Report: Moody’s may move Paramount debt to ‘junk’ status

Investment firm Moody’s is likely to downgrade Paramount Global’s credit rating to “junk status” by the end of 2024, according to a financial research firm.

Paramount’s debt was already been lowered to that status by S&P Global Ratings in March 2024 and CreditSights is joining a growing chorus of voices on Wall Street that said it’s likely Moody’s will take the same step.

It’s not surprising; Paramount has around $14.6 billion in debt on the books and its failed sale to Skydance Media sent its stock price falling after showing weak performance for some time.

By selling, the Paramount board was hoping to get a deal that was structured in such a way that it could use a potential cash infusion to at least partially put a dent in what it owes creditors, but with no deal in sight, the company will need to leverage other debt servicing strategies. 

In addition to its debt, Paramount is also facing challenges in the changing media industry landscape as linear TV, which still account for a core chunk of its revenue, continues to decline. Like most broadcast owners, the company could see a spike in advertising for the 2024 election, but those trends have been shifting more toward digital and political advertising is known to fluctuate heavily from year to year.

The company has made inroads into streaming and digital, but lost $1.6 billion on its Paramount+ streamer in 2023, a figure that grew heavy criticism from investors.

As such, it has cooled a bit on Paramount+ by cutting content costs in the near term as part of an effort to level the books.

Paramount is not alone in media conglomerates with heavy debts — Disney and Warner Bros. Discovery each have around $39 billion on debut, according to published financials (these companies have significantly more revenue than Paramount and, in the case of Disney, operate outside just the linear and digital TV business).

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Moving forward, Paramount has stated it still intends to explore sale opportunities that might emerge but is reportedly reluctant to sell to a buyer who might split the company up.