Paramount Global credit rating lowered to 'junk status'

Paramount Global’s credit rating has been lowered to junk status by S&P Global, US media reports.

The company said Wednesday it dropped Paramount’s rating to BB+ from BBB- due to the “accelerating declines in linear media and the shift toward a more competitive and less certain streaming model.”

S&P warned a month ago that a downgrade would be possible due to adjustments it was making to its ratings evaluation metrics.

The media company “will need to execute its plan to substantially improve streaming losses over the next two years to mitigate further downside ratings pressure,” the report added.

The news comes as speculation continues to swirl about the future of Paramount, which began 2024 as the most likely company in the media sector to be part of a major mergers and acquisitions transaction.

One positive, the S&P report noted, is its assumption that “streaming losses will improve by more than $700 million due to strong average revenue per user (ARPU) growth from price increases enacted in mid-2023 and ongoing, albeit more modest, subscriber growth.” The linear TV operation could also stabilise, the report added, given that the company will reap a windfall from political advertising this year and is part of the Super Bowl rotation as a long-term NFL rights holder.

Source: Deadline