Last week at an investor event, ViacomCBS announced plans to change its corporate name to Paramount, signaling an increased focus on the company’s Paramount+ streaming service. The good news is that Paramount+ increased its total number of subscribers and revenue in the fourth quarter of 2021.
The not-so-good news is that it will take a massive injection of new spending on content in 2022 to keep up the momentum, increasing from $2B in 2021 to a projected $6B in 2024. As a result, the company is also projecting operating losses to increase from a “starting point” of $1B in 2021, $1.5B in 2022, and even more in 2023 before beginning to improve in 2024.
Company executives are describing this as a necessary investment to build up Paramount+ for the long haul, projecting 100M subscribers by 2024. But investors were unconvinced, driving down the price of ViacomCBS shares by 20% after the company issued its quarterly report. Here is yet another example of a big-ticket streaming stock facing increased scrutiny by investors, after announcing plans that involve large investments and losses in the near term while pursuing a sunny future in streaming.
See also: ViacomCBS is renamed Paramount in a nod to its past and streaming future (LA Times)