Paramount Global (NASDAQ: PARA) stock price has been in the spotlight this month as investors focused on its acquisition. It has already surged by almost 30% from its lowest level in March, outperforming other media companies like Warner Bros. Discovery and CuriosityStream.

I have covered Paramount Global several times in the past few years. In an article I did last year, I explained how Shari Redstone destroyed a company that her father spent decades building. 

Her biggest mistake was combining Viacom and CBS, which created a new company known as ViacomCBS before it transitioned to Paramount+. While CBS was a valuable brand, Viacom had many toxic assets in the linear television industry.

Now, Paramount Global is in the process of finding a buyer, a process that has attracted companies like Sony, Apollo Global Management, and Skydance. Skydance is owned by David Ellison, the son of Larry Elison, the tenth richest person on earth.

Sony has teamed with Apollo and placed a $26 billion deal while Skydance wants to acquire Shari Redstone’s National Amusement, which controls the company. 

Most analysts believe that Paramount will ultimately be sold to either of these firms. However, some analysts believe that there will be no acquisition after all, a situation that will lead to a sharp collapse of the stock.

The view is that Paramount Global can achieve what Apollo and Sony want to do. Media reports indicate that the two firms would sell off the linear television business, including CBS, one of the most popular media companies in the US. 

According to the New York Times, the companies would also sell Paramount+, its streaming business to firms like Comcast. They would also sell its TV stations to companies like Tegna and Nextar. 

The remaining company would be its Paramount Pictures, which created movies like Top Gun and Godfather. They would also keep its library and license it to other media companies. 

This is not new for a company like Apollo Global. For example, the company bought Yahoo a few years ago, sold its Yahoo Japan brand to Softbank for over $1.6 billion and Edgecount for $300 million. It remained with Yahoo Finance and Yahoo Sports, which are now said to be more valuable than the $5 billion that it acquired.

Therefore, the theory is that Paramount Global can argue that it can do the same thing and generate more value for its investors. As I wrote in my article on Warner Bros. Discovery, at times, 

PARA chart by TradingView

Most investors hope and believe that Paramount will ultimately be sold since the company is too small to compete with the likes of Disney and Netflix. Therefore, a decision not to sell would see it crash to the key support at $10.14, its lowest point this year. This target is about 21% below the current level.

There is a precedent to this scenario. Just this week, TripAdvisor (NASDAQ: TRIP) stock price tumbled after the company rejected a takeover bid from Apollo.

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