Paramount Global, NASDAQ: PARA (formerly Skydance Media), was the focus of attention on Friday following approval by the Federal Communications Commission for its $8.0 Billion merger.
Skydance has finally overcome regulatory obstacles and is set to take control of CBS, Paramount and other assets. This will bring about a major shift in Hollywood’s power structure.
Paramount’s stock rose slightly this morning on FCC approval, before slipping back to the red at market close. It’s still up 30% from its high for the year.
What is in store for Paramount Stock after Skydance Merger?
Matt Belloni, the well-known entertainment journalist and founding partner of Puck expects Skydance to make “pretty drastic moves” once the merger is completed. This will likely happen in early August.
The industry expert said in an interview today with CNBC that Skydance may decide to “sell the cable networks from Paramount Global” by the second half 2025.
He also sees cost savings of up to $2 billion through restructuring and layoffs across CBS as well as other linear television assets.
Belloni said that the merger mentioned above could see Paramount+, Pluto TV, and Cindy Holland coming together, with an emphasis on low-cost content.
Skydance has already signed deals with high-profile filmmakers, such as Will Smith. It may also divest assets that are not core, like BET.
Belloni believes that the pace of changes will be fast and aggressive, as Skydance had around a year in which to develop its strategy post-merger.
Wall Street’s consensus rating for PARA was “underweight”.
Does the Skydance Merger benefit PARA shares?
Skydance’s merger with Paramount could be a positive move for the company, as new leadership and tech-first mentality will help Paramount reduce its $14 billion in debt.
David Ellison, Jeff Shell and their team are committed to the repositioning of Paramount into a more lean media-tech hybrid.
The merger will not only improve operational efficiency but also help Paramount+ achieve profitability in the US by 2025, thanks to AI-driven content and reduced churn.
The merger is also a way to move forward after years of insecurity under Shari’s Redstone leadership.
Robert Fishman, of MoffettNathanson believes that the Skydance acquisition will provide long-term benefits for PARA shareholders if they execute well.
The $8 billion deal that was approved by the FCC today has a lot of upside, both in terms of cost-savings and growth.
Paramount’s stock pays out a current dividend yield of 1.54 percent, making it a very attractive investment in 2025, especially for investors looking to create a passive income stream.
The following post: What happens to Paramount Stock after FCC approves Skydance Merger? This post may change as new information becomes available
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