PSKY, Welcome to Wall St: Analysts Warn of ‘Risk Running This Into the Ground’
They tell me their worries on Day 1 of the company’s trading on NASDAQ
As the newly merged Paramount Skydance makes its debut today (Aug. 7) on the NASDAQ under the ticker PSKY, the financial community is responding with deep skepticism and guarded curiosity. While some welcome the potential for change under fresh-faced 42-year-old CEO David Ellison, others see a familiar story of tech ambition crashing against the realities of legacy media.
Ellison, the son of Oracle founder Larry Ellison — presently the second wealthiest man in the world with a fortune of $307 billion, according to the Bloomberg Billionaires Index — has established credibility in Hollywood through his leadership of privately-owned Skydance Media, which co-produced and financed the Mission: Impossible movie franchise and streaming hits like Reacher. He has also brought cloud computing and AI into animation workflows. But Skydance lost money in the first nine months last year, and selling Wall Street on a big turnaround story that combines high-concept tech with aging media assets won’t be easy. A representative for Paramount Skydance declined to comment.
Inside and outside of Paramount, Hollywood stakeholders have waited for more than a year for the merger to close as questions about its future programming and dealmaking plans swirled. Though criticism was rampant over Paramount’s $16 million settlement with Trump over his 60 Minutes lawsuit, as well as the president’s statements that he also had struck a side deal with Ellison for post-merger PSAs for his causes, there was nonetheless widespread industry relief after the FCC’s Brendan Carr approved the merger on July 25.
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But what Hollywood wants and what Wall Street wants are often in conflict.
“There’s no growth in sight, the business models are under siege, and nobody wants to really own them,” says Doug Creutz, senior research analyst at TD Cowen, of the traditional media sector. While Paramount executives may now lean into a tech-forward narrative, with tech companies able to achieve higher valuations, Creutz warns, “At the end of the day, you have to make something people want to watch.”
Ahead of the merger closing today, just two analysts — Benchmark and Guggenheim — had a “Buy” rating on Paramount, while the consensus price target was hovering at $11.70, per MarketBeat. Compare that to Netflix’s 20+ “Buy” ratings.
Along with Creutz, I spoke to analysts including Seaport Global Partners’ David Joyce and ValueEdge Advisors’ Nell Minow, plus other media and finance insiders to take the pulse of expectations for the new company.
As Hollywood crosses its fingers for success, The Street feels little nostalgia for the era of McCarthy Salads, Chasen’s and the glory days of Robert Evans.
And where the stock price goes after today will be the driver behind decisions around a strategy of growth vs. ongoing cutbacks, what to do with streaming, and what kinds of movies make it across the finish line, and — OMG — what to do with those cable assets:
Today, what Wall Street’s saying on Day 1:
Four big challenges looming for PSKY: Analysts break down the major threats, from cable decline to NFL uncertainty
Wall Street doesn’t believe the hype: Last summer’s rosy forecasts? Already outdated, say the pros
$2 billion in “synergies” = big cuts ahead: Some warn Ellison could gut the company too fast
“A cozy board,” one institutional adviser says: Insiders run the show, and governance critics are raising red flags
Employee morale is a business risk: After a year of chaos, rebuilding trust is more than just a culture fix
Tech dreams vs. media realities: Ellison’s cloud-forward vision faces old-school headwinds, and Wall Street is watching closely
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