PS PSKY Paramount Skydance Corporation Class B Common Stock Loading... : Investor Sentiment and Bull/Bear Views

Ben says Paramount's $52 billion debt load from the Warner Brothers media deal is a major red flag; no media deal with this level of debt has paid off for equity investors, and he does not think this one will be the exception, even if Paramount aims to become the next Netflix.

Jim Cramer is negative on the combined Paramount Skydance-Warner Bros. Discovery because of its debt. He says debt service is very high and he does not see the company paying down debt as planned in the first few years, or perhaps even meeting its interest costs. He says management is pitching growth, but the industry it operates in is not a growth industry. He thinks they overpaid, though only by a little. He grants that the company has a real shot because it is not traditional media. He remains skeptical, though, because costly commitments like the NFL require cash flow the company may not have.

The author is skipping the Paramount Syntex SME IPO, noting only about 1% QIB and anchor allocation and a GMP of zero, and argues the QIB subscription looks high only because of a tiny allocation. The bearish view rests on weak genuine institutional demand, and the author also says safe investors can skip all three IPOs.