Paramount Global Inc. will slash its quarterly dividend to 5 cents a share from 24 cents a share, the media giant announced Thursday.
This “updated dividend policy…will further enhance our ability to deliver long-term value for our shareholders as we move toward streaming profitability,” Chief Executive Bob Bakish said in a release.
Shares of Paramount
PARA,
were off 27.9% in midday trading Thursday and at risk of recording their largest single-day percentage decline on record. That would require closing with a decline of more than 27.3%, as shares did on March 26, 2021.
“We think a dividend cut typically signals material shifts in managements’ views of risk profiles,” Wells Fargo analyst Steven Cahall wrote in a note to clients. “At issue for PARA will be whether it is reassessing the path for DTC [direct-to-consumer], though the release notes PARA expects to ‘move toward streaming profitability.’”
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The announcement came alongside Paramount’s first-quarter earnings, which brought a net loss of $1.1 billion, or $1.74 a share. The company posted net earnings of $433 million, or 64 cents a share, in the year-ago quarter.
Paramount lost $1.81 a share from continuing operations. It earned 58 cents a share on the metric a year before.
The company saw 9 cents in adjusted earnings per share, down from 60 cents a year prior and below the FactSet consensus, which was 17 cents a share.
Revenue slipped to $7.27 billion from $7.33 billion, while analysts had modeled $7.41 billion. Direct-to-consumer revenue was up 39% on the year, while Paramount+ added 4.1 million subscribers in the quarter to bring its total to 60 million.
Cahall said in his report that the results and dividend cut “likely suggest forward estimates have downside risk.”
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