Paramount’s Profitability Is Improving as Streaming Matures and Television Stabilizes

Paramount has agreed to acquire Warner Bros. Discovery, and the outcome of an antitrust lawsuit, with a trial set for March 2026, will determine whether the firm can complete the merger. Like peers, Paramount has been in a period of transition as the traditional television business upon which it was largely built is in secular decline, and it has looked to replace this business with streaming. Warner faces identical challenges, and the greater scale a combined company would have should help preserve profits in legacy TV and lead to greater success in streaming. However, Paramount took on significant risk and offered to pay a steep price for this merger, so we didn’t think it would add value. With the difficulties in getting the deal completed, we now think it’s likely to destroy some value.