The Writers Guild of America (WGA), representing screenwriters and newsroom staff, has voiced strong objection to the potential merger between Paramount Skydance (PSKY) and Warner Bros. Discovery (WBD). In a letter to Bloomberg, the guild warned that further consolidation in the media industry would be “a disaster for writers, consumers, and competition.”
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Paramount Skydance, led by David Ellison, has emerged as the leading bidder in efforts to acquire Warner Bros. Discovery, though the WBD board has rejected three separate offers. Paramount Skydance aims to acquire Warner Bros. in its entirety before WBD’s proposed split takes place next year. Since reports of the merger talks emerged, WBD shares have gained more than 24%.
Why Is the WGA Worried About a Media Merger?
In a statement on Thursday, the guild said the recent wave of media mergers has harmed workers, stifled competition and free expression, and wasted hundreds of billions of dollars that could have been used for organic growth. The guild pledged to urge regulators to block any further consolidation involving major media companies. WGA has a long history of opposing similar deals.
Paramount Skydance has a market capitalization of roughly $18 billion, whereas Warner Bros. is far larger, valued at about $52 billion. While this would rank among Hollywood’s largest mergers, Warner Bros.’ larger size compared to Paramount gives it an upper hand in the negotiations.
A potential deal would unite two of Hollywood’s major studios and streaming platforms, including HBO Max and Paramount+, and combine a wide range of TV networks, including CBS, MTV, HBO, and CNN, under a single corporate umbrella. Warner Bros. Discovery owns blockbuster franchises like Barbie, DC Comics, and Harry Potter, as well as leading news channels such as CNN, TBS, and TNT.
Is Paramount Skydance Stock a Good Buy?
Analysts remain cautious about Paramount Skydance’s long-term outlook amid the challenges of integration and effectively executing new content strategies in intense competition.
On TipRanks, PSKY stock has a Hold consensus rating based on two Buys, 10 Holds, and six Sell ratings. The average Paramount Skydance price target of $13.15 implies 20.2% downside potential from current levels. Year-to-date, PSKY stock has gained 59%.
