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Paramount Global’s Debt Rating Downgraded to Junk by S&P


Paramount Global's debt rating was cut to junk status by credit-rating agency S&P Global.

S&P on Wednesday said it expects Paramount Global’s free operating cash flow-to-debt will remain “well below” 10% through 2025, and that adjusted leverage (debt-to-equity ratio) will stay above 3.5 times through then. The agency cited “the ongoing deterioration of the linear television ecosystem and the elevated investments for its direct-to-consumer (DTC) streaming model” for the downgrade. As part of its ratings update, S&P issued a “stable outlook” for Paramount Global, which “reflects our expectation that leverage will decline to around 4.0X in 2024 with FOCF/debt improving to about 5% as losses in the streaming segment materially decline.” That is “largely based on our assumption that streaming losses will improve by more than $700 million due to strong average revenue per user (ARPU) growth from price increases enacted in mid-2023 and ongoing, albeit more modest, subscriber growth.”

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