Investing.com -- Class B shares in Paramount Global (NASDAQ:PARA) moved lower in premarket U.S. trading on Wednesday, pointing to an extension in losses registered in the prior session that were sparked by news that talks over a potential merger between the media conglomerate's parent National Amusements and entertainment firm Skydance Media had been terminated.
In a statement cited by the Associated Press on Tuesday, National Amusements, which is owned by Paramount's controlling shareholder Shari Redstone, said it had not been able to come to a "mutually acceptable" agreement with Skydance.
The announcement ends weeks of speculation around a possible deal, which would have seen Skydance, the movie production group behind hits like "Top Gun: Maverick" and the "Mission Impossible" franchise, acquire one of the most storied names in Hollywood history.
Citing people familiar with the matter, the Wall Street Journal reported that Redstone is now set to pursue a sale of National Amusements, instead of attempting to tie Paramount into a separate company.
Analysts at Wells Fargo said Redstone's decision to walk away from the tie-up with Skydance will "add to the long shadow" over Paramount, which has been struggling under the burden of a heavy debt load and weakness in its traditional cable unit.
"Controlling shareholder [National Amusements] has walked away from a strategic deal that we believe would have improved [Paramount]'s outlook," the Wells Fargo analysts wrote in a note downgrading their rating of Paramount's stock to "Underweight" from "Equal Weight."
"[W]e think it will be difficult to pivot the company to stable profitability."