO Naveen Chopra said that Paramount was a year ahead of schedule on realizing “peak losses” and could make domestic streaming profitable sooner than expected.
Revenue for three-year-old streaming service Paramount+ was up 69% in the fourth quarter, year over year, “and we now expect to reach domestic Paramount+ profitability in 2025 — a significant milestone,” Bakish said in a February statement.
“The stable outlook reflects our expectation that leverage will decline to around 4.0x in 2024 with FOCF/debt improving to about 5% as losses in the streaming segment materially decline,” S&P’s statement read.
Deadline first reported this story.
