ViacomCBS To Launch Paramount+ Streaming Service In US In March
ViacomCBS announced on Jan. 19 that its streaming service, Paramount+ will launch in the United States and Latin America on March 4. The streaming service will launch in Nordic countries and Australia on March 25 and in mid-2021, respectively.
ViacomCBS’s (VIAC) shares closed at $43.75, down by 3.4% on Jan. 19. The company’s current streaming service, CBS All Access will be rebranded to Paramount+ in Canada. The company’s current streaming service CBS All Access offers two price tiers. Its basic service with limited ads is priced at $5.99 per month, and a commercials-free service at $9.99 per month that is without ads. The media giant’s other streaming services also include Showtime and Pluto TV.
ViacomCBS is expected to announce its 4Q and FY20 results on Feb. 24. At the end of 3Q20, ViacomCBS had 17.9 million streaming services subscribers in the US – a growth of 72% year-on-year. The media company is increasingly focused on streaming services as a growth opportunity. It had domestic streaming and digital video advertising revenues of $636 million in 3Q20, a rise of 56% year-on-year. (See VIAC stock analysis on TipRanks)
On Jan. 19, Barclays analyst Kannan Venkateshwar downgraded the stock from a Buy to a Sell and also reduced the price target from $36 to $35. Venkateshwar found the optimism around the launch of Paramount+ as premature. He also believes that there is not much upside to the stock at present stock levels.
In November last year, Rosenblatt Securities analyst Bernie McTernan reiterated a Hold rating on the stock and raised the price target from $28 to $30.
McTernan had commented regarding Paramount+ and its existing streaming services, “We are taking a relatively conservative view on Paramount+ until we learn more about the original programming hitting the service. While we like the company's multi-pronged distribution points in streaming, over the medium term we have concerns over balancing share gains with their own stream services and licensing to third parties.”
Overall, the Street consensus is a Hold on the stock. That is based on 5 Buys, 7 Holds, and 3 Sells. The average price target of $36 suggests a downside potential of around 17.7% over the next 12 months. The stock has ballooned by 61.3% in the past three months.
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