The idea of Skydance buying media company Paramount (NASDAQ:PARA) isn’t that big of a surprise, really. Even the idea of Sony (NYSE:SONY) doing the job instead is pretty rational. But what got Apollo Global Management (NYSE:APO) involved in the hunt? Apollo’s CEO recently explained, and the news sent Paramount up nearly 4% in Monday afternoon’s trading.
Marc Rowan, Apollo Global’s CEO, revealed that Apollo Global is interested in value, which can often be found in areas that are experiencing “significant change.” And that’s actually a pretty good way to describe Paramount, at least right now. With streaming video coming on, the linear television concept falling apart, and Paramount having some evergreen properties that produce reliable cash flow, that represents a terrific opportunity for Apollo Global.
“Background Noise”
Meanwhile, Paramount continues to operate as a business, and interestingly, some within the company consider the merger talks as little more than “background noise.” One of those is John Halley, president of advertising for Paramount, who recently started up some upfront presentations to attract new advertisers ahead of new season launches. An upfront presentation is when media companies present their upcoming content to advertisers in advance so they can secure advertising spots.
In fact, reports note that Halley is using the merger talks as a way to “…engage with them (advertisers) on the topic.” That’s a strategy Halley is out to use more often; Paramount stayed out of the traditional Upfront season and instead moved to focus on the relationship between advertisers and Paramount.
Is Paramount Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on PARA stock based on six Buys, eight Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 19.94% loss in its share price over the past year, the average PARA price target of $13.29 per share implies 0.67% downside risk.
