PSKY, WBD Stocks In Focus: Barclays Flags Deleveraging, Restructuring Risks In $110B Merger

Barclays sees streaming and studio growth potential in the Paramount-Warner deal but flags execution, deleveraging, and potential restructuring challenges as legal hurdles remain.

• The proposed $110 billion transaction remains tied up in lawsuits brought by a coalition of states and the Writers Guild of America, with the DOJ backing Paramount’s request for a financial bond from the challengers.
• Paramount is seeking nearly $1.9 billion in security, while the company has secured antitrust clearance in nearly 70 jurisdictions.
• Barclays said further asset restructuring could be necessary over time as the combined company works toward its synergy and deleveraging goals, according to The Fly.

Paramount Sky (PSKY) and Warner Bros. Discovery (WBD) are in focus on Thursday after Barclays resumed coverage of both stocks but flagged execution risks tied to the proposed $110 billion merger. 

The firm has an ‘Equal Weight’ rating on WBD with a $29 price target, while assigning PSKY an ‘Underweight rating and $8 price target. Analyst Kannan Venkateshwar said the proposed Paramount-Warner combination could create “growth optionality” in streaming and studios, but executing that growth while constrained by synergy and deleveraging targets could be difficult, according to a report from The Fly.

In Thursday premarket trading, PSKY shares gained 0.9% while WBD shares edged up about 0.11%.

$110B Paramount-Warner Deal Remains In Legal Limbo 

The Paramount-Warner deal continues to face legal challenges from a coalition of states and the Writers Guild of America, despite federal regulators previously determining that the combination would not impair competition. The U.S Department of Justice(DOJ) has backed Paramount’s request for a financial bond from the challengers, while taking no position on the exact amount; Paramount is seeking nearly $1.9 billion.

The bond request faces a legal hurdle after U.S. District Judge Araceli Martínez-Olguín denied a similar request in July, ruling that the states brought the case in the public interest. Opponents have also argued that Paramount waived its right to seek security by agreeing not to close the transaction until June 2027, allowing time for a judicial decision following the planned March trial.

Paramount has secured antitrust approval in nearly 70 jurisdictions worldwide, leaving the state and WGA lawsuits as the remaining legal obstacles to the proposed combination of Paramount and Warner Bros. Discovery, including their studios, cable networks and streaming platforms.

Barclays: Restructuring Could Add Another Layer Of Risk

Beyond the legal uncertainty, Barclays also said further asset restructuring may be inevitable over time, according to The Fly. The firm’s view reflects the challenge of pursuing growth across streaming and studios while meeting the merger’s synergy and deleveraging objectives.

The proposed transaction would bring together Paramount’s streaming and studio assets with Warner Bros. Discovery’s HBO Max, Warner Bros. studio operations and broader media portfolio. The deal remains subject to ongoing litigation from state attorneys general and the Writers Guild of America.

According to Koyfin data, nine of 21 analysts covering PSKY rate the stock a ‘Hold,’ while six rate it a ‘Sell.’ For WBD, 15 of 19 analysts rate the stock a ‘Hold,’ while three rate it a ‘Buy.’

WBD, PSKY Stocks: What Is Retail Mood?

Retail sentiment on Stocktwits for PSKY and WBD improved slightly, moving from "extremely bearish" to "bearish," though message volume remained low over the past 24 hours.

PSKY has slid about 17% so far this year, while WBD has held up better, down roughly 3% year-to-date.

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