With the Skydance/Paramount (PARA) merger about to get slapped with litigation, it’s easy to see why some in the media industry are concerned that mergers just can’t get done anymore. As a result, Barry Diller has backed out of the hunt for media giant Paramount, fearing there will be litigation no matter who tries to acquire it. Paramount shares were down nearly 2% in Friday afternoon’s trading.
Basically, Barry Diller—chairman and senior executive of IAC (IAC)—decided to bow out for good despite previously pursuing Paramount. Diller expressed concern about litigation, saying that he would be “shocked” should the merger not face multiple legal challenges before it’s all said and done. In fact, there is already a lawsuit from investor Scott Baker, and one may be in the works from billionaire investor Mario Gabelli. In addition, regulators could potentially get involved to try to block the merger.
The merger has had trouble since before its inception, with Skydance trying on several occasions to make it happen, coming back with a sweeter pot each time in a bid to finally land the deal. And once it did, the controversy immediately roared to life in response.
Paramount Could Find New Revenue Streams If Merger Goes Through
One other key point that often goes unconsidered about the Skydance/Paramount merger, if it goes through, is that Skydance has two game studios. They’re not particularly big, but these two have worked on some pretty big projects. That includes Skydance Interactive, working on Skydance’s Behemoth set to release this fall. There’s also Skydance New Media, which is working on at least a couple projects right now. If you couple the vast array of Paramount properties with Skydance’s gaming chops, you open up a floodgate of potential for revenue.
Assuming no one does anything suboptimal—going “woke” is near the top on that list—it could be a hefty new source of funding as Paramount would be able to roll out a panoply of games.
Is Paramount Global a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PARA stock based on three Buys, seven Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. After a 24.05% loss in its share price over the past year, the average PARA price target of $12 per share implies 6.76% upside potential.
