“A Melting Ice Cube”: Paramount Stock (NASDAQ:PARA) Quiet as a Future Without Skydance Considered

So…what if this whole merger between entertainment giant Paramount (PARA) never actually, you know, happens? That is an issue that some are starting to consider, and the early consideration says that this could be bad news for Paramount. Investors, meanwhile, are holding their collective breath, giving Paramount shares only a fractional boost in the closing minutes of Thursday’s trading.

Rich Greenfield with LightShed Partners—who has a nearly five-star rating on TipRanks—recently offered comment, noting that he’s “…increasingly concerned the deal could collapse as Paramount is paralyzed by legal fears surrounding the pending President Trump – CBS 60 Minutes lawsuit.” There is still time, of course; should the deal not close July 7, another automatic extension will kick in that takes us into early October. But Greenfield believes that that extension may not matter, and both parties will back out before October hits.

After all, Greenfield notes, “…it is unlikely the FCC will weigh in until the current Trump / CBS lawsuit is resolved.” And with concerns about “personal liability” growing in Paramount’s boardroom—despite assertions from some legal experts that this is all a giant “nothing burger,” that may be enough to have Paramount pull back from the Skydance brink altogether.

“A Melting Ice Cube”

But Paramount may not have much choice here. Word from Rob McDowell, former commissioner of the Federal Communications Commission (FCC) is that, should the merger fail, it would leave Paramount like “a melting ice cube,” open to a major play from someone else, who would likely offer less. After all, how much of Paramount’s actions of late have been tied to this merger? Yesterday alone they fired their primary ad agency. If it fails, then Paramount has to recover.

But McDowell also noted that, despite recent resignations at the FCC, the deal could still go through. “Paramount can get approved at 1-1 because it could be a bureau action. The conventional thinking, which is inaccurate, is that you need commission votes for high-profile mergers. Only if there’s something ‘new or novel.’ The Skydance proposal is a simple transfer of control of licenses.” But McDowell still looks for the deal to succeed on the FCC’s end, noting that the Commission is likely to be “…a little bit more laissez-faire,” especially given how much of this is legacy media involved.

Is Paramount Stock a Good Buy Right Now?

Turning to Wall Street, analysts have a Hold consensus rating on PARA stock based on two Buys, eight Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 0.33% loss in its share price over the past year, the average PARA price target of $12.18 per share implies 2.1% upside potential.

See more PARA analyst ratings

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