Analyst Note
| Neil Macker |Paramount’s direct-to-consumer efforts continue to pay off in terms of subscriber additions, but DTC segment losses continued to mount in the first quarter. The quarterly dividend was cut to $0.05 from $0.20, providing $500 million in annual “savings.” This money will not be allocated to increased content spending but rather to gain financial flexibility and is a direct consequence of Paramount lagging peers in shifting its focus to profitability from DTC customer growth at all costs. Paramount also took a $1.7 billion noncash programming charge related to the plan to integrate Showtime into Paramount+. We are lowering our fair value estimate to $35 from $40 to account for weaker margins at all three segments.