Paramount Skydance Corporation (PSKY) investors are facing another major development as the company considers whether selling CNN could help clear a key regulatory obstacle to its proposed acquisition of Warner Bros. Discovery (WBD).
Paramount and WBD first announced a definitive merger agreement on Feb. 27, under which Paramount agreed to acquire WBD for $31 per share in cash, valuing the transaction at approximately $81 billion in equity value and $110 billion in enterprise value. The deal was initially expected to close in the third quarter of 2026, subject to regulatory and shareholder approvals.
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The transaction has since cleared a number of regulatory hurdles, including approvals in several international jurisdictions. However, a major obstacle remains in the United States, where California and 11 other states have challenged the merger on antitrust grounds. Paramount Chief Legal Officer Makan Delrahim said last week that the company is considering all strategic options, including potentially selling CNN, to resolve the litigation.
The potential divestiture highlights the increasingly complex path toward completing Paramount’s acquisition of WBD. The company also faces a $0.25-per-share ticking fee, accruing daily after Sept. 30 if the transaction remains incomplete.
On the other hand, Paramount Skydance has escalated its legal battle, asking a U.S. judge to require 12 states to post a $1.88 billion bond to cover potential financial losses stemming from the litigation and resulting delays.
While selling CNN could help address regulators’ concerns and improve the chances of closing the deal, it would also mean Paramount potentially giving up a major WBD asset before the merger is completed.
Investors are now left with the question of whether a CNN sale would ultimately strengthen the economics of the transaction or reduce the strategic value Paramount expects to gain from combining with WBD.
About Paramount Skydance Stock
Headquartered in New York, Paramount Skydance is a global media and entertainment company formed in Aug. 2025 through the merger of Paramount Global and Skydance Media. The company’s portfolio spans film and television production, broadcasting, streaming and digital entertainment, with major brands including Paramount Pictures, CBS, CBS Sports, Nickelodeon, MTV, BET, Comedy Central, Paramount+ and Pluto TV. Paramount Skydance has a market cap of $11.5 billion.
PSKY stock has staged a notable short-term rebound, although the broader performance remains under pressure. PSKY has gained 10.5% over the past five trading sessions, extending a recent winning streak that has provided some relief after a prolonged decline.
Despite the recent momentum, the stock remains down 22.65% year-to-date (YTD) and 23.22% over the past 52 weeks.
Over the latest five trading sessions, PSKY has continued to move higher, supported by investor optimism surrounding Paramount Skydance’s proposed acquisition of Warner Bros. Discovery and progress toward satisfying regulatory conditions. Paramount announced on Aug. 14 that it had secured regulatory clearances in nearly 70 countries, adding to the recent positive sentiment around the deal.
www.barchart.com The stock is currently trading at 0.39 times sales, which is a discount compared to the sector median.
Mixed Q2 Results
Paramount Skydance reported its second-quarter 2026 results on Aug. 4. Paramount generated $6.9 billion in Q2 revenue, a 1% increase from the prior-year quarter. Adjusted EBITDA increased 27% year-over-year (YOY) to $1.1 billion, reflecting stronger profitability and the impact of cost reductions. However, net earnings were about $41 million, or $0.04 per share, compared with $57 million, or $0.08 per share, in the year-ago period.
Its DTC revenue increased 9% YOY, supported by growth in Paramount+ subscriptions and higher average revenue per user. Paramount+ ended the quarter with 81.6 million subscribers, up about 2 million sequentially and roughly 4.8 million from a year earlier. Management said retention reached its best level ever, while total viewing hours increased at a double-digit rate. DTC profitability also continued to improve substantially, reinforcing management’s strategy of shifting the business toward streaming.
Studios revenue rose approximately 16% YOY, while adjusted EBITDA reached $36 million, compared with a loss in the prior-year quarter. The improvement reflected a stronger theatrical and licensing slate and continued cost discipline. Meanwhile, TV Media remained the key weakness, with revenue declining 9% YOY.
Operationally, management said the company was tracking toward more than $2.7 billion in run-rate efficiencies by year-end, with the broader Skydance-Paramount combination expected to generate more than $3 billion in efficiencies. Paramount also continued integrating its streaming platforms, with Paramount+, Pluto TV and BET+ targeted for technology convergence by the end of summer. The company highlighted strong engagement from sports, including UFC and the World Cup, while expanding its 2026 theatrical slate to approximately 15 films.
Meanwhile, Paramount increased its 2026 adjusted EBITDA outlook to $3.8 billion-$3.9 billion, and expects free-cash-flow conversion of at least 10%. It maintained its $30 billion revenue outlook, implying roughly 4% YOY growth.
PSKY provided third-quarter 2026 revenue guidance of $6.95 billion to $7.15 billion, representing 4% to 7% YOY growth, while adjusted EBITDA is expected to range between $875 million and $975 million.
Analysts forecast EPS of $0.58 for fiscal 2026, followed by a 34.5% rise to $0.78 in 2027.
What Do Analysts Expect for Paramount Skydance Stock?
TD Cowen maintained its “Hold” rating on Paramount Skydance on Aug. 5, while cutting its price target to $8 from $13. The move followed Paramount’s Q2 results and reflected greater uncertainty around the company’s proposed Warner Bros. Discovery acquisition.
Also, Raymond James reiterated its “Market Perform” rating on Paramount Skydance on Aug. 5, following the company’s second-quarter earnings report.
Overall, PSKY has a consensus “Hold” rating. Of the 20 analysts covering the stock, one advises a “Strong Buy,” one suggests a “Moderate Buy,” 12 analysts are on the sidelines, giving it a “Hold” rating, one offers a “Moderate Sell,” and five recommend a “Strong Sell.”
PSKY’s average analyst price target of $10.57 indicates an upside of 2.03%, while the Street-high target price of $16 suggests that the stock could rally as much as 54.4%.
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www.barchart.com On the date of publication, Subhasree Kar did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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