Paramount stock tumbles after Arete downgrade on debt concerns

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Summary · why it matters

Paramount Skydance shares fell 8% Thursday after Arete Research downgraded the media company to sell from neutral and slashed its price target to $2, a Street low, citing concerns about the debt burden from its planned merger with Warner Bros. Discovery. The downgrade follows Paramount's proposed acquisition of Warner Bros. Discovery, which is set to close in September 2026 and would create a company with $86 billion in gross debt and leverage of six times, according to Arete analyst Pierre-Marie d'Ornano. D'Ornano commented that media mega-mergers are tough and questioned whether management has the experience to run a highly levered balance sheet. The analyst noted that large media mergers have a challenging track record, with estimates frequently missed due to ongoing linear declines, lofty streaming expectations, and hard-to-manage capital structures. Arete reduced its price target on Paramount to $2 from a previous level, compared to the stock's close of $9.75 on Wednesday.

Impact on stocks 2

Communication Services▼ · 2 stocks
Warner Bros Discovery Inc
WBD
▼ NegativeCapitalrelevance

The merger with Paramount creates a combined entity with $86 billion gross debt and high leverage, raising concerns about Warner Bros. Discovery's financial health.

Off-coverage companies 1

Arete ResearchPrivate± Mixed
relevance

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