Bad news for streaming fans, good news for media giant Paramount (NASDAQ:PARA), at least in the short term: Paramount is planning a price hike for Paramount+ access. That news proved welcome to investors, who sent shares up nearly 2% in Monday afternoon’s trading.
The latest price hike is poised to start this August, with the ad-supported Essential plan going to $7.99 per month for all new subscribers, up $2 a month. Meanwhile, the plan with Showtime included will climb to $12.99 per month, up $1 per month. The Showtime price hike won’t kick in until September, which is when the weather cools down and people have more reason to stay indoors.
The FAST Problem
We know why Paramount is doing this, of course; its competitors are pretty much all raising prices, and in turn, Paramount needs cash to fund its operations. But there’s one problem in particular, not just for Paramount but for all streamers out there. No, it’s not piracy, though that is an issue. It’s the FAST—Free, Ad-Supported Television—concept. A new report from Omadia found that there are over 2,000 free, live channels out there in the United States alone, covering such platforms as Pluto TV and Tubi.
Over 600 such channels exist in the United Kingdom, and another 400 can be found in Spain. All told, there are 5,264 FAST channels to be had worldwide across 18 streaming services. And that’s just counting the legitimate ones. This may make it a tougher sell to offer a paid service, especially one where the prices just keep going up.
Is Paramount a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PARA stock based on two Buys, seven Holds, and eight Sells assigned in the past three months, as indicated by the graphic below. After a 32.57% loss in its share price over the past year, the average PARA price target of $11.90 per share implies 15.42% upside potential.
