ViacomCBS is readying itself to write some greater checks for content material flowing to Paramount Plus and its different streaming properties.
The firm, which bowed the Paramount Plus streaming service earlier this month in an expanded foray onto the streaming battlefield, introduced Monday that it plans to promote $Three billion price of inventory. ViacomCBS mentioned it plans to use the funds from the inventory gross sales for “investments in streaming,” amongst different common company functions.
Following the announcement, shares of ViacomCBS had been down about 4% in after-hours buying and selling, after closing common buying and selling up 3% for the day. The inventory has greater than doubled in value for the reason that starting of 2021.
Last 12 months ViacomCBS spent about $15 billion companywide on content material together with sports activities rights. By 2024, the media conglomerate expects to spend around $5 billion on streaming content, a few of which is able to embrace the price of content material for each linear TV and streaming platforms.
The firm is making a major wager on Paramount Plus — selling it with the tagline “a mountain of entertainment” — which outmoded the earlier CBS All Access direct-to-consumer service. ViacomCBS tallied some 29 million subscribers for its streaming platforms worldwide as of This fall 2020 and is concentrating on 65 million-75 million by 2024.
In the brand new providing, the corporate is promoting $2 billion of Class B frequent inventory and $1 billion of its Series A Mandatory Convertible Preferred Stock (which is able to robotically convert right into a variable variety of shares of Class B frequent inventory on April 1, 2024, until transformed earlier). ViacomCBS additionally granted the providing’s underwriters, Morgan Stanley and J.P. Morgan, separate 30-day choices to buy up to an extra $450 million in inventory.
ViacomCBS selected to increase capital by way of a inventory sale fairly than difficulty debt. The firm’s long-term debt as of the top of 2020 was $19.7 billion, which is comparatively excessive provided that it reported adjusted working revenue of $5.1 billion and free money movement of $1.9 billion for full-year 2020.
