After everything that entertainment giant Paramount (PARA) has been through trying to get a deal set up between itself and Skydance, the latest news may be one of the most heartbreaking hits ever. At least, for anyone who wanted to see the merger go through. That news hit hard, and investors pulled back from Paramount shares, sending it down nearly 2% in the closing minutes of Monday’s trading.
Word from the current head of the Federal Communications Commission, Brendan Carr, says that the Paramount-Skydance merger could be scuttled thanks to diversity, equity and inclusion (DEI) policies. Those businesses that keep such policies in place can count on not getting the nod from the government on any deals they try to strike. Further, Carr made it clear that this was not limited to Paramount and Skydance, but to any company that might be planning to do something for which government approval was needed.
And with Paramount under considerable scrutiny already—not just from the FCC, but from several groups of shareholders as well—the notion that this deal will go through looks less and less likely with each passing day. It could still go off, of course; Paramount has been pursuing an outright dismissal of President Trump’s lawsuit against Paramount. But with this much arrayed against the deal, the chances are not looking good.
“Take the Money and Run”
When Jim Cramer, infamous stock analyst, notes that it is time to “take the money and run,” it is not a good picture for the company in question. Sadly, this time, Cramer’s remarks were aimed squarely at Paramount. Cramer declared that Paramount was “…kind of a done deal,” and it was time to “…move on to the next.”
As for what the “next” might look like, Cramer actually recommended Disney (DIS), which he declared “…really cheap.” Considering that Disney just took it on the chin with its ill-fated release of Snow White, there may be a particular bargain afoot on that one after all. Yet given that Disney shares are running nearly 10 times what Disney shares are, it may not be the bargain Paramount shareholders were hoping for.
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, six Holds and five Sells assigned in the past three months, as indicated by the graphic below. After a 3.43% rally in its share price over the past year, the average PARA price target of $12.50 per share implies 7.43% upside potential.
