Paramount is an impaired asset with a broken deal process, according to top advisor to Disney CEO

Paramount is an impaired asset with a broken deal process, according to top advisor to Disney CEO

by Paramount (FOR) the future seems as uncertain as the ending of a bloody, gutsy horror film.

“I will say that Paramount, as a company, is pretty weakened at this point,” the Candle Media co-founder said. Kevin Mayer told Yahoo Finance during the Cannes Lions Festival this week.

Mayer is credited with leading the launch of Disney+ and is a close advisor to Disney (SAY) CEO Bob Iger on succession planning. He was also briefly the CEO of TikTokafter leaving the Mickey Mouse company.

“Maybe it will be resurrected, but its transaction process is broken and its business is not doing very well,” Mayer added.

The resurrection promises to be difficult for Paramount.

Last week, Shari Redstone’s National Amusement, Paramount’s majority shareholder, scuttled a deal with David Ellison’s Skydance. This last-minute decision surprised those involved in the negotiations and shareholders.

Paramount is an impaired asset with a broken deal process, according to top advisor to Disney CEO

The reported reasons for the change of heart vary.

This ranges from Redstone’s inability to sell his father Sumner Redstone’s inheritance to Ellison’s billionaire father, Oracle (ORCL) founder Larry Ellison, swinging his sharp elbows in the final days of negotiations.

Redstone was also reportedly concerned about the risk of litigation arising from the Skydance tie-up.

“David Ellison and Skydance are great guys, really smart guys. I’m very surprised that in the end Shari didn’t decide to take that option,” Mayer said. “I think she’ll hopefully know what to do here. But right now it’s a big, weird problem.”

This comes as previous suitors Warner Bros. Discovery (WBD), and a joint effort by Apollo Global Management (APO) and Sony (SONY), were also discarded.

The company is now entering turbulent waters, after ousting its former CEO Bob Bakish at the end of April. It is now led by an office of the CEO, consisting of Brian Robbins, Chris McCarthy and George Cheeks.

The trio is widely expected to begin a new round of layoffs to shore up Paramount’s finances. At the company’s June 4 annual meeting, Cheeks highlighted the opportunity to reduce costs by $500 million, in addition to significant reductions made since the Viacom-CBS merger closed in 2019.

Paramount may also consider creating a streaming joint venture with Comcast (CMCSA) to strengthen profitability and engage in a process of selling the BET, MTV and/or VH1 networks, speculates Christian Crosby, analyst at JP Morgan.

The company reported adjusted operating losses in its direct-to-consumer ($286 million) and theater ($3 million) divisions in the first quarter. Profits rose 11% in the television sector, thanks to strong advertising spending for the Super Bowl.

The stock has lost 80% of its value over the past five years, according to data from Yahoo Finance. Its market capitalization of $6.9 billion is light years ahead of Netflix’s (NFLX) 292 billion dollars.

“While we continue to believe that Paramount maintains an attractive collection of assets, secular and cyclical headwinds should remain a challenge to near-term fundamentals,” Bank of America analyst Jessica Reif Ehrlich said in a note. customer.

Brian Sozzi is the editor-in-chief of Yahoo Finance. He is also the host of the show “Opening offer” Podcast. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Any advice on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com. Are you a CEO and want to participate in Yahoo Finance Live? Email Brian Sozzi.

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