Paramount Skydance (NASDAQ:PSKY) faces a protracted and dear turnaround because it integrates Skydance and Paramount World. Analysts warn that execution will take years.
Regardless of its potential as a world media powerhouse, Paramount Skydance should overcome restructuring hurdles, heavy content material spending, and streaming losses.
Financial institution of America Securities analyst Jessica Reif Ehrlich initiated coverage on Paramount Skydance with an Underperform score and a worth forecast of $11.
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Ehrlich argued that whereas the brand new entity has the potential to evolve into a world media powerhouse, the turnaround will take years, demand important funding, and require investor endurance.
Drawing comparisons to Warner Bros. Discovery’s (NASDAQ:WBD) extended integration, she emphasised that Paramount Skydance faces a equally complicated restructuring path.
Ehrlich famous that the Skydance-Paramount merger closed on August 7, 2025, following years of sale makes an attempt and a prolonged regulatory assessment.
She mentioned the uncertainty created operational challenges, as Paramount had been underfunded for years attributable to cost-cutting by prior management.
With David Ellison now CEO and contemporary capital injected by Skydance and RedBird, she sees potential in Paramount Skydance’s mixture of iconic studios, CBS broadcast belongings, and beneficial sports activities rights. Nevertheless, she harassed that execution stays unsure.
On synergies, Ehrlich highlighted administration’s $2 billion price financial savings goal, which might assist offset heavy content material spending. She believes the goal is achievable given current trade precedents, however she warned that incremental rights prices and unprofitable streaming will weigh on near-to-medium-term earnings.
She forecast $3.06 billion calendar 2026E EBITDA, far under administration’s $4.1 billion projection, citing the $750 million UFC rights deal as a major expense partially balanced by modest Paramount+ subscriber development and advert uplift.
Ehrlich mentioned the inventory presently trades at a premium to friends like Fox (NASDAQ:FOX), Disney (NYSE:DIS), and Warner Bros. She sees the valuation as “wealthy,” particularly given restricted monetary visibility, secular headwinds in linear TV, and Paramount+’s lack of profitability.
Whereas acknowledging CBS’s significance for sports activities and information, she warned that linear OIBDA continues to say no at roughly 10% CAGR.
Her skepticism prolonged to the DTC unit, which reported -$497 million OIBDA in 2024. She mentioned scaling Paramount+ would require heavier content material spending, bundling methods, or a possible merger with one other subscale streamer.
