Paramount (PARA) CEO Bob Bakish is all in on advertising despite overall Wall Street skepticism.
At Yahoo Finance’s All Markets Summit shrugged off concerns about a global slowdown in ad spending amid macroeconomic headwinds.
“The two concerns in the Street right now are advertising and streaming profitability,” Bakish said (full interview above). “Advertising is a great business. And we have a fundamentally strong position in it. Our combination of linear reach, particularly with a broadcast network, plus the number one fast service in the country in Pluto TV, gives us a great reach expression for advertisers.”
He argued that the company’s strong franchise content, coupled with advanced ad capabilities, generates a fundamentally compelling position for investors — although the stock price paints a different picture.
Paramount’ stock, hammered by a slew of analyst downgrades in recent months, is down 35% so far in 2022. Many Wall Street insiders have cited uncertainties surrounding advertising and streaming margins as top areas of concerns.
“I don’t think there’s a lot of people walking around that’s happy with the state of the markets… it’s been a rough half year with respect to equity valuations, and certainly our company’s stock,” Bakish said. “My view is you have to decide what you believe in and play through.”
Paramount’s version of playing through has involved a commitment to certain theatrical-only releases at the height of COVID-19 in addition to the 2019 acquisition of advertising video-on-demand service Pluto TV.
Bakish explained that those choices, despite hesitations on Wall Street, ultimately led to successful outcomes with “Top Gun: Maverick” securing several box office records while Pluto TV went from generating $70 million in revenue to over a billion dollars in just three years.
“If you listened to the Street, there’s no way you would ever have done it — you have to decide what you believe,” the executive emphasized.
Bakish added that while uncertainty surrounding streaming profitability has been another key issue across the sector, Paramount is well-positioned to succeed with its current business model.
“Our business is only a year and a half old — it takes a little while,” he said. “We always said peak investment year is 2023. It still is. But we are building a business that we see as as, over time, having TV media-like margins.”
Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at firstname.lastname@example.org
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