Paramount (PARA, PARAA) has reportedly agreed to the terms of a deal to merge with Skydance Media. MoffettNathanson Senior Research Analyst Robert Fishman joins Catalysts to break down how investors should digest the move.

The media giant announced several new measures at its annual meeting, from job cuts to streaming opportunities, which Fishman explains comes at "an awkward time" amid the Skydance deal uncertainty. The company's controlling shareholder, Shari Redstone, ultimately has the final say on the deal, Fishman explains: "It's possible that there's a deal in place already, so it should be known within the next few days — I think is what the reporting suggests — whether Shari wants to go forward or not. But this alternative scenario with the office of the CEO and the updated plan that was laid out today would probably be the marching orders if Shari decides not to go forward with Skydance for whatever reason."

He notes that regardless of a deal, Paramount should remain focused on cost-cutting measures "given the pressures of the revenue and cord cutting, and even more so, advertising recently as secular challenges for the entire TV ecosystem continue to emerge and get worse." He reiterates that the annual meeting has laid out the company's plans if the deal falls through. However, he sees the deal crossing the finish line as a "more likely" outcome.

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This post was written by Melanie Riehl

Video Transcript

A big day here for Paramount after news of their potential merger seemingly coming to an end after they reportedly reached a deal.

But what does this mean for investors moving forward?

We have Robert Fishman, Mo Na and senior research analyst joining us, I also joined by Yahoo says Alexandra Canal for this interview, Robert, thank you so much for being here.

I mean, there's no shortage of news from Paramount this morning, right?

We're hearing news about job cuts, streaming opportunities.

Also this potential merger, what sticks out to you as the most important piece for investors to be watching?

Well, I guess the obvious answer is what does sherry decide about the future of the company given the proposed um new updated terms that, that are on the table with the Sky Dance's bid.

So then Robert, you know what we heard this morning from the shareholder meeting mad.

He was just mentioning it.

We have $500 million in cost savings, a potential streaming joint venture down the line.

Do any of those initiatives excite you or is it all a mute point?

Depending on what happens with this deal?

Yeah, I mean, I'd say it's a very confusing time and an awkward time probably to, to be having this annual meeting today given the uncertainty about the future of the company.

Um and how real this plan is and, and whether we'll actually see it, I think to your point because we, we don't know uh how long this is actually gonna, gonna take place and and what the the real future of the company is gonna be if Sherry ends up deciding to uh go forward with the, with the Sky Dance deal as early as the next couple of days.

So, um it's unclear as far as where this plan is actually gonna be implemented and how much this uh future plan might be different as part of a new, new leadership and there's a town hall with employees that's set for tomorrow.

Do you expect a lot of the same in terms of what the plan is and the strategy go forward, move that we heard from management today on the earnings call on the um annual shareholder meeting to take place at that town hall tomorrow.

Yeah, I mean, again by tomorrow, for all that we know, um it's possible that that there's a deal in place already.

So it, it, it should be known within the next few days I think is, is what the reporting suggests, whether Sherry wants to go forward or not.

But this alternative scenario with the office of the CEO and the updated plan that that was laid out today would, would be the marching orders if Sherry decides not to go forward with Sky Dance for whatever reason, if they do go forward though, how likely is it that some of the plan laid out today would still be in place moving forward?

Or should investors anticipate that what they talked about today would sort of be off the table and we'd get a completely new round of insights for the company moving forward if that goes through.

I mean, I'm sure some of it would be um at least considered as far as the the new plan for the company because clearly the company needs to be focused on additional cost cutting, given the pressures of the revenue and port cutting and even more so advertising recently as secular challenges for for the entire TV ecosystem continue to emerge and get worse over over the coming months and quarters.

So given the shift in landscape, of course, the company needs to be focused on cutting additional costs out of that system so that it can help offset the revenue pressures.

But the real question here is the future of streaming and, and what they decide to do with Paramount Plus.

And if uh they want to go forward with some sort of new JV type of partnership with Paramount Plus or look to keep Paramount Plus going and uh I guess try to license content in a different way than, than what they've been doing previously and Robert, let's talk about that Sweet and Sky Dance deal based on the latest reporting 8 billion in total equity.

We have a $15 premium for those non voting shareholders.

A cash injection of one point 5,000,000,002 billion for shari for her share of national amusements.

Do you a view?

View, this is more attractive to those non voting shareholders, especially because that was really the crux of the issue leading up to this week.

Well, I guess the, the question would be more attractive relative to what, um and so relative to the, the prior reporting of, of the initial deal, I, I think the answer is clearly yes, um relative to other proposed deals out there.

That that's uh, I guess a little bit less clear, but I think it does seem to be the case that this is the deal on the table right now.

And uh again, if the reporting is correct, the special committee has essentially, um, already approved it and, and now it's up to Sherry, whether she wants to move forward or not.

I know you don't have a crystal ball.

I know we don't know ultimately what's going to happen.

But if this deal does not go forward, one, would you be surprised?

And two does that mean we shouldn't expect any type of deal to happen this year?

And that Paramount is just gonna sit back and try to correct their problems internally Well, I think what, what you heard today is essentially the plan as if there is no deal going forward.

And, um, again, there, there's really only one person can, that can decide that as far as the crystal ball goes.

So ultimately, this is Sherry's choice and, and Sherry gets to decide, given her voting control of the company, uh and the future of the company and which direction she wants to go.

But as far as what the plan looks like without it, I think that that's what the initial vision that was laid out today.

And then we're going to be getting more details in the coming months if, if there is no deal.

But Robert to Ali's question, what percentage would you put on the likelihood of a deal going forward here?

The percentage question.

Um So I would say, uh you know, right now, it does seem more likely than not that, that uh the Sky Dance deal would go forward.

Um Again, that's all based on the, the public reporting and seemingly what Sherry wants to do as far as that, the taking the future of the company and putting it in someone else's hands that will not completely break up the company.

I think that they're probably going to be open to assets and, and explore different possibilities here.

But I do think um at least again, based on what has been publicly reported that Sherry is aligned with the Ellison vision and Sky dance vision in terms of what they want to do with the company.

All right, Robert, I appreciate you playing ball with my percentage question there.

Thank you so much for joining us, Robert Fishman.

He is with Moffett Nhien.

He's their senior research analyst and of course, our very own Yahoo finances Alexander Canal as well.