Entertainment giant Paramount Skydance (PSKY) is now facing Congress over the deal with Warner Bros. Discovery (WBD), and the politics are shaping up about as expected. Two House Democrats recently asked CEO David Ellison if he would be changing CNN’s coverage of President Trump, and if he offered to do so in exchange for the merger’s approval. Investors were less than pleased with the non-streaming drama, and shares slipped modestly in the closing minutes of Tuesday’s trading.
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The process started, somewhat, back in November. Representatives Jamie Raskin and Frank Pallone accused Paramount of “stonewalling congressional oversight” following requests for documents around the Federal Communications Commission’s (FCC) approval of the merger between Skydance and Paramount. Raskin and Pallone also want documents connected to donations to “…any Trump cause or interest….”
Raskin and Pallone made their contempt for Ellison clear, saying, “Your actions at CBS News after the Paramount Skydance merger demonstrate your willingness to tailor news coverage to the liking of the president.” This is part of a larger effort, reports note, to stage a “rigorous review” of the Paramount / Warner merger after Paramount sought the FCC’s approval for larger-than-normal foreign ownership.
Overblown Concerns?
While Democrats will continue to rage at anything that might look like a good deal for President Trump, there are other concerns to address, like the whole issue of theatrical movies. Some are convinced that the move is just one more nail in the theaters’ coffin, but others think that, perhaps, there is a bit more sizzle than steak going on here.
Some believe that the Ellisons are out to elevate Paramount into a worthy competitor against the massive tech-sector firms that stepped into streaming in recent years. And there is one key point to bear in mind: a post-merger Paramount will have $79 billion in debt on its ledger. Selling movie tickets will be about the only way to dig out from under that weight.
Is Paramount Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PSKY stock based on one Buy, five Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 9.09% loss in its share price over the past year, the average PSKY price target of $11.38 per share implies 6.21% upside potential.
