Paramount Global is preparing to hike the monthly price of Paramount+ later this year, and the company disclosed its intent to take as much as a $1.5 billion write-down from the integration of Showtime with the streaming platform.

Paramount Global’s Q4 earnings report added to the sector-wide pain felt by Big Media amid steep losses from heavy investment in content and marketing to build up direct-to-consumer streaming platforms. Paramount Global CEO Bob Bakish and chief financial officer Naveen Chopra emphasized repeatedly that 2023 will mark the summit of the company’s spending on Paramount+ and other platforms. But as evidenced by Q4, the advertising slowdown and macroeconomic headwinds affecting consumers have created a perfect storm.

Paramount Global acknowledged that the company will have negative free cash flow in 2023 — a situation that would have seemed shocking for a media giant the size of Paramount just a few years ago. The news of the write-down coupled with the previously announced integration of Paramount+ and Showtime also provides strong evidence that the “Peak TV” bubble of rampant series production is rapidly coming to an end. Paramount Global expects to save about $700 million in the long term on content costs by uniting Paramount+ and Showtime.

Chopra unveiled the pricing plan details and plans for a $1.3 billion-$1.5 billion impairment charge as Showtime is blended into Paramount+ in the U.S.

Bakish acknowledged that the company hit big “headwinds” in 2022 and that 2023 will not be a robust year for profits. “We are at peak investment in 2023” in Paramount+, Bakish said.

The monthly price of the premium Paramount+ tier with Showtime will rise to $11.99/month, from $9.99 at present. The essential tier without Showtime and with advertising will climb from $4.99 to $5.99 monthly. The price hikes will come when the Paramount+ With Showtime product launches in Q3.

The impairment charge will be taken in the current quarter for Paramount. Chopra said that write-down is “all about content, driven by the fact that when we combine Showtime and Paramount+, we don’t need the kind of content you would need if they were operating on an independent basis.”

The early response from investors to Paramount Global’s Q4 earnings, unveiled before the market opened, was harsh. The stock was down about 5% at the start of trading, opening at $22.95 per share. UBS reiterated its sell rating on Paramount Global with a price target of $15.

Bakish was pressed on the call by analyst Rich Greenfield about the Showtime strategy, indicating that the company received offers to buy the pay TV stalwart as a stand-alone unit. The CEO didn't directly address the question of fielding inquires for Showtime but he did indicate that they'd crunched some numbers. "We think there's enormous value to unlock with the integration of Showtime and Paramount+. Relative to that, if we were to divest the asset, it would have to create more value than our operating plan," Bakish said. "That bar is pretty high."

Paramount Global has had its struggles with the transition from linear basic cable to the weaker profit margins delivered by direct-to-consumer streaming. Bakish was also asked for his views on comments made last week during an earnings call by Disney CEO Bob Iger, who asserted that the Mouse is wary of being too invested in "general entertainment" given the enormous competition for eyeballs.

In Bakish's view, Paramount Global has the assets to drive a broad-based content strategy, appealing to the youngest viewers via Nickelodeon on up to the adult-focused, high-end scripted dramas on Showtime, CBS and Paramount+. "Differentiation matters. The general entertainment space may not make sense for everyone," Bakish said. "But general entertainment clearly makes sense for us."