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4
5 = Summary =
6
7 * Paramount Global (NASDAQ:PARA, PARAA) is one of the world's leading producers of premium entertainment content headquartered at One Astor Plaza in Midtown Manhattan, New York.
8 * On December 4, 2019, Viacom Inc. merged with and into CBS Corporation, with CBS continuing as the surviving company. At the effective time of the Merger, the combined company changed its name to ViacomCBS Inc. (“ViacomCBS”).
9 * On February 16, 2022, ViacomCBS changes its name to Paramount Global.
10 * For 2021, revenues increased 13% to $28.59 billion from $25.29 billion in 2020, reflecting growth in all revenue streams. The increase was led by 64% higher streaming revenues, with growth across streaming services, and an 11% increase in advertising revenues.
11 * Paramount Global has reported $4,543 million in net income attributable to ViacomCBS in the year 2021, ended December 30, which was $2,422 million the previous year. The growth of 87% in net income is primarily an outcome of 2020’s net income being too low due to the pandemic.
12 * Top shareholders include Berkshire Hathaway (12.89%), The Vanguard Group (10.40%), BlackRock Inc (7.38%), State Street Corporation (5.18%), Geode Capital Management LLC (2.06%).
13
14 = History and Company Overview =
15
16 Paramount Global (NASDAQ:PARA, PARAA) is one of the world's leading producers of premium entertainment content headquartered at One Astor Plaza in Midtown Manhattan, New York. The company has 22,965 employees as of December 31, 2021. Bob Bakish is the current President and CEO of the company. The company generated revenue of $28.59 billion in 2021.
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19 [[image:Paramount_Global.svg.png||alt="paramount global logo" height="279" width="407"]]
20
21 == Brief History ==
22
23 The history of Paramount Global starts back in 1914 when three partners – Adolph Zukor, Daniel Frohman, and W.W. Hodkinson partner to establish ‘Paramount Pictures Corporation’ what would later become Paramount Global through split, spin-off, merger, and re-merger. The story of Paramount is connected with that of Columbia Broadcast System (CBS). William S. Paley acquired United Independent Broadcasters Inc., a network of 16 independent radio stations, and changed the name to CBS in 1928. Immediately after its founding year, Paramount Pictures buys its 49% shares, which it sells back in 1932. CBS expanded into different businesses; it branded, re-branded under different names to become CBS Enterprises in 1968. A division of CBS was Viacom which became incorporated in 1970; later on, Viacom was spun off from CBS as a separate company in 1971.
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26 [[image:tw-paramount-logo.jpg||alt="paramount opening screen" height="307" width="558"]]
27
28 In 1966, Gulf+Western buys Paramount and buys another line of business in 1968 to rename it as Paramount Television. In 1986, National Amusements buys Viacom. In 1989, Gulf+Western was renamed as Paramount Communications. It was then acquired by Viacom in 1994. Westinghouse buys CBS in 1995 to rename itself CBS Corporation in 1997. In 1999, Viacom buys CBS Corporation but splits in 2006 to form CBS Corporation and Viacom. But they merge in 2019 to form ViacomCBS. On February 16, 2022, ViacomCBS changes its name to Paramount Global.
29
30 == Acquisitions ==
31
32 During 2021, the company made payments totalling $54 million, net of cash acquired, for the acquisition of Chilevisión, a free-to-air television channel, and a controlling interest in Fox TeleColombia & Estudios TeleMexico, a Spanish language content producer. The results of these companies are included in the Cable Networks segment from the dates of acquisition.
33
34 During 2020, the company acquired a 49% interest in Miramax, a global film and television studio, for $375 million, which included a cash payment at closing of approximately $150 million along with a commitment to invest $45 million annually, beginning on the first anniversary of the closing and continuing through 2025, to be used for new film and television productions and working capital.
