from the strikes, with Chopra stating, “We estimate free cash flow in the back half of the year will be significantly higher than previously expected.” The comments come after the company reported -$210 million in free cash flow for the prior quarter.
But highlighting free cash flow has its pros and cons in the current market environment for media companies. While the strike-related boost to free cash flow seems nice on the surface, it is all fleeting. Once the strike ends and production resumes, the temporary savings will do little to the company’s long-term balance sheet health.
On top of that, the strikes are also weighing down most media companies’ bottom lines. For instance, advertisers don’t necessarily want to buy TV inventory without knowing what programming will look like. That being said, there’s a reason investors and analysts look to free cash flow as an indicator of good overall financial standing. Robust free cash flow generation typically means better earnings ahead. It also means a company is well positioned to pay down debt, invest in growth, pay out dividends and buy back stock.
Ebbs and flows in free cash flow are the norm, but prolonged suppressed free cash flow is also worrisome. Look no further than Paramount. The company has been in negative free cash flow territory since Q3 2022 even as it sells off non-core assets to free up some cash. Earlier this month, Paramount agreed toMeanwhile, after putting it up on the auction block, Paramount