Shares of Paramount Global (PARA) jumped to a new 52-week high of $13.30 yesterday after the Federal Communications Commission (FCC) approved the $8 billion merger with Skydance Media. The agency, concerned about the authenticity of news and journalism from legacy news channels, took over 250 days to review the merger. Commenting on the merger, FCC chief Brendan Carr said, “It is time for a change. That is why I welcome Skydance’s commitment to make significant changes at the once storied CBS broadcast network.”
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Notably, CBS has 28 TV broadcast stations, which requires broad FCC review and approval before any management or control change. FCC commissioners voted 2-1 in favor of the approval, with Democratic commissioner Anna Gomez still alleging that the agency used its power to pressurize Paramount into brokering a $16 million settlement with President Donald Trump.
How Did FCC Approve Paramount-Skydance Merger?
The FCC’s approval was contingent upon certain conditions. Ellison met with the FCC last week, urging the agency to fast-track the merger approval. During the meeting, he pledged that Paramount’s CBS News would adhere to unbiased journalism and that the network’s editorial decision-making would reflect “the varied ideological perspectives of American viewers.”
Moreover, Skydance said it would create an ombudsman position at CBS News to review “any complaints of bias or other concerns” against the network. Ellison also vowed that Paramount has ended all diversity, equity and inclusion (DEI) initiatives and that the merged company will not include such programs in the future.
Skydance and Paramount are expected to close the merger in the coming weeks and Skydance is committed to making shifts and transformations rapidly. According to the deal, Skydance will pay $2.8 billion to acquire National Amusements, which belongs to Paramount’s controlling stakeholder, the Redstone family. Upon closure, Skydance CEO David Ellison will head the combined entity, while former NBCUniversal CEO Jeff Shell will assume the role of president.
The deal is designed to provide Paramount with substantial capital to reduce its debt, fund new content creation and technology upgrades, and strengthen the merged company’s position against major streaming and media competitors such as Netflix (NFLX), Amazon (AMZN), and Disney (DIS).
Is PARA Stock a Buy, Hold, or Sell?
On TipRanks, PARA stock has a Moderate Sell consensus rating based on two Buys, seven Holds, and six Sell ratings. The average Paramount Global price target of $11.92 implies 10.1% downside potential from current levels. Year-to-date, PARA stock has gained 27.9%.
