Update: Paramount Merger Is Nearly Done. But Skydance Faces These Challenges. — Barrons.com
Dow Jones Newswires ·
By George Glover
Paramount Global stock was rising on Friday after U.S. regulators approved the entertainment company's merger with Skydance Media. But questions remain for investors.
Shares in the CBS parent climbed 2.2% to $13.56 in early trading. The benchmark S&P 500 was up 0.1%.
The Federal Communications Commission approved the merger between Skydance and Paramount late Thursday, laying out a path for a deal worth more than $8 billion to close.
The signoff comes after Paramount earlier this month agreed to pay $16 million to settle a lawsuit by President Donald Trump that alleged CBS's "60 Minutes" had edited an interview with Kamala Harris to make her sound better. CBS denied any wrongdoing.
Ironically, the deal also came a day after South Park kicked off its 27th season with an episode parodying Trump's row with "60 Minutes." The episode was released just a day after the animated series' creators struck a deal to stream the series on the Paramount+ streaming service.
Skydance and Paramount are expected to close their merger over the next few weeks, The Wall Street Journal reported, citing people familiar with the matter. Neither company immediately responded to a request for comment from Barron's.
Investors won't rush to snap up shares in the new company unless they get some much-needed clarity. Paramount+ still looks like a minnow in a space dominated by the likes of Netflix, Disney, and Google's YouTube TV. It's tough to see a route to Paramount scaling the platform without dipping into its pockets and splashing the cash on content.
Paramount could also soon find itself renegotiating its rights deal with the National Football League, and the company will have a tricky decision to make over what to do with its portfolio of linear cable networks.
"Now that the long, drawn-out sale process is finally nearing its end, Skydance leadership is poised to take control," MoffettNathanson analyst Robert Fishman, who rates Paramount a Hold with a $10 price target, said in a research note late Thursday.
"With that, the real work begins — rebuilding Paramount," he added.
Shareholders may feel relieved right now, but there's still a long way to go for Skydance and Paramount to make this soap opera of a merger work.
Write to George Glover at [email protected]
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Dow Jones Newswires