According to a Wall Street Journal report, leading media, streaming, and entertainment giant Paramount (NASDAQ:PARA) has turned down a $3 billion offer for Showtime, its premium channel and streaming service offering series, movies, sports, comedy, documentaries, and special events. Analysts are not enthusiastic about PARA stock.
Per the report, Paramount’s former executive David Nevins offered to acquire Showtime for over $3 billion. Private equity firm General Atlantic backed Mr. Nevins’ offer.
Showtime has garnered investors’ interest of late. Besides for Mr. Nevins, another former Showtime executive, Mark Greenberg, made a bid to buy it.
While Paramount’s executives turned down these offers, the company recently announced that it would be integrating Showtime into Paramount+ across the streaming and linear platforms. Through the move, Paramount plans further scale its streaming offerings in 2023. Paramount expects its strategic measures to provide a solid foundation for earnings and free cash flow growth in 2024.
PARA plans to increase the price of its premium tier Paramount+ offering, including Showtime. This will likely support its revenues and drive the blended average revenue per user.
While PARA is optimistic about future prospects of the combined Paramount and Showtime offering, let’s look at what analysts recommend.
Is PARA a Buy, Sell, or Hold?
The weak advertising market and increased competitive headwinds could continue to negatively impact PARA’s financials. Its CEO Bob Bakish stated during the Q4 conference call that the softness in the ad market and increased investments in the streaming business have affected its earnings. It’s worth highlighting that PARA has missed the Street’s estimates in the past two quarters.
Given the short-term challenges, PARA stock has a Hold consensus rating on TipRanks, reflecting four Buy, three Hold, and five Sell recommendations. Further, analysts’ average price target of $22.56 implies 5.32% upside potential.
