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Paramount Global and AMC Networks have ‘Material Estimate risk’


© Stocksak. Paramount Global and AMC Networks have ‘Material Estimate risk’ – Wells Fargo

By Sam Boughedda

In a Monday note, Wells Fargo analysts informed investors that they believe Paramount Global (NASDAQ) and AMC Networks (NASDAQ) have material estimate risks.

According to the research memo, they stated that U.S. advertising based video on demand and connected TV revenue are expected to grow by $15bn in 2019-23.

“With significantly more AVOD platforms offering impressions, and  AVOD launching, we think linear TV is more at-risk than ever. The analysts estimated that only $18.5bn of the $72bn in 23 linear TV advertising revenue is live sports. This is the least protected. “We think ~$35bn is entertainment—the immediate AVOD TAM. More critically, we think $10.5bn is the low-hanging fruit of non-sports/non-news/non-upfront sold via scatter (15% of non-political linear TV). 2023 could mark the tipping point for scatter spend/CPMs. The 2024+ upfronts will then see a turning towards AVOD.

Wells Fargo believes that the risks to AMC Networks and Paramount Global’s earnings are significant, but “all Media and Broadcast stocks will have to cope with the pressure over time.”

The analysts concluded that AMCX, PARA and other entertainment content sellers in scatter pose a material estimate risk. This at-risk ad income represents 50%+ of their total linear ad sales (and these stocks have a high susceptibility to EBITDA cuts).

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