Over the summer, Hollywood played out a drama worthy of a movie. At the beginning of May, screenwriters went on strike, joined by actors and stuntmen around two months later. At the core, the U.S. filmmakers are seeking higher revenues, especially from streaming services, as well as better working conditions. At the same time, they see their existence threatened by the use of artificial intelligence (AI). The first joint labor dispute by authors and actors since 1960 has serious consequences for the media industry: The corporations vying for content in the fiercely competitive streaming business in particular must fear for their programming. Consequently, the sector was sidelined on Wall Street. This also applies to Paramount Global: Since the beginning of May, the group has lost almost half of its stock market value.
Most recently, those responsible at Paramount's headquarters, located on New York's Broadway, were able to breathe a slight sigh of relief. Last weekend, the screenwriters reached a preliminary agreement with the film and television studios. Their union, the WGA, called it an extraordinary result with "significant gains and protections for writers." However, the deal is not yet in the bag. In addition to the union's executive board, the 11,500 WGA members must approve the agreement. Popular TV formats such as "Jimmy Kimmel Live" and "The Tonight Show with Jimmy Fallon" could quickly return to the air as soon as writers return to work. For movies and series, fans will continue to need patience. The 160,000-member SAG-AFTRA did congratulate the WGA on the agreement. At the same time, however, the actors' union announced the continuation of its strike and called on labor and management to return to the negotiating table.
This appeal is probably also directed at Bob Bakish, the influential CEO of Paramount Global. Be it the streaming service Paramount+, TV channels like CBS and Showtime or the legendary Paramount Film Studios - the company is affected by the labor dispute right across its segments. When presenting the figures for the second quarter of 2023, the CEO was still relatively relaxed. "The strikes do present some challenges for marketing, but the film slate for the rest of the year is full," he said in early August. Any potential impact on 2024 could not be quantified at this time, according to Bakish.
The situation in Hollywood is likely to be all the more of a topic when Paramount Global presents its third quarter results soon. Another focus at the event, the date of which has not yet been set, will be on the development of the streaming division. Despite fierce competition from other providers such as Disney+ or Netflix, Paramount+ has grown strongly. In the second quarter, the portal counted a good 60 million users, 40% more than in the same period last year. The segment is still deep in the red. Management would like to lead the segment, which is known as "direct-to-consumer" (DTC), towards breakeven with further growth and higher prices.
The Paramount share could certainly use some positive news. The media stock, which is listed on the NASDAQ technology exchange, is still in a downward trend. To a certain extent, even the continuation of this chart constellation could not harm the Softcallable Barrier Reverse Convertible. The new issue starts with a low barrier of 49% of the initial fixing. As long as the underlying does not fall to or below this threshold, the maximum yield is fixed. In the product currency CHF, the coupon amounts to 13% p.a. The USD variant pays out 300 basis points p.a. more. If Paramount were to use up the risk buffer, the partial protection would expire. Then the investment would be directly linked to the performance of the underlying. Please also note: Due to the soft callable feature, Leonteq may call this issue early.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.