Will NFL Payments Bankrupt Paramount? What Are Company’s Options As it Enters Uncertain 2024?
Paramount owes $2 billion in rights payments to the NFL in 2024, and S&P’s senior director says the company may not have the cash on hand as of now.
It’s hard to be in the business of media these days. The entire model is shifting, as revenue drivers that used to be rock-solid, like linear TV advertising, are nowhere close to as profitable as they used to be. Legacy media companies like Paramount Global are some of the hardest hit by this atmosphere of change, and that company in particular has been the subject of merger and acquisition talks more than once in 2023.
- Standard & Poor’s Senior Director Naveen Sarma says he doesn’t necessarily see the cash on hand at Paramount needed to meet its $2 billion obligation to the NFL next year.
- Paramount’s financial position makes it a ripe topic of conversation for mergers and acquisitions, particularly as it prepares to offer a streaming bundle with Apple.
- The company made attempts to sell BET Media Group earlier this year, but didn’t get a bid worth accepting.
Can Paramount Afford the NFL?
NFL football continues to be one of the most-watched events on American television. It’s a sure ratings draw, and Paramount holds one of the largest packages of NFL games to air weekly on CBS on Sunday afternoons. But the rights to those games will cost Paramount $2 billion next year, and S&P Senior Director Naveen Sarma, speaking at the 2023 UBS Global Media and Communications Conference this week, said that money won’t be easy for the company to pull together.
“They don’t necessarily have the cash on the balance sheet to be able to make that payment,” Sarma said.
Sarma noted that Paramount’s finances make its future more difficult to foretell than that of other companies. Generating positive cash flow and identifying a firm “break-even” point with its streaming business is crucial for the company, and if it can’t accomplish those things it may as well consent to being sold. A new streaming bundle could help; Paramount and Apple are reportedly in discussions to bundle Paramount+ and Apple TV+ together for a discounted price.
Where Can Paramount Go From Here?
Even a successful Apple TV+/Paramount+ bundle may not be enough to keep Paramount rolling as an independent company. In fact, its controlling shareholder has reportedly been willing to sell the company for years if she got the right offer, but apparently that offer has never materialized.
Indeed, even attempts to sell portions of the company have met with failure. Paramount got serious interest from several parties when it put BET Media Group up for sale this year, but ultimately never got the offer it wanted and pulled the asset off the table. It also turned down a $3 billion offer for Showtime, preferring instead to merge that channel/streaming service’s content onto Paramount+.
If Paramount was to be acquired by another media outlet, which would make sense? Its new bundling partner Apple could be one potential buyer, at least for its movie studio and streaming assets. Warner Bros. Discovery has also been floated as a buyer for Paramount, as improving streaming health has Wall Street analysts optimistic about its future.
There are lots of options on the table for Paramount, but fewer and fewer of them lead to a future where it remains an independent company. Things could still improve for Paramount, but they’ll have to start improving fast if Paramount+ is to survive in the long term.
Paramount Plus
Paramount+ is a subscription video streaming service that includes on-demand access to 40,000+ TV show episodes from BET, CBS, Comedy Central, MTV, Nickelodeon, Nick Jr. and more. The lineup includes “1883,” “Tulsa King,” “Star Trek: Discovery,” Nickelodeon’s “SpongeBob SquarePants,” and “PAW Patrol.” Subscribers can watch the NFL, college football, The Masters, college basketball, UEFA Champions League, UEFA Europa, Serie A, and NWSL. The service also offers the option to watch your live CBS affiliate. The upgraded ad-free package includes premium movies and shows from Showtime.