ViacomCBS VIAC shares plunged lower Wednesday after the network and streaming media group posted weaker-than-expected fourth quarter earnings and unveiled plans to change its name to Paramount.
The group posted December quarter earnings of 26 cents per share, well shy of Street forecasts, with operating income of $2.66 billion and revenues of $8 billion, a 16% increase from last year. Streaming revenues were pegged at $1.33 billion while cable network revenues were up 16.3% to $4 billon. Ad revenues were largely flat to last year at $2.6 billion
The group will also make its Paramount name change effective today, with a new ticker symbol -- PARA -- to replace its existing VIAC on the Nasdaq.
ViacomCBS said it hopes to have 100 million streaming subscribers by 2024, up from an earlier forecast of around 70 million, and pans to spend more than $6 billion a year on content for its Paramount CBS, Showtime, MTV and Comedy Central offerings as it looks to compete with market leaders Disney (DIS) and Netflix (NFLX). Revenues of around $9 billion are expected for 2024, up from a prior estimate of $6 billion.
"We see a huge global opportunity in streaming, a much larger potential market than can be captured by linear TV and film alone," said CEO Bob Bakish. "We're excited about our ability to not just compete, but thrive, creating significant value for both consumers and shareholders."
"As we look forward, the size of the opportunity we see is matched only by our ambition to seize it," he added.
ViacomCBS shares were marked 21.6% lower in early afternoon trading Wednesday to change hands at $28.25 each, a move that would extend the stock's six-month decline to around 27%.
"The content slate looked good and subscriber momentum seemed healthy, while the level of investment the next few years and uncertain mid-term outlook (no year given for streaming breakeven) leaves investors with a challenging dynamic, how to treat streaming losses and streaming value when investors are already skeptical about too much streaming competition, particularly internationally," said Credit Suisse analyst Douglas Mitchelson, who carries a neutral rating with a $38 price target on the stock.
The company name change, however, "will likely end speculation that Viacom might break up the company or sell outright soon (something we had already felt was unlikely)," he added.
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