SP Global has officially downgraded Paramount Global debt to junk status at BB+, from BBB-, or one level below investment grade.

The credit rating agency made the move on weak credit metrics, with a stable outlook. The downgrade comes a month after Paramount was put on a negative watch by SP Global for a possible credit rating downgrade over weaker cash flow concerns as the major studio pivots from linear TV to the streaming space.

Paramount will need to execute its plan to substantially improve streaming losses over the next two years to mitigate further downside ratings pressure. Paramounts current credit metrics are weak for the BB+ rating, SP Global said in commentary accompanying the debt downgrade. The Shari Redstone-controlled media conglomerate is battling to replace lost linear TV revenues with streaming and other digital revenues as it responds to fast-changing consumer TV viewing habits. The ratings agency resolved its credit watch after Paramount Global, led by CEO Bob Bakish, unveiled its fourth quarter earnings on Feb. 28, 2024, where Paramount+ hit 67.5 million subscribers and shrunk its streaming loss to $490 million.

Last year, the studios credit rating was lowered from BBB to BBB- and additional downgrades were possible as SP Global started to weigh cash flow along with leverage metrics when measuring Paramounts debt worthiness. The credit rating agency is also introducing cash flow metrics when measuring the wider U.S. media sector.

The credit agency said it could lower its Paramount Global debt rating further if the studio was unable to reduce its leverage and increase its free operating cash flow over the next 12 to 18 months. Paramount Global is using NFL games to sign up new Paramount+ subscriptions, but those live sport rights are expensive.

On Feb. 13, the company unveiled plans to cut an estimated800 jobsas part of what Bakish called streamlining costs. Shares in Paramount Global fell by 30 cents, or nearly 3 percent, to $11.67 in late day trading on Wednesday.