Hollywood studio Paramount Global has been downgraded to junk status by S&P, which cited the ongoing plunge in cable TV subscriptions as the reason for the credit rating change.
Paramount — which owns numerous linear TV properties including CBS, Nickelodeon, MTV, BET, and Comedy Central — is facing a dire economic forecast that is shared by other legacy studios.
American households continue to cut the cords by the millions, depriving studios of lucrative carriage fees. At the same time, TV advertising revenue is plunging due to weak consumer sentiment tied to historic levels of inflation brought about by the Biden administration.
Studios are trying to save themselves by betting the farm on streaming entertainment, but most are still unable to make streaming profitable. Last year, Paramount lost more than $1 billion on streaming in a six-month time span.
The result is a media doom loop that threatens to tank Hollywood’s most venerated institutions.
S&P said it downgraded Paramount’s rating due to the “accelerating declines in linear media and the shift toward a more competitive and less certain streaming model.”
“Paramount will need to execute its plan to substantially improve streaming losses over the next two years to mitigate further downside ratings pressure.”
Paramount’s streaming services include Paramount+ and Pluto TV.
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