Digital Focus And Skydance Transaction Will Unlock Global Potential

Key Takeaways

• Paramount leverages strong streaming growth, valuable content franchises, and operational efficiencies to drive recurring revenue, margin resilience, and improved profitability.
  
• Strategic partnerships and upcoming transactions are set to enhance global scale, technology, and personalized monetization, supporting sustained long-term growth.
  
• Paramount faces pressure as core TV revenues fall, streaming monetization lags, filmed entertainment losses deepen, and strategic shifts bring operational and integration risks.

Catalysts

Operates as a media, streaming, and entertainment company worldwide.

• Paramount+ is achieving strong global subscriber and ARPU growth, with watch time and user engagement at record highs, supporting accelerating D2C revenue growth (+15–23% YOY) and improved churn-pointing to future topline expansion and enhanced recurring revenue.
  
• The company continues to leverage its deep library and hit franchises (e.g., Mission Impossible, Sonic, Yellowstone, South Park), enabling value extraction from high-quality intellectual property across streaming, theatrical, and downstream platforms, boosting both revenue per title and margin resilience.
  
• Operational efficiencies and $800M in annualized cost reductions, combined with a strategic content focus on fewer, bigger hits, are driving a significant improvement in streaming profitability (6x YOY OIBDA growth), translating to improved net margins and free cash flow.
  
• The alignment of CBS's leading content on Paramount+ and increasing consumption of sports-where advertiser demand and CPMs are rising-supports robust ad sales growth and strengthens the company's position to capture shifting marketing budgets, impacting both revenue and EBITDA.
  
• The upcoming Skydance transaction is expected to inject technology and capital resources, potentially accelerating Paramount's ability to scale globally, invest in data-driven personalization, and monetize a diverse international audience, all supportive of long-term revenue and earnings growth.

Paramount Global Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Paramount Global's revenue will decrease by 0.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from -0.1% today to 3.8% in 3 years time.
• Analysts expect earnings to reach $1.1 billion (and earnings per share of $1.63) by about August 2028, up from $-19.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.3 billion in earnings, and the most bearish expecting $700 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.1x on those 2028 earnings, up from -391.8x today. This future PE is lower than the current PE for the US Media industry at 18.9x.
• Analysts expect the number of shares outstanding to grow by 1.13% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.1%, as per the Simply Wall St company report.

Paramount Global Future Earnings Per Share Growth

Risks

• Paramount's core linear TV business continues to face viewership declines and falling affiliate revenues, as evidenced by a 4% year-over-year drop in TV media advertising revenue and a 7% decline in TV affiliate revenue, highlighting ongoing secular pressure on its high-margin legacy business and directly impacting total revenue and profitability.
  
• Growing competition and oversupply in the digital advertising market are leading to a 4% decline in DTC advertising revenue, despite subscriber growth, suggesting Paramount may struggle to monetize its streaming platforms at the same level as legacy TV, which could weigh on earnings and net margins.
  
• The company's international streaming subscriber count decreased by 1.3 million in the quarter due to the expiration of an international distribution deal and timing of Paramount+ premieres, highlighting challenges in sustaining global growth and potentially limiting future top-line expansion.
  
• Paramount's filmed entertainment segment continues to underperform, posting an increased adjusted OIBDA loss year-over-year ($84 million loss vs. $54 million loss), primarily due to weaker licensing profits-raising concerns about the ability to offset linear TV declines with gains in film and content monetization, which could restrain earnings growth.
  
• The closing Skydance transaction and new leadership introduce execution and integration risks, as Paramount transitions its strategy and operating structure; uncertainty around this reorganization may hamper investment flexibility, operational efficiency, and ultimately long-term free cash flow and margins.

Valuation

• The analysts have a consensus price target of $12.075 for Paramount Global based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $20.0, and the most bearish reporting a price target of just $8.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $29.4 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 10.1x, assuming you use a discount rate of 10.1%.
  
• Given the current share price of $11.04, the analyst price target of $12.08 is 8.6% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.