“Could the NFL Back Out?”: Paramount Stock (NASDAQ:PARA) Drops as a Major Contract is at Risk

Of all the things entertainment giant Paramount (PARA) did not need right now, one of the things it needed least was a big question mark appearing in the vicinity of its National Football League (NFL) agreements. With live sports increasingly vital, especially where streaming is concerned, the idea that the NFL might pull out of Paramount agreements is potentially disastrous. And investors saw that particular danger as well, sending shares sliding nearly 2.5% in the closing minutes of Thursday’s trading.

Reports note that the NFL’s agreements with CBS—which are basically with Paramount at their root—come with a clause that allow the NFL to open up the rights deal if there is a change in ownership. Now, granted, the NFL does not have a particular problem with Skydance; reports also noted that the NFL and Skydance have worked together previously, and have “…shared ownership of the studio’s sports vertical.” For the most part, noted commissioner Roger Goodell, it has worked out well.

Regardless, ownership changes would still prompt review. And though the NFL may not have much problem with Skydance, it may increasingly have a problem with CBS / Paramount, and may use the ownership change as an opportunity to get out altogether. That is strictly speculative, of course, as the NFL certainly has not said an ownership change would do anything more than prompt review.

No Longer Boldly Going?

Then another problem emerged, as Paramount’s last Star Trek show, Star Trek: Strange New Worlds, got a bit of an update. As it turns out, the fifth season of the show will be its last, and will only have six episodes, a 40% drop from the standard 10-episode run. The third season will begin airing in a little over a month, and the fourth season is currently in production with no release date in sight.

The issue, though, is that this means that soon there will be no active, original Star Trek on Paramount’s docket anywhere. There is still one series left, the still-unreleased Starfleet Academy, but it is still in production. It has already been renewed for a second season despite having zero viewers, which suggests Paramount is hoping for the best here. But for Paramount to be completely Trekless at a time when content is vital to any streaming aspiration is potentially very bad news.

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 five Sells assigned in the past three months, as indicated by the graphic below. After a 18.26% rally in its share price over the past year, the average PARA price target of $12.08 per share implies 1% upside potential.

See more PARA analyst ratings

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