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36 During 2019, the company acquired Pluto Inc., the provider of Pluto TV, a leading free streaming television service in the U.S., for $324 million, net of cash acquired, as well as the remaining 50% interest in Pop TV, a general entertainment cable network, for $39 million, net of cash acquired, which brought Paramount’s ownership to 100%.
37
38 = Stock Performance Analysis =
39
40 The stock of Paramount Global is listed in NASDAQ as PARA (the class B share) and PARAA (the class A share). Total number of shares outstanding is 197,670. Current price of the share as on 27 September, 2022 is High/Low $20.068/$19.89; and the 52-week High/Low have been $41.18/$19.64. The market cap therefore of the company as on 27 September, 2022 is $12,969,555,482. Earnings per share (EPS) of the company is $5.17, which makes the Price-to-earnings ratio (P/E) 3.8 times on the aforementioned day. Latest cash annualized dividend is $0.96. Ex-dividend date in this year is December 14, 2022 and dividend pay date is January 3, 2023.
41
42 = Financial Analysis =
43
44 == Q2 (2022) Financials ==
45
46 Paramount Global reported earnings results for the second quarter and six months ended June 30, 2022. For the second quarter, the company reported sales was $7,779 million compared to $6,564 million a year ago. Net income was $419 million compared to $1,036 million a year ago. Basic earnings per share from continuing operations was $0.53 compared to $1.52 a year ago. Diluted earnings per share from continuing operations was $0.53 compared to $1.5 a year ago. Basic earnings per share was $0.62 compared to $1.58 a year ago. Diluted earnings per share was $0.62 compared to $1.56 a year ago. For the six months, sales was $15,107 million compared to $13,976 million a year ago. Net income was $852 million compared to $1,947 million a year ago. Basic earnings per share from continuing operations was $1.11 compared to $2.96 a year ago. Diluted earnings per share from continuing operations was $1.11 compared to $2.93 a year ago. Basic earnings per share was $1.27 compared to $3.05 a year ago. Diluted earnings per share was $1.27 compared to $3.01 a year ago.{{footnote}}https://www.investing.com/equities/viacom-cl-b-financial-summary{{/footnote}}
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48 Evidently, the company has incurred greater costs in operation in this 2022. The sales of the first six months of 2022 is 8.10% higher than the previous year’s but net income has skidded by 56% during that period. Operating expense of the company for the three months ended on June, 2022 was $5,106 million, compared to $3,865 million in the same period of a year earlier. Also, the company had to keep tax provision of $129 million in the quarter of this year, whereas it was a benefit of $34 million a year earlier.
49
50 **Global DTC (Direct-To-Consumer)** revenue of the company increased 56% year-over-year. Adjusted OIBDA decreased $302M year-over-year, which reflects increased investment in DTC services – according to the financial results of the quarter.{{footnote}}https://ir.paramount.com/static-files/19c917ac-a92b-4e68-920a-db1264e56def{{/footnote}}
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52 Reported adjusted OBIDA is $445 million at the end of 2^^nd^^ quarter, which was $143 million a year earlier for the same quarter.
53
54 **TV Media** segment’s revenue rose 1% year-over-year, reflecting growth in content licensing revenues, partially offset by lower advertising and affiliate revenues. Adjusted OIBDA decreased 8% year-over-year, primarily driven by the lower advertising and affiliate revenues. The company reported $1,380 in adjusted OBIDA from this segment for the second quarter of 2022, which was $1,504 a year earlier for the same quarter.
55
56 **Filmed Entertainment** segment’s revenue grew 126% year-over-year, led by the strong performance of current quarter theatrical releases. Top releases include //Top Gun: Maverick, The Lost City, Sonic the Hedgehog 2, Scream, //and //Jackass Forever//. Adjusted OIBDA increased $129M in the quarter, reflecting the strong performance of current year releases. The company reported $181 in adjusted OBIDA from this segment for the second quarter of 2022, which was $52 a year earlier for the same quarter.
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58 The company has reported **liquidity **as $4,000 million cash in hand and $3,500 million undrawn revolving credit facility.
