Entertainment giant Paramount Skydance (PSKY) has recently—and some might even say downright frantically—been trying to reassure anyone who will listen that there will not be fewer movies at the box office as the result of a merger between Paramount and Warner Bros. Discovery (WBD). Ellison even plans to roll out 30 movies in the first year alone, which would be an average of five movies every two months for the entire year. Hollywood insiders believe this pace is nearly impossible, and history tends to agree. Shareholders seem inclined to agree as well, and they sent shares down nearly 2% in the closing minutes of Wednesday’s trading.
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A 30-film release slate is already tough enough to do, as evidenced by the fact that no studio has ever actually done this in the modern age of cinema, reports note. Granted, back during the depths of the direct-to-video era, a company like Lionsgate (LION) would be able to pump out 30 or more titles in that time frame, but these were mostly completed films Lionsgate distributed, not films they made.
Releasing 30 movies in a year certainly would be a help to cinemas, but theater owners are already quietly expressing doubt. It certainly does not help that David Ellison has not made much mention of exactly how he manages to release at such a breakneck pace. It also does not mention how many of these will be merely distributed, or if they will all see theatrical release. Ellison’s goal is ambitious by any practical measure, but there are too many unanswered questions to take it seriously as yet.
Resistance Continues
There remains resistance to the merger, meanwhile, and some reports say that evidence that the merger is a bad idea only grows. Leaving aside the notion that 30 films a year is difficult at best, we have heard on several occasions that unifying these two will produce a conglomerate with a barrel of redundancies and, in all likelihood, plenty of lost jobs.
Concerns over foreign ownership certainly do not help matters. The idea that a movie company basically founded on tech—we cannot forget where David Ellison came from, nor where the money to buy Paramount, let alone Warner, came from—might actually put more emphasis on artificial intelligence (AI) to make films is also a concern. There are quite a few unanswered questions, and some questions answered in a fashion no one likes. Only time will tell, however, how it all comes out.
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 10.39% loss in its share price over the past year, the average PSKY price target of $11.38 per share implies 10.17% upside potential.
