Apparently, Skydance is not taking entertainment giant Paramount’s (PARA) plan to consider a different takeover offer very well. In fact, it recently demanded that Paramount ignore the bid from American businessman Edgar Bronfman Jr., or it may well end up costing it more than a $400 million break-up fee. Investors were hardly fazed, though, as shares were up modestly in Friday afternoon’s trading.
A letter from Skydance’s lawyers says that, apparently, by extending the length of its go-shop agreement with Skydance, Paramount has violated the terms of the deal. Though this won’t necessarily result in Skydance terminating the entire Transaction Agreement, Skydance does reserve the right to do so in the future.
This makes little sense; either Paramount passes on the Bronfman deal, which makes this a moot point, or Paramount goes with the Bronfman deal, in which case Skydance gets its $400 million, and the deal is terminated anyway.
Skydance then followed this up by noting the special committee at Paramount overseeing the deal should either return or destroy all information related to the Bronfman deal. The committee, meanwhile, has not commented.
A New Deal
Meanwhile, Paramount—regardless of how the deal process ends up—still needs to run as if there were no deal at all. So, it made a new deal of its own with Charter (CHTR). Now, Charter is offering the ad-supported version of Paramount+ for every one of its Mi Plan Latino and Spectrum TV Select customers at no cost.
The new offer was actually part of the multi-year distribution agreement that the two companies set up back in May and makes sense, especially given that Charter offers internet access and Paramount has a vested interest in linear television.
Is Paramount Stock a Good Buy?
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 21.84% loss in its share price over the past year, the average PARA price target of $12.07 per share implies 6.48% upside potential.
