A strange development recently revealed itself at entertainment giant Paramount Skydance (PSKY). While shareholders of Warner Bros. Discovery (WBD) recently cleared the planned move to be purchased by Paramount, the same could not be said for Paramount+ subscribers. In fact, several of those subscribers recently got together to file a class-action lawsuit in federal court in California. The move left Paramount shares up fractionally in the closing minutes of Monday’s trading.
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The suit is fairly small in nature, and represents just three current subscribers and two “prospective” subscribers. The plaintiffs in the suit assert that the combined firm would ultimately offer fewer theatrical film releases. It would also narrow the release slate, and create “…less genre and budget variety,” as well as “…fewer meaningful alternatives at local theaters.”
The fact that David Ellison has gone to great lengths to assure anyone who will listen that this will not be the case seems largely lost on these plaintiffs, however. Naturally, Paramount responded to the suit, saying that it was “without merit.” But then, have you ever heard a defendant in a class-action suit say that the suit is completely accurate and it will start writing checks immediately?
All Eyes on Streaming
Those streaming viewers are going to be particularly important to Paramount Skydance, reports note, as it goes into its first-quarter results, which will be released after the closing bell today. And reports suggest that most everyone’s focus will be on exactly the place that is suing Paramount Skydance: Paramount+ viewers.
Paramount, like a lot of other media companies, has been struggling with a decline in traditional television viewership. With new content coming to streaming services much more often than standard television, a decline should be expected to some degree. But with television revenue poised to drop to $4.11 billion at Paramount—down 9.5% against the previous year—shareholders and analysts will be watching to see if the numbers from Paramount+ can make up the difference.
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 1.42% loss in its share price over the past year, the average PSKY price target of $11.75 per share implies 5.29% upside potential.