59
60 == Analysis of the Past Financial Year ==
61
62 Paramount Global has filed its outgoing financial year’s statements with the name of ViacomCBS and in the statements, it declared the new name would take into effect from February 16, 2022.{{footnote}}10-K Filing, Page: I-1{{/footnote}}
63
64 === Revenue ===
65
66 For 2021, revenues increased 13% to $28.59 billion from $25.29 billion in 2020, reflecting growth in all revenue streams. The increase was led by 64% higher streaming revenues, with growth across streaming services, and an 11% increase in advertising revenues.
67
68 The advertising revenue growth is principally the result of CBS’ broadcasts of Super Bowl LV and NCAA Division I Men’s Basketball Championship (the “NCAA Tournament”) games, which contributed 9-percentage points of the increase and for which there were no comparable broadcasts on CBS in 2020. The company has the rights to broadcast the Super Bowl on a rotational basis with other networks, and the 2020 NCAA Tournament was cancelled as a result of the coronavirus pandemic (“COVID-19”).
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70 Affiliate revenues grew 5%, driven by expanded distribution for domestic cable networks and growth in fees received from television stations affiliated with the CBS Television Network (“reverse compensation”).
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72 Licensing and other revenues also increased 5%, primarily reflecting a higher volume of licensing, including from the timing of program availabilities, partially offset by the benefit to the prior year from the licensing of the domestic streaming rights to South Park.
73
74 Theatrical revenues were up 34%, as a result of a higher number of theatrical releases in 2021, reflecting the impact on 2020 from the closure or reduced capacity of movie theatres in response to COVID-19.
75
76 |**Business Type**|**Revenue**|**% of Total**|**Revenue Growth Rate**
77 |Advertising| 9,267|32%|11%
78 |Affiliate| 8,394|29%|5%
79 |Streaming| 4,193|15%|64%
80 |Theatrical| 241|1%|34%
81 |Licensing and other| 6,491|23%|5%
82 |**Total**|** 28,586**|**100%**|
83
84 === Net Income ===
85
86 Paramount Global has reported $4,543 million in net income attributable to ViacomCBS in the year 2021, ended December 30, which was $2,422 million the previous year. The growth of 87% in net income is primarily an outcome of 2020’s net income being too low due to the pandemic. Operating income of the company during the latest year was $6,297 million and $4,139 million a year earlier. Basic earnings per share (EPS) of the company was $7.02 in 2021 and diluted EPS was $6.94 in the same year. Total number of common shares outstanding is 641 million.
87
88 === Assets ===
89
90 Total current assets of the company stood at $16,676 million on the year end of 2021, up from $13,779 million a year earlier, due to basically improved cash and cash equivalent position. Total fixed assets of the company stood at $58,620 million in 2021, up from $52,663 million the previous year.
91
92 === Liabilities and equity ===
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94 Total current liability of the company reported in 2021 is $9,479 million, which was $8,296 million a year earlier. Long-term debt of the company stood at $17,698 million at the latest year-end, down from $19,717 million. Paramount Global has three types of stock – 5.75% Series A Mandatory Convertible Preferred Stock, Class A Common Stock, and Class B Common Stock. Total liabilities and equity of the company is $58,620 million.
95
96 === Cash Flow Statement ===
97
98 Net cash flow provided by **operating activities **of Paramount Global is $953 million in 2021, which was $2,294 million a year earlier. Net cash flow from **investing activities** is $2,395 million in 2021, which was $56 million a year earlier. Net cash flow used in **financing activities **is $152 million in 2021, which was $90 million a year earlier. Cash and cash equivalents at the end of the year is $6,267 in 2021, which was $3,119 in 2020.
