How The Paramount-Skydance Merger Affects You
By Movieguide® Contributor
After the merger announcement from Skydance Media and Paramount, the company’s stock price shot up and then fell back down, highlighting Wall Street’s uneasiness about what the deal means for the studio’s future.
“With a breakup of the company off the table, the investment debate simplifies: can Paramount invest profitably in direct-to-consumer (DTC)? Are forecasts low enough,” wrote Wolfe Research analyst Peter Supino in a report where he downgraded the stock to “underperform.” “Respectively, we are cautious and negative.”
While Supino doesn’t believe an overhaul from Skydance can save the struggling company, which has posted losses totaling $4.5 billion since 2020, others believe Skydance can restore the company and reestablish Paramount as a premiere studio.
“At a high level, new leadership’s strategic focus on content creation, technology investments and financial discipline are rational, and we believe Skydance leadership is positioned to drive creative and operational improvements at the asset,” said Guggenheim Securities analyst Michael Morris, who maintained a “buy” rating on the stock. “That said, specific details on key issues include future structure of the streaming service, management of the portfolio of linear network assets, and expanded use of technology to drive growth remain in development.”
On paper, Paramount should be one of the most successful companies in the entertainment industry today. It boasts a deep history and legacy in Hollywood, hosts a strong library of movies and TV shows and takes roughly 9% of all TV usage – per a new Nielsen report. However, the company has struggled with the disruption of traditional media and has failed to find its footing in the streaming age.
The differing opinions from Wall Street essentially come down to whether Paramount can leverage its assets to restore its former glory before it is dragged down and sunk by the problems plaguing it today. Skydance’s overhaul certainly gives it hope, but the trajectory of Paramount’s future, nonetheless, remains murky.
Movieguide® previously reported:
After talks between Skydance Media and Paramount broke down last month, a renewed effort to pen a merger between the two companies has resulted in a tentative deal.
When talks ended in the middle of June, the major holdup came from Paramount’s majority shareholder, Shari Redstone, who was dubious about Skydance’s ability to close the $6 billion deal. Under this new deal, it appears her concern has been addressed, though it remains unseen if the cost of the arrangement has changed.
While the merger between Skydance and Paramount has been tentatively agreed upon, one term believed to be included is a 45-day period for Paramount to shop around for a better deal. Paramount had previously been in talks with Sony, Peacock and Warner Bros. Discovery. This 45-day period makes way for any of these companies to make an eleventh-hour offer.
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