Paramount Skydance faces a challenging turnaround as it merges with Paramount Global. Analysts anticipate a lengthy and costly integration process that will require significant investment and patience from investors. Despite its potential, obstacles like heavy content spending and streaming losses must be overcome.
Bank of America Securities analyst Jessica Reif Ehrlich initiated coverage on Paramount Skydance with an Underperform rating and a price target of $11. She believes the new entity has the potential to become a global media powerhouse but emphasizes that it will take time, money, and investor patience to achieve success.
Ehrlich points out that the Skydance-Paramount merger closed on August 7, 2025, after years of sale attempts and regulatory hurdles. The operational challenges created by uncertainty and previous underfunding present obstacles that must be addressed for the company’s success.
With new leadership and fresh capital injection, Paramount Skydance combines iconic studios, broadcast assets, and sports rights. Ehrlich sees potential in these assets but cautions that execution remains uncertain, especially in the face of heavy content spending and unprofitable streaming services.
Ehrlich forecasts a lower EBITDA for 2026 compared to management’s projection, citing the significant expense of the UFC rights deal. She notes that the stock currently trades at a premium to peers and highlights potential challenges like linear TV headwinds and profitability issues with Paramount+.
Despite the importance of CBS for sports and news, linear OIBDA continues to decline, posing challenges for the company. Ehrlich is skeptical about the DTC unit’s profitability and suggests that scaling Paramount+ will require increased content spending or strategic partnerships with other streaming services.
Recent deals for content rights indicate aggressive spending by management to stabilize and grow the platform, creating short-term financial challenges. Paramount Skydance’s stock is trading higher at $15.06 per share, reflecting investor optimism amidst the company’s turnaround efforts.
Read more at Yahoo Finance: Paramount Skydance Turnaround Could Take Years To Materialize, Says Analyst