Revenue at Paramount's only profitable business has plummeted. Will its purchase by Warner save it?

Hollywood media giant Paramount Skydance, battling Netflix for the assets of Warner Bros. Discovery, has seen sales decline in its television media segment, its largest and only profitable business. Increased revenue from the streaming service and movie studios didn't save the company from a spike in losses in the pre-New Year's quarter.

The owner of the CBS broadcast network and Paramount+ service reported a widening of its loss in the fourth quarter of 2025 to $573 million from $224 million a year earlier, despite a 2% increase in total revenue to $8.15 billion. According to Paramount's quarterly report, sales of the streaming division grew by 10% (to $2.2 billion against analysts' expectations of $2.29 billion, according to Bloomberg). Revenue from movie studios added 16% ($1.26 billion versus expectations of $1.24 billion). However, sales in the television media segment fell by 5% (to $4.7 billion).

Paramount noted that it expects the negative factors for partner revenues to persist due to the shrinking pay-TV subscriber base. For 2026, the media giant forecasted growth in profitability of the direct-to-consumer segment (DTC, which includes the Paramount+ streaming service) while maintaining stable margins of TV networks, according to The Wall Street Journal.

After the publication of the report Paramount shares on the postmarket in New York rose by 0.7%. On February 26, at the over-the-counter trades in the U.S. this growth is maintained.

"Paramount Skydance's quarterly results don't really come down to the fundamentals - the question is whether the growth momentum in streaming can outpace the structural decline in linear (traditional. - Oninvest) TV," Reuters quoted PP Foresight analyst Paolo Pescatore as saying.

Paramount released its quarterly report just as tensions in its battle with streaming giant Netflix for control of Warner Bros. movie and TV studios reached a peak. Earlier this week, Warner said it had received a revised offer from Paramount to buy the entire company at $31 a share. The board concluded that Paramount's updated bid "could reasonably result" in an offer that exceeds the terms of its already signed agreement with Netflix to acquire Warner studios and streaming service HBO Max.

The takeover of Warner Bros. will provide significant support for Paramount's traditional TV business, Bloomberg states. Paramount itself said it sees the purchase of Warner Bros. Discovery as a catalyst for achieving its goals "at a faster pace and in a way that is economically attractive to shareholders," Variety reports.

Analysts' assessments of Paramount Skydance shares indicate the prevalence of cautious and negative expectations: according to FactSet, six experts recommend to "hold" the stock (Hold), another six advise to sell (Sell or Underweight), and only one - to buy (Overweigt). The consensus rating calculated by the service is "below the market" (Underweight, which corresponds to the advice to sell).

The average target price of $13.55 per share implies a 33% upside from the current stock price over the course of the year.

This article was AI-translated and verified by a human editor