Entertainment giant Paramount Skydance (PSKY) is about to undertake one of the last big steps to get its merger with Warner Bros. Discovery (WBD) off the ground. Specifically, it is regulatory approval, and reports suggest those regulators will not be especially kind. Investors also seem concerned, as shares of Paramount dropped nearly 3% in the closing minutes of Monday’s trading.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
The top brass of Warner has signed off, and the shareholders gave their approval as well. But this means surprisingly little to the regulators, who are already looking at the deal with what looks like deep concern about competition in the market. They have a certain amount of sense going for them in objecting; no matter what is said overall, there is still basically one less studio by the time all is said and done. That means a lot of redundant positions, a lot of job loss, and more.
The emphatic promises issued by Paramount do not seem to be helping much either. While CEO David Ellison promises that the combined studio will put out more together than the components did last year, the regulators are already digging in on studio output, streaming rivals, and issues of movie theater placement.
Fair, Fair Nashville
While recently, we have heard about Starbucks (SBUX) making plans to move some of its operations to Nashville, Tennessee, it turns out that Paramount has a similar idea. It turns out that David Ellison has already been putting investment in Tennessee, among other places, putting cash into everything from rodeos to production companies.
Paramount also has a connection to country music. Ellison’s wife, Sandra Lynn Modic, is an aspiring country singer, and Paramount owns CMT, the cable channel for country music. And indeed, some of Paramount’s biggest properties right now are solid entrants in the “country” arena, like the Yellowstone series. Thus, Paramount making moves—rather, more moves—in the Nashville space makes a certain sense. Favorable tax pictures certainly do not hurt matters.
Is Paramount Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PSKY stock based on five Holds and five Sells assigned in the past three months, as indicated by the graphic below. After a 6.16% loss in its share price over the past year, the average PSKY price target of $11.38 per share implies 7.62% upside potential.
