Paramount (PARA) has secured the much-anticipated approval from the Federal Communications Commission (FCC) for its $8 billion merger with Skydance Media.
The aforementioned merger will place Paramount assets, including CBS, under the David Ellison-led company and is expected to close early in August.
Paramount stock initially inched up on the news, but then reversed gains to ultimately close 1.6% lower on Friday. However, it’s still up some 30% versus its year-to-date low at the time of writing.
The Skydance merger will likely prove a meaningful positive for PARA shares as the buyer is injecting $1.5 billion in fresh capital to reduce its debt.
Plus, it’s offering $4.5 billion in payouts to Paramount shareholders as well, essentially boosting liquidity and overall investor confidence.
The $8 billion deal consolidates high-value assets, including CBS, Paramount+, and Paramount Pictures under tech-savvy leadership, promising streaming profitability and artificial intelligence (AI)-driven content innovation.
All in all, it positions Paramount stock for longer-term growth in the competitive media landscape.
Operational efficiency is another significant reason why the aforementioned merger is constructive for Paramount shares.
Skydance and Bain & Co. have identified about $2 billion in annual cost savings, half of which will be implemented in year one.
That said, Robert Fishman, an analyst with MoffettNathanson, recommends that investors remain on the sidelines as the combined Skydance-Paramount entity has a lot to prove still.
“Now that Skydance leadership is poised to take control, real work begins, rebuilding Paramount,” he told clients in a research note on Friday.
Fishman maintained his “Hold” rating on PARA stock with a $10 price target indicating potential downside of as much as 23% from current levels.
Despite the Skydance merger and how it may help Paramount stock in the second half of 2025, other Wall Street analysts recommend staying clear of the media firm as well.
The consensus rating on PARA shares currently sits at “Moderate Sell” with the mean price target of about $11.67 indicating potential downside of roughly 10% from here.