Benchmark Reiterates Buy Rating on Paramount Skydance (PSKY), Says Deal with WBD Could Yield Meaningful Upside

Benchmark analyst Daniel Kurnos reiterated a Buy rating and $16.00 price target on Paramount Skydance (: PSKY).

The analyst commented, "Shares of Paramount (PSKY: Buy, PT $16) are up ~7% as a rumor that an Ellison-backed bid for Warner Brothers (WBD: Buy, covered by Matt Harrigan) hit the tape, also sending Warner up over 25%. We addressed this exact topic in December of 2023, noting the industrial logic of a deal and that we could see a base case of $3 billion in synergies. A lot has happened since then, but the math remains relatively the same, and the industrial logic has only gotten stronger in what appears to be a consolidating media landscape. While we are not going to establish any proforma EBITDA numbers for the combined hypothetical company, we note that, even without synergies, Paramount could pay ~$18 per share for Warner and still have the deal be value neutral or possibly even marginally accretive depending on which proforma standalone Paramount Skydance EBITDA one is using (our prior estimate was $3.75 billion middle-of-the-road case but that does not factor in the recent UFC deal). That number goes higher still if our base case of $3 billion in synergies is accurate. The timing is also particularly auspicious given that the FCC’s September preliminary agenda seeks to potentially eliminate the dual network rule which, while not a merger of big 4’s here, suggests an openness to further media consolidation of the major players (DoJ still has to weigh in, of course). We re-paste our synergy math from two years ago below, with our overall view that a combination between the two could yield meaningful upside for the combined entity, although how the all or almost all-cash bid manifests and what the actual takeout price is if this proves to be real could certainly alter the math meaningfully."

For an analyst ratings summary and ratings history on Paramount Skydance click here. For more ratings news on Paramount Skydance click here.

Shares of Paramount Skydance closed at $ yesterday.

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