Paramount (NASDAQ: $PARA) Soars Then Falls 5%+ After WSJ Report of $11B Bid From Apollo

Paramount Global (NASDAQ: $PARA), formerly known as ViacomCBS, is a leading American multinational mass media group and multi-industry entertainment company. Headquartered in Midtown Manhattan, NY, it owns various assets, including Paramount Pictures, a major film studio, several television networks, and streaming platforms.

Apollo’s $11 Billion Bid

On Wednesday, March 20, 2024, Apollo Global Management, a private equity firm, offered $11 billion for Paramount Global’s film and television studio, according to an exclusive WSJ report, which cited people familiar with the bid but not authorized to comment. Following the news, the stock surged by 11%+ on Wednesday.  

This film studio is considered a prized asset of the Paramount Global conglomerate with blockbuster movies like “The Godfather,” “Breakfast at Tiffany’s,” “Mission: Impossible,” and “Transformers,” and it has received numerous offers from all around the world.

Furthermore, the Financial Times reported that Shari Redstone, the controlling shareholder of the media conglomerate, was skeptical about Apollo’s offer for the studio. Redstone is instead interested in another billionaire, David Ellison of Skydance Media.

Since 2019, when Paramount Global was formed via a merger of Viacom and CBS, the company’s value has fallen from $17 billion to $7.7 billion as the global entertainment business has deteriorated. Following the report on Apollo’s bid, the company’s market cap rose to $8.23 billion, below Apollo’s $11 billion offer price. 

Paramount to Inaugurate Premium Plans

On March 19, 2024, the company announced it would launch ad-supported streaming services across Canada and Australia at higher prices. The premium version will be released across Europe, expanding its international business.

The media conglomerate’s expansion comes after unexpectedly posting a profit for the quarter in late February, driven by gains in streaming. Paramount+, the company’s main streaming service, saw a surge of 4.1 million subscribers in the fourth quarter, up from 2.7 million in the previous quarter.

The pricing for the premium package for Canada will be C$6.99 and A$6.99 in Australia. These plans will be launched in April for Canada and June for Australia. According to Paramount, the plans will be released for Europe this month, starting in France for 10.99 euros ($11.93).

In February, Paramount announced plans to lay off approximately 800 employees, around 3% of the workforce.  

PARA Share Price Performance

On Thursday, March 20, PARA shares rose to $12.51, with a gain of 11.80% from the previous closing of $11.19 on the report of Apollo’s bid. However, during the Friday, March 21, trading session, the stock fell 5.12% to $11.88 during the afternoon session following reports that Paramount Chair Shari Redstone was not interested in Apollo’s bid. 

At the time of writing, the market cap is $8.23 billion, with an average trading volume of 17,174,605. The stock is up by 0.59% in the past 30 days. However, it has lost 17.36% of its value year-to-date and is down 44% in the past 12 months. 

Should You Buy $PARA?

The company has shown significant revenue growth for fiscal 2023 with a gain of 69% Y/Y and also secured 67.5 million subscribers. Paramount is also taking measures to launch its premium plans around Canada and Europe, which could fuel a stock surge in the future.

The current offer from Apollo to purchase its film and TV studio business is worth more than its entire market cap, which is in line with various analysts’ sentiment that PARA stock is undervalued. For investors willing to take the risk on the long-term value realization of the stock, PARA is a great addition to your portfolio. 

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