Paramount Skydance's (PSKY) current set of assets face a "challenging" path, owing to a drag from its legacy TV assets with high general entertainment exposure as well as the risk of an early renewal of National Football League broadcasting rights agreement, UBS said in a note emailed Friday.

While a potential deal with Warner Bros. Discovery (WBD) would give the company means to become a major global player in streaming and would drive significant cost cutting initiatives, visibility into the final outcome of the deal remains limited, UBS added.

The brokerage said it updated its estimates on the company to reflect lower costs in TV Media segment and softer performance from the film segment. The firm expects earnings before interest, taxes, depreciation and amortization of $3.54 billion in 2026. Meanwhile, 2027 EBITDA estimate was lowered to $3.54 billion from $3.68 billion prior.

UBS adjusted its price target on Paramount Skydance to $10 from $12 and maintained its sell rating.

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