Paramount shares jumped more than 10% on Tuesday following the release of the company’s third-quarter earnings report and a strategic update from CEO David Ellison and his management team. The stock climbed above $16.90, reaching its highest level in two weeks midway through the trading session. However, trading volume on the Veterans Day holiday was lighter than average.
Since the August 7 close of the Paramount-Skydance merger, shares have surged nearly 50%, though they have remained relatively flat in recent weeks. Paramount’s quarterly revenue came in slightly below Wall Street analysts’ expectations, alongside other less-than-stellar data points in the report. Still, with the merger timing meaning current management wasn’t fully in control for the entire quarter, investors focused more on executive commentary about strategy than on the financials themselves.
During the earnings call on Monday, Ellison shared insights aimed at intriguing investors. While acknowledging possible merger and acquisition (M&A) opportunities, he refrained from discussing specific targets. “We really look at this as ‘buy versus build’ and we absolutely have the ability to build,” he said.
Notably, shortly after finalizing the Skydance merger, Ellison and his team have made three offers to acquire all of Warner Bros. Discovery (WBD). WBD, for its part, has confirmed it is also considering interest from outside parties in its studio-and-streaming division and is still weighing plans to formally split into two companies.
Paramount also raised its cost savings target from the Skydance deal, increasing the goal to $3 billion, up from $2 billion. In addition, the company announced plans to significantly ramp up its film and TV output. On the streaming front, Paramount has made bold moves by adding UFC bouts without charging subscribers extra, using this value-add to justify an upcoming price increase scheduled for January.
Wall Street analysts responded to the earnings report with generally cautious, measured reactions, emphasizing the long timeline typically involved in M&A activity. A strategic chess game is unfolding among Ellison, WBD CEO David Zaslav, and other interested players like Comcast and Netflix. Even once more clarity emerges in the coming weeks and months, any proposed combination would introduce further uncertainty and transition.
Jessica Reif Ehrlich, an analyst at BofA Securities, captured the mood in her client note titled “Sky High Ambitions But Patience Required is Paramount.” Despite rating the stock as “underperform” (sell), she raised her 12-month price target from $11 to $13. She cautioned, “There are still many unknowns on the strategic initiatives the company has undertaken and, as evidenced by prior large combinations, restructurings often take years to implement.”
Doug Creutz of TD Cowen, who holds a “hold” rating on the stock, acknowledged that the management team did a “credible job” outlining their vision. “Unsurprisingly,” he added, “the plan is another variant on the old standby ‘cut lots of expenses and make better content.’ Execution will be critical.”
Robert Fishman of MoffettNathanson argued that the newly combined company is “off to a promising start.” However, he noted concerns about Paramount’s plan to increase content spending by $1.5 billion annually alongside boosting Paramount+. “The question that hangs over this approach,” Fishman wrote, “is the level of investment required for the company’s direct-to-consumer (DTC) offering to truly compete with the likes of Netflix, Disney, and Amazon – all of which hold a considerable lead in global scale, content output, and engagement.”
Fishman believes that to accelerate its DTC growth, M&A is likely the most viable path Paramount Skydance will pursue. He maintains a “neutral” rating on the stock.
Similarly, Guggenheim’s Michael Morris, also neutral on Paramount shares, highlighted the company’s simultaneous increase in cost savings projections and lowering of profit guidance, likening it to “media merger déjà vu.” Unless a WBD transaction materializes, he wrote, Paramount “is running a very similar playbook to that of Warner Bros. post the Discovery combination in 2022, where optimism and increased synergies yield lower financial estimates.”
As the strategic moves unfold, Paramount’s journey remains one to watch, with execution and M&A developments likely to define its trajectory in the months ahead.
https://deadline.com/2025/11/paramount-shares-jump-q3-earnings-david-ellison-comments-1236614077/
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