99
100 = Company Overview =
101
102 The shares of Paramount Global are owned 45.87% by institutional investors, 4.79% by individual shareholders and 33.79% by mutual fund holders.{{footnote}}https://money.cnn.com/quote/shareholders/shareholders.html?symb=VIAC&subView=institutional{{/footnote}} Top shareholders include Berkshire Hathaway (12.89%), The Vanguard Group (10.40%), BlackRock Inc (7.38%), State Street Corporation (5.18%), Geode Capital Management LLC (2.06%).{{footnote}}https://finance.yahoo.com/quote/PARA/holders?p=PARA{{/footnote}}
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104 Total number of employees of the company is 22,965 as of December 31, 2021.
105
106 === Merger with CBS ===
107
108 On December 4, 2019, Viacom Inc. merged with and into CBS Corporation, with CBS continuing as the surviving company. At the effective time of the Merger, the combined company changed its name to ViacomCBS Inc. (“ViacomCBS”). The Merger has been accounted for as a transaction between entities under common control as National Amusements, Inc. was the controlling stockholder of each of CBS and Viacom (and remains the controlling stockholder of ViacomCBS). Upon the closing of the Merger, the net assets of Viacom were combined with those of CBS at their historical carrying amounts and the companies have been presented on a combined basis for all periods presented in the consolidated financial statements.
109
110 === Discontinued operation ===
111
112 On November 25, 2020, Paramount Global (ViacomCBS then) entered into an agreement to sell their publishing business, Simon & Schuster, which was previously reported as the Publishing segment, to Penguin Random House LLC, for $2.175 billion in cash.
113
114 === Dispositions ===
115
116 During October 2021, the sale of 51 West 52nd Street, an office tower that was formerly the headquarters of CBS, to Harbor Group International, LLC, was completed for $760 million. Paramount Global leased back the space netting it a total pre-tax gain of $523 million.
117
118 In December 2021, Paramount sold CBS Studio Centre for $1.85 billion. At closing, the company executed a 10-year lease-back of the portion of a building on the property that is used by Paramount’s Los Angeles television stations. The sale resulted in a pre-tax gain of $1.70 billion. In addition, during 2021 the company recognized a pre-tax net gain of $117 million, principally relating to the sale of a noncore trademark licensing operation.
119
120 = Business Overview =
121
122 Paramount Global is a leading global media and entertainment company that creates premium content and experiences for audiences worldwide. The company offers broadcast and cable television programming, streaming services and digital video products, provides production, distribution and advertising solutions, and have mentionable libraries of television and film titles. Some of the brands in the company’s portfolio include Paramount+, Pluto TV, CBS, Showtime Networks, Paramount Pictures, Nickelodeon, MTV, Comedy Central and BET.
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124 [[image:Cover photo.png||alt="products and services of paramount global"]]
125
126 The business of Paramount is divided mainly into three parts – TV Entertainment, Cable Networks, and Filmed Entertainment.
127
128 **//TV Entertainment~://** TV Entertainment is consisted of the CBS Television Network, the domestic broadcast network of Paramount; CBS Studios and CBS Media Ventures, the segment’s television production and syndication operations; CBS Sports Network, CBS Sports’ 24-hour cable channel; CBS Stations, Paramount’s owned broadcast television stations in the U.S.; and a number of streaming services, including direct-to-consumer subscription streaming service, Paramount+ (in the U.S.), and several CBS-branded streaming services, including CBS News Streaming and CBS Sports HQ.
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130 Revenue of this segment are generated primarily from advertising; affiliate revenues are comprised of fees received from television stations affiliated with the CBS Television Network (“reverse compensation”), fees for authorizing multichannel video programming distributors’ (“MVPDs”) and third-party live television streaming services’ (“virtual MVPDs” or “vMVPDs”) carriage of the company’s owned television stations; streaming revenues, principally comprising advertising and subscription revenues generated by the segment’s streaming services and from digital video advertisements websites and in the video contents of the company on third-party platforms; and the licensing and distribution contents and other rights.
