Paramount Global (PARA) closed Tuesday’s trading session more than 6% higher after Loop Capital upgraded the stock late last week, suggesting financial pressures surrounding the company will force it to find a buyer.
Loop Capital upgraded shares to Hold from Sell but reiterated its price target of $14 a share with analyst Alan Gould telling investors, “We no longer believe the downside is that much greater than the upside.”
“While we still believe a turnaround of PARA will be a challenge, investors’ perception of the company could change with a motivated seller, clever bankers, and Berkshire’s purse strings,” he said.
“The bull case is that the financial pressure will force PARA to find a buyer and shareholders will achieve private market value. The bear case is that there are no buyers for the cable assets, the streaming business is a work-in-process, and Shari Redstone will not sell just the studio, the only asset that would have multiple highly interested buyers,” Gould added.
Shari Redstone currently serves as the non-executive chairwoman of Paramount Global, in addition to president of her family’s holding company, National Amusements (NAI), which controls the company through its class A shares.
The investment will help NAI pay down its revolving loan and recent term loan borrowings, according to a press release. Paramount has recently battled layoffs, business restructurings, and a dividend cut that sent the stock plummeting nearly 30%.
“Our expanded partnership with BDT & MSD reflects our strong belief in Paramount’s ability to deliver value to all shareholders,” Redstone said in the release.
“NAI has conviction in Paramount’s strategy and execution, and we remain committed to supporting Paramount as it takes the necessary steps to build on its success and capitalize on the strategic opportunities in our industry,” she continued.
Shari Redstone is president of her family’s holding company National Amusements, which controls Paramount. (Photo by Evan Agostini/Invision/AP, File)
Paramount has long been viewed as a potential acquisition target due to its small size relative to competitors. The company boasts a current market cap of about $10 billion, compared to Disney’s (DIS) $161 billion and Netflix’s (NFLX) $176 billion.
Paramount CEO Bob Bakish hinted more media M&A was on the horizon while speaking at a UBS media conference late last year.
“Consolidation has been the rule in business for a long time, certainly been the rule in media,” he said at the time. “So, it’s hard for me to bet on anything other than consolidation will happen in the future.”
In February, shortly following the announcement that Paramount would be folding Showtime into Paramount+, The Wall Street Journal revealed the company had turned down a more than $3 billion offer from executive David Nevins to buy Showtime.
Nevins’ proposal was one of many offers the company had received for Showtime over the past several years, the Journal said. The network, which is home to popular shows like “Billions” and “Yellowjackets,” was said to be a key driver in unlocking value for the media giant.
In addition to the Showtime offer, the company has tip-toed around recent reports of a potential sale of the company’s BET Media Group, which includes cable channels BET and VH1, after producer Tyler Perry and media mogul Byron Allen reportedly expressed interest in purchasing a majority stake.
FILE – Berkshire Hathaway Chairman and CEO Warren Buffett smiles during an interview in Omaha, Neb., May 7, 2018. Buffett recommitted to his favorite bank stock, Bank of America, during the first quarter while dumping two other banks as part of a number of moves in Berkshire Hathaway’s stock portfolio. Berkshire provided a quarterly update on its U.S. holdings Monday, May 15, 2023, in a filing with the Securities and Exchange Commission. (AP Photo/Nati Harnik, File)
Warren Buffett’s Berkshire Hathaway (BRK-B) boosted its stake in Paramount Global in the fourth quarter of 2022, purchasing an additional 2.4 million shares worth more than $40 million, according to a regulatory filing released on February 14, pushing its stake in the company north of 93 million shares.
Another Buffett connection lies in BDT & MSD Partners’ Chairman and Co-CEO Byron Trott — long known as a trusted advisor of Buffett.
“Paramount has an incredible legacy, underpinned by its industry-leading content and media assets. We believe strongly in the value creation opportunities ahead for the company and its shareholders,” Trott said in Friday’s release.
Still, not everyone is convinced a sale is on the horizon — at least not right away.
Wells Fargo analyst Steve Cahall suggested on Tuesday that Redstone’s “conviction” in Paramount’s strategy implies “a break up of the company is not likely anytime soon.”
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
