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Paramount Skydance Corp (NASDAQ:PSKY) shares fell nearly 5% on Tuesday morning after the media company reported first-quarter earnings the previous evening, as investors looked past a stronger-than-expected profit result and focused instead on underwhelming forward guidance.
Shares initially climbed following the release before reversing course as the market absorbed the company's outlook.
Revenue rose 2% year-over-year to $7.35 billion, up from $7.19 billion a year earlier, edging past analyst estimates of $7.28 billion. Adjusted earnings per share came in at $0.23, ahead of the $0.15 consensus forecast.
UBS analysts noted that results came in ahead of expectations on lower costs and timing of spend, with first-quarter revenues largely in line with guidance while profits across segments were stronger due to cost cutting.
Adjusted EBITDA for the total company rose 59% year-over-year, with TV Media EBITDA growing 11% and direct-to-consumer EBITDA improving to $251 million from negative $4 million in the same period last year.
For the full year 2026, management reiterated guidance for total revenue of $30 billion and adjusted EBITDA of $3.8 billion, with expectations for improved profitability in its direct-to-consumer and studio segments while TV Media margins remain stable to improving.
Management said it expects the pending Warner Bros. Discovery transaction to close by September and expressed confidence in the path to regulatory approval.
UBS said it believes a potential deal would help reposition the company for a streaming future and drive meaningful cost synergies, though it remains cautious given elevated leverage at close and significant legacy TV exposure, which accounts for roughly two-thirds of combined EBITDA and nearly half of revenues.