WBD - Paramount: Seek Streaming JV Sell Some IP And Reject Suitors
2024-06-16 09:25:21 ET
Summary
- Paramount acquisition deals have fallen through, leading to uncertainty about future offers and the company's direction.
- Paramount may stay independent, focusing on its cash-generating TV Media business and strategic DTC streaming realignment to improve financial performance.
- The value of Paramount Studios as a hidden balance sheet asset is becoming more apparent, giving the company additional strategic options.
- Staying independent might turn out to be the preferred option for common stockholders.
One more deal to acquire Paramount (PARA) has reportedly fallen through and details about potential new offers are rather murky. We have been holding the stock assuming that fairly low-risk profits could be pocketed given the significant discount to the sum-of-the-parts value that the company is trading at. This has proven to be a lot more difficult than we anticipated.
We have covered PARA previously in our articles:
- Paramount: The Market Does Not Buy Byron Allen : we explored scenario analysis of future potential deals, Skydance deal was discussed as a worst-case scenario.
- Paramount: One Big Content Factory : we discussed the scale advantages of PARA and the value of sharing content between linear and streaming.
- Paramount: Potential Merger Arbitrage With Downside Protection : we estimated the value of the PARA equity to be about ~$19 billion, based on SOTP.