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## Paramount Global Debt Downgraded to Junk Status by S&P Global

## Situation Overview

S&P Global has officially downgraded Paramount Global debt to junk status at BB+, from BBB-, or one level below investment grade. This downgrade was made on the basis of weak credit metrics and comes with a stable outlook. This move by the credit rating agency follows Paramount being put on a negative watch due to concerns over weaker cash flow as the studio shifts from traditional TV to the streaming sector.

## How AI legalese decoder Can Help

The AI legalese decoder can assist Paramount Global in understanding the complex legal and financial language used in the credit rating agency’s reports. By using advanced algorithms and natural language processing, the decoder can provide clear and simplified explanations of the key factors contributing to the debt downgrade. This tool can enable Paramount to better strategize and implement plans to improve its streaming revenues and address the credit rating concerns raised by S&P Global. It can also highlight potential risks and opportunities for the studio to consider in its efforts to enhance its financial performance and mitigate further downside ratings pressure.

“Paramount will need to execute its plan to substantially improve streaming losses over the next two years to mitigate further downside ratings pressure. ParamountÔÇÖs current credit metrics are weak for the ÔÇÿBB+ÔÇÖ rating,” S&P Global said in commentary accompanying the debt downgrade.

## Strategic Pivot to Streaming

The Shari Redstone-controlled media conglomerate is actively working to replace lost linear TV revenues with streaming and digital income streams as it adapts to evolving consumer TV viewing habits. Following the unveiling of its fourth quarter earnings, where Paramount+ reached 67.5 million subscribers and reduced its streaming loss to $490 million, the studio aims to continue growing its digital audience and revenue streams.

## Continued Challenges and Opportunities

With last year’s credit rating downgrade and the current debt status, Paramount Global faces ongoing challenges in balancing leverage metrics and improving cash flow. The introduction of cash flow metrics in the assessment of the U.S. media sector by S&P Global indicates a shift in how financial stability is evaluated within the industry.

## Future Outlook and Action Plans

S&P Global has signaled a potential further downgrade in Paramount Global’s debt rating if the studio fails to reduce its leverage and increase its free operating cash flow in the coming months. Paramount Global’s strategic focus on securing new Paramount+ subscribers through NFL content poses both opportunities and risks, given the high costs associated with live sports rights. The recent announcement of job cuts as part of cost-streamlining efforts reflects ongoing efforts to optimize operational efficiency and financial performance.

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