131
132 **//Cable Network: //**Cable Networks consisted of a portfolio of premium and basic cable networks comprising SHOWTIME, The Movie Channel, Flix, BET, Nickelodeon, MTV, Comedy Central, Paramount Network, Smithsonian Channel, VH1, CMT, Pop TV, Logo and TV Land; a number of direct-to-consumer subscription streaming services — SHOWTIME OTT, Showtime Networks’ premium streaming service, Noggin, Nickelodeon’s preschool streaming service, and BET+, a streaming service focused on the Black audience; and Pluto TV.
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134 Cable Networks also include VCNI, which operates international extensions of Paramount+, Pluto TV and company’s Cable Networks brands and services, international free-to-air networks, which include Channel 5 in the U.K., Telefe in Argentina, Network 10 in Australia and Chilevisión in Chile, and VIS, which produces content for different brands and streaming services of the company, as well as for third parties.
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136 Cable Networks’ revenues were generated primarily from affiliate revenues comprising the fees from MVPDs and vMVPDs for carriage of cable networks; advertising; streaming revenues, principally comprising advertising and subscription revenues generated by the segment’s
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138 streaming services and from digital video advertisements the company’s websites and in the video content on third-party platforms; and the licensing of contents and other rights of the company. In 2021, Cable Networks affiliate, advertising, streaming and licensing and other revenues generated approximately 39%, 28%, 19% and 14%, respectively, of the segment’s total revenues. Cable Networks generated approximately 47%, 50% and 46% of Paramount’s consolidated revenues in 2021, 2020 and 2019, respectively (after the elimination of intercompany revenues).
139
140 **//Filmed Entertainment: //**Filmed Entertainment consisted of Paramount Pictures, Paramount Players, Paramount Animation, Paramount Television Studios and Miramax. Paramount produces franchise live-action and animated films and genre films for specific audiences and releases its films in various markets around the world theatrically, on streaming services, including Paramount+, through transactional home entertainment offerings, on television, and through various other media.
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142 Filmed Entertainment’s revenues are generated primarily from the release or distribution of films theatrically, transactional home entertainment, the licensing of film and television product to streaming services, including Paramount+, broadcast and cable television networks and other digital services, and other ancillary activities.
143
144 == Competition ==
145
146 Paramount Global operates in highly competitive environment – the faces of competition being such as competition for creative talent, for intellectual property, and for audience and distribution of their products.
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148 Top competitors of the company include Sony Pictures, The Walt Disney Studios, Warner Bros Entertainment Inc., Vivendi, Fox Media LLC, Universal Pictures, DreamWorks Animation LLC. According to the 10-K filing of the company, it competes with a variety of media, technology and entertainment companies. The small to large scale competitors of the company include broadcast networks, basic and premium cable networks, streaming services, film and television studios, production groups, independent producers and syndicators, television stations and television station groups.
149
150 The company also compete for content creators for creative talent including producers, directors, actors, and writers as well as for new program ideas and intellectual property and for the acquisition of popular programming.
151
152 Paramount Global also faces significant competition for audiences from various sources. The company competes for audiences for its films and television content with releases from other film studios, television producers and streaming services, as well as with other forms of entertainment and consumer spending outlets.
153
154 = Recent Developments =
155
156 * Paramount is having an early discussion on discontinuing Showtime as a standalone service and merging it with Paramount+.{{footnote}}https://www.wsj.com/articles/paramount-considers-discontinuing-showtime-streaming-service-merging-with-paramount-11663094840{{/footnote}}
157 * Paramount+ launched its services in Italy on September 15, 2022 as its latest destination.{{footnote}}https://www.dailystartreknews.com/read/paramount-global-continues-to-live-up-to-its-name-as-paramount-launches-in-yet-another-country{{/footnote}}
158 * Paramount will issue its third quarter, ending on September 30, 2022, financial results on November 3, 2022.{{footnote}}https://www.paramount.com/press/paramount-global-to-report-third-quarter-financial-results-on-november-2-2022{{/footnote}}
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