The media giant is offering of 20 million shares of Class B common stock at $85 per share, meaning net proceeds of about $1.67 billion. And it’s also issuing 5.75% Series A mandatory convertible preferred stock for net proceeds of about $983 million.
Stock issues frequently depress a company’s stock price because they dilute the value of shares already held. ViacomCBS recently traded at $74.27, down 18.6%. Still, it has soared 96% since the beginning of the year.
The company is emphasizing its new Paramount+ streaming service and its Pluto streaming offerings. Indeed, ViacomCBS said it plans to use proceeds of the offerings for “general corporate purposes, including investments in streaming.”
The heavily competitive space has been dominated by Netflix (NFLX) - Get Netflix Inc. Report, as well as Walt Disney Co.'s (DIS) - Get The Walt Disney Company Report fast surging Disney+, which recently topped 100 million subscribers.
ViacomCBS will pay an estimated $2 billion for the next NFL broadcast package that was finalized last week. So it might need some cash for that too.
Meanwhile, the company swung to a stronger-than-expected fourth-quarter profit from a year-earlier loss on 3.3% higher revenue.
In the quarter, ViacomCBS earned $1.31 a share compared with a loss of 42 cents a share in the year-earlier quarter. The latest adjusted earnings were $1.04 a share. Revenue reached $6.87 billion from $6.66 billion.
A survey of analysts by FactSet produced consensus estimates of GAAP earnings of $1.05 a share, or an adjusted $1.01, on revenue of $6.88 billion.