Paramount Skydance kept at 'sell' by UBS despite Warner Bros Discovery deal clearing final hurdle
UBS kept its 'sell' rating on Paramount Skydance (PSKY) despite the clearance of its Warner Bros Discovery acquisition. The deal is expected to close by September 30, avoiding $650M quarterly fees. UBS noted behavioral settlement terms, film release targets, and risks like high leverage and TV exposure. It set a price target based on 6x standalone OIBDA, with pro forma EBITDA multiples of 8x and 6x for 2027 and 2028.
How this was made
The 30-second read
Why it matters
The settlement removes the last major legal barrier, moving the transaction toward a late‑September close, but UBS highlights financial and operational risks.
Market read
The cleared settlement advances a major media merger, affecting valuation and risk assessments for both PSKY and WBD and their sector peers.
What to watch
Potential regulatory scrutiny of the combined company's streaming and news assets could delay integration.
Background
Paramount Skydance and Warner Bros Discovery have been negotiating a merger, hindered by antitrust and state attorney general lawsuits.
Ticker impact
UBS kept a 'sell' rating on Paramount Skydance (PSKY) after the settlement cleared the final hurdle for its Warner Bros Discovery acquisition.
Potential short-term pressure as investors digest the sell rating despite deal nearing close.
The settlement removes a major legal obstacle, yet UBS highlights leverage and integration risks, indicating limited upside.
Paramount Skydance's acquisition of Warner Bros Discovery (WBD) is expected to close by September 30 after the settlement.
WBD may see modest upside if the market views the deal as value accretive, but fee risks could cap gains.
The acquisition is near completion, but the fee structure and required film output create uncertainty.
Market effects
Consolidation in the media and entertainment sector could pressure peers with similar legacy TV exposure.
U.S. media stocks may react to the deal's progress and fee risk structure.
The transaction influences global content production dynamics and cross‑border media investments.
Counterpoint
Despite the cleared legal hurdle, the high leverage and fee penalties suggest the deal may be overvalued.
Key entities
- CompanyParamount Skydance Corp
Acquirer in the pending merger with Warner Bros Discovery.
- CompanyWarner Bros Discovery
Target of the acquisition by Paramount Skydance.
- AnalystUBS
Maintains a sell rating on PSKY despite the settlement.
