ViacomCBS Slumps on Pricing of $2.65 Billion of Equity

Viacom said it plans to use the proceeds of its offerings for 'general corporate purposes, including investments in streaming.'
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ViacomCBS  (VIACA) - Get Report shares tanked Wednesday after the company priced added shares and convertible securities with total net proceeds of about $2.65 billion.

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.”

Disney+ to Stream Blockbusters the Same Day They Debut in Theaters 

The heavily competitive space has been dominated by Netflix  (NFLX) - Get Report, as well as Walt Disney Co.'s  (DIS) - Get 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.

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