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The analysts explained that the investment bank’s prior bullish thesis and valuation methodology were predicated on PARA’s inherent asset value in a potential sale.
“Despite receiving credible bids for several different assets (e.g. Showtime and BET), it does not appear any significant asset sales are on the horizon,” said the analysts.
“Given the secular challenges in the traditional media ecosystem, we were surprised to see PARA walk away from these potential buyers for various assets,” they added. “While we recognize management should try to extract maximum value, shares of PARA are down over 40% since May 1st.”
The firm is concerned that the longer it takes to execute potential asset sales, the less value it could ultimately garner.
“This, coupled with the challenging macro backdrop, persistent secular headwinds, negative FCF continuing into CY24 and PARA’s elevated leverage levels (nearly 5x our CY24E) create an unfavorable medium-term outlook,” the analysts wrote.
