MEDIA

Hollywood’s Largest Deal of the Year Has Finally Landed On the Big Screen: Paramount Is Merging with David Ellison’s Skydance

No, that wasn’t the latest “Succession” season you were watching over the past six months — it was the Paramount ($PARA) deal drama, and it has (finally) come to an end. The entertainment giant has spent most of 2024 sifting through offers, redlining term sheets, and negotiating its future. This weekend, it finally signed on the dotted line.

Done deal: Movie and TV giant Paramount has agreed to merge with David Ellison’s Skydance Entertainment, marking the end of an era for the 112-year-old family-owned company and one of Wall Street’s worst-performing stocks. The $8B deal will take the company private under new management and private equity suitors, just weeks after a tentative agreement was called off by the company’s largest shareholder. But a little money and a few contract changes made it happen.

• Over the last five years, $PARA has fallen 78% due to massive losses, prompting the family ownership to consider selling the business.

• It was a hot commodity, attracting competitive offers like a $26B bid from Sony and Apollo and a $14.3B offer from media entrepreneur Byron Allen.

Of Paramount Importance

Assuming no surprises, the deal is expected to close in 2025. Skydance’s David Ellison is anticipated to become the company’s CEO, and former NBCUniversal CEO Jeff Shell will serve as President. With their media and tech experience, analysts are optimistic about the company’s future under new leadership.

• Ellison and Shell say that the newly organized Paramount will be able to “double down on core competency” of film and TV while embracing technology and new resources.

• After losing $563M in the first quarter of 2024, the revamped Paramount aims to cut more than $2B in costs — with over 50% of efficiencies expected in the first year.

Streaming struggles: Paramount might soon have new leadership, but it’ll still face old problems, especially with its streaming platform, Paramount+. Despite boasting over 70M subscribers, the platform has been one of the company’s biggest losers. This has pushed the company to raise the price of its streaming service by $1 to $2 per month. However, charging more is a band-aid solution for bigger problems, including the future of its linear TV business, film business, and 22K employees.

PARTNERED WITH MARKETBEAT

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High-yield stocks can be attractive, but they often signal danger. The company's dividend might stop growing, or worse, be cut, reducing your income and the stock's value.

• 5% plus yields might seem like an easy way to boost investment income, but they can be traps.

• In a world where 10-year treasuries yield 3%-4%, the market rarely offers a free lunch.

Get the list of dividend stocks to avoid

LARGECAP RECAP

💸 Earnings Season Kicks Off This Week, And The Stakes Couldn’t Be Higher

Report cards are due on Wall Street — and it’s time to see if US companies will rise to the occasion or give the doomers fuel for their downturn forecasts. Analysts have forecasted a robust 8.8% year-on-year earnings growth for S&P 500 firms in the second quarter, the highest anticipated increase since early 2022, according to FactSet. Big banks like JPMorgan Chase ($JPM) and Citigroup ($C) will kick us off on Jul. 12 — with Big Tech companies like Microsoft ($MSFT) and Alphabet ($GOOG) reporting on Jul. 23. But why does this earnings season matter?

• Those hefty 17% gains in the S&P 500 this year are riding on companies beating expectations — especially the largest 10 companies in the S&P 500, which make up a record 37% of the index’s market cap.

• Analysts expect the communication services and healthcare sectors to report an 18% and 17% increase, respectively, while the materials sector is forecasted to experience a 10% decline (WSJ).

Buckle up: Charles Schwab’s Liz Ann Sonders believes earnings will need to “catch up to where valuations are” to justify current valuations, which are sitting above the 5-year and 10-year averages of 19.3x and 17.9x. Banrion’s Victoria Bills warns, “You’ll see a correction in stock prices if they’re not able to beat out their earnings projections.” So investors, hang on — it’s going to be an interesting next few weeks.

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Markets & Economy

AI dominates VC returns: Artificial intelligence startups made up over 40% of new American unicorns in the first half of 2024, driving over 60% of valuation growth. [Read]

US tech hubs get funding boost: The Biden administration awarded $504M to 12 US regions to create tech hubs focusing on biomanufacturing, clean energy, and AI. Beneficiaries include western Montana, southern Florida, and upstate New York. [Read]

French election rattles markets: French stocks and the euro rallied after no party won a majority in the national elections, easing fears of debt increases but raising concerns of political gridlock. [Read]

Business & Wealth

Hurricane Beryl batters Texas coast: Hurricane Beryl, now Category 1, hit Texas, causing widespread damage, power outages for 2.6M people, two reported deaths, and ongoing flood rescues. The storm will move through the Midwest over the coming days. [Read]

Vanguard faces a customer service crisis: The firm’s new CEO was greeted by widespread customer dissatisfaction due to tech glitches and limited hours despite low fees. Vanguard ranked last for satisfaction among major brokerages. [Read]

Heatwave fuels western wildfires: A record heatwave ignited 24 large fires across western US states, threatening homes and prompting evacuations. Over the past two decades, human-caused climate change has doubled the frequency and intensity of global wildfire events. [Read]

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DIGIT OF THE DAY

Americans Lost Over $500M to Fake Job Scams in 2023

Scammers are luring job seekers with well-paying job offers that can end up costing them everything. According to the Identity Theft Resource Center, scammers are using platforms like LinkedIn to impersonate recruiters and create fake job listings, making it difficult for job seekers to spot fraud. With artificial intelligence, fraudsters craft convincing job postings targeting desperate individuals, such as recent graduates and those recently laid off.

• In 2023, job scams rose by 118% compared to the previous year, with fraudulent business and job opportunity reports reaching ~108K.

• These scams resulted in a total loss of $500.8M, with the average victim losing nearly $2.2K, up from $373.5M in 2022.

Beware of scammers: The boom in scams is also due to the shift towards digital-only job applications and interviews, providing scammers with more opportunities to exploit job seekers. With rising unemployment, many Americans are falling prey to these scams. Experts recommend being cautious of job offers that require upfront payment for equipment or training and verifying the legitimacy of the company making the offer.