Paramount shares jumped more than 10% Tuesday after the company\u2019s third-quarter earnings report and a strategy update from CEO David Ellison and his management team.<\/p>\n
The stock topped $16.90, its highest level in two weeks, midway through the session. Trading volume on the Veterans Day holiday was lighter than average. Shares are up almost 50% since the August 7 close of the Paramount-Skydance merger, but they have been flat in recent weeks.<\/p>\n
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Paramount\u2019s quarterly revenue came in a bit lighter than Wall Street analysts expected and there were other less-than-scintillating data points in the report. Even so, with the timing of the Paramount-Skydance merger close meaning current management wasn\u2019t in control for the full quarter, the financials were less of a focus than exec comments on strategy.<\/p>\n
Ellison said a few things designed to tantalize investors during the company\u2019s earnings call Monday. He acknowledged the company\u2019s M&A options<\/a> but declined to address any of them specifically. \u201cWe really look at this as \u2018buy versus build\u2019 and we absolutely have the ability to build,\u201d he said.<\/p>\n With the ink barely dry on the merger of Skydance and Paramount, Ellison & Co. have made three offers to acquire all of Warner Bros. Discovery. For its part, WBD says it is also fielding interest in its studio-and-streaming division and is still considering proceeding with plans to formally split into two companies.<\/p>\n Paramount also increased its target for cost savings from the Skydance deal to $3 billion from $2 billion and said it was significantly increasing its film and TV output. The company also has made dramatic moves in streaming, adding UFC bouts without an extra charge for subscribers, citing the value-add as justification for a price hike<\/a> due in January.<\/p>\n Wall Street analysts weighed in with generally circumspect reactions to the earnings report, with many emphasizing the long time horizon of M&A. A strategic chess game is playing out among Ellison, WBD CEO David Zaslav and interested parties like Comcast and Netflix. Even once clarity emerges in the coming weeks and months, a proposed combination would usher in yet more uncertainty and transition.<\/p>\n BofA Securities analyst Jessica Reif Ehrlich summed it up in the headline of her note to clients: \u201cSky High Ambitions But Patience Required is Paramount.\u201d She rates the stock as \u201cunderperform\u201d (sell), but upped her 12-month price target to $13 from $11. \u201cThere are still many unknowns on the strategic initiatives the company\u00a0has\u00a0undertaken and,\u00a0as evidenced by prior large combinations, restructurings\u00a0often take years to implement,\u201d she wrote.<\/p>\n Doug Creutz of TD Cowen, who has a \u201chold\u201d rating on the stock, said the management team did a \u201ccredible job\u201d of laying out its vision. \u201cUnsurprisingly,\u201d he added, \u201cthe plan is another variant on the old standby \u2018cut lots of expenses and make better content.\u2019 Execution will be critical.\u201d<\/p>\n The newly combined company is \u201coff to a promising start,\u201d argued MoffettNathanson\u2019s Robert Fishman, but his note flagged Paramount\u2019s plan to up content spending by $1.5 billion a year and boost Paramount+. \u201cThe question that hangs over this approach,\u201d he wrote, \u201cis the level of investment required for the company\u2019s DTC offering to truly compete with the likes of Netflix, Disney, and Amazon \u2013 all of which hold a considerable lead in global scale, content output, and engagement. To supercharge its path to DTC scale, we continue to believe M&A is the most likely avenue Paramount Skydance will explore.\u201d<\/p>\n Fishman has a \u201cneutral\u201d rating on Paramount shares.<\/p>\n Guggenheim\u2019s Michael Morris, also neutral on the stock, said Paramount\u2019s increasing of cost savings estimates at the same time it lowers profit guidance gives him \u201cmedia merger d\u00e9j\u00e0 vu.\u201d If and until a WBD transaction materializes, he wrote, Paramount \u201cis running a very similar playbook to that of Warner Bros. post the Discovery combination in 2022, where optimism and increased synergies yield lower financial estimates.\u201d<\/p>\n Best of Deadline<\/p>\n Sign up for Deadline’s Newsletter<\/a>. For the latest news, follow us on Facebook<\/a>, Twitter<\/a>, and Instagram<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Paramount shares jumped more than 10% Tuesday after the company\u2019s third-quarter earnings report and a strategy update from…\n","protected":false},"author":2,"featured_media":134473,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[29],"tags":[48360,93,61,60,65249,3282,282,55341],"class_list":{"0":"post-134472","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tv","8":"tag-david-ellison","9":"tag-entertainment","10":"tag-ie","11":"tag-ireland","12":"tag-paramount-skydance","13":"tag-paramount","14":"tag-tv","15":"tag-wall-street-analysts"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/134472","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=134472"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/134472\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/134473"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=134472"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=134472"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=134472"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}