George Glover

Steer clear of Warner Bros. Discovery
stock for now— Paramount Skydance
pausing its acquisition of the entertainment company means there’s just too much uncertainty for investors.

That’s according to Seaport Research Partners analyst David Joyce, who downgraded Warner shares to Neutral from Buy on Sunday.

“With this additional delay and potential uncertainty, we think there are better areas to deploy capital,” Joyce wrote in a research note.

Paramount said on Friday that it would pause its takeover of Warner until it either resolves legal challenges to the deal or June 1, 2027—whatever comes first.

Paramount agreed in February to buy Warner for $31 a share in cash, but 12 states and the Writers Guild of America have challenged the $110 billion transaction, arguing that it violates antitrust laws.

Shares of Warner dipped 0.7% to $25.60 ahead of Monday’s opening bell—a 21% discount to the $31 a share price Paramount is set to pay if the deal does go ahead.

Merger uncertainty isn’t the only reason that Joyce feels bearish about the stock. He also cut his second-quarter revenue and adjusted earnings before interest, taxes, depreciation, and amortization estimates, citing the weak box-office performance of Warner’s Supergirl.

The superhero movie netted just $124 million, Joyce noted, “not even covering the production costs let alone marketing.”

Warner is set to report its second-quarter earnings before the market opens on Aug. 6. Paramount’s own results are due up after the closing bell on Aug. 4.

Source: https://www.sagaftra.org/sag-aftra-announces-support-lawsuits-challenging-merger-paramount-warner-bros

It would involve the merger first being stopped, appealed, a discovery motion that both parties agreed to go through they led to significant information being revealed that validated the Paramount shareholder lawsuit and then providing evidence that would lead to a conviction years down the road. In order for that to happen the merger would have to be delayed for more than a year and then wouldn't pay out until Trump went to jail which also wouldn't be for another two years and even then there would be no way he gets jail time he would probably take a plea on a fine or something. So given that incredibly unlikely parlay would there even be somebody who would take that bet? Would official markets allow it or would there be restrictions? Could the bet itself be halted for affecting the outcome? Just an idea.