Stock of Paramount surges close to 40% in vigorous trading following UFC deal announcement
In a significant move, Paramount+ has secured a seven-year, $7.7 billion deal to acquire exclusive U.S. rights to all UFC events starting in 2026. This deal, announced less than a week ago, is expected to drive substantial subscriber growth for the streaming platform.
Analysts like Morgan Stanley and J.P. Morgan view this deal as a highly successful rights renewal for UFC, projecting that the move will broaden UFC's reach and increase the visibility of numbered events through CBS's national broadcast coverage. This increased visibility is expected to indirectly support a larger subscriber base for Paramount+ moving forward.
The UFC's former streaming home, ESPN+, had roughly 24.1 million subscribers in 2024, but was not growing. With the shift from ESPN's pay-per-view plus subscription model to Paramount+'s subscription-only model, some UFC subscribers are likely to migrate to Paramount+. The deal replaces the pay-per-view model with UFC content available under a single subscription, creating a "recurring content spine" that is expected to build user habits and lower subscriber churn, critical for long-term streaming growth.
Industry commentary and strategic rationale strongly indicate that Paramount+ expects to gain several million new subscribers driven by the UFC live sports content deal, capitalising on a captive MMA audience and the shift away from ESPN+ and pay-per-view fragmentation.
Meanwhile, the stock market has shown a mixed response to this news. On Monday, the stock's price dropped significantly, reaching a 52-week low during that trading day. However, on Wednesday, the stock peaked at $17.53, a 60% increase from Tuesday's closing price of $10.97. Trading volume for Paramount Skydance was unusually heavy on Wednesday, with more than 131.1 million shares traded before the closing bell.
The surge on Wednesday might be attributed to a short squeeze, although there is insufficient data to confirm this. It's worth noting that short interest as a percentage of the company's public float was around 13.4%, higher than peers such as Warner Bros. Discovery (4.3%) and Disney (1.1%).
In conclusion, while the exact subscriber gain forecasts vary, the strategic rationale and industry commentary suggest that Paramount+ expects to gain several million new subscribers driven by the UFC live sports content deal. This deal is expected to significantly contribute to Paramount+ subscriber growth, leveraging live UFC events as a recurring content anchor to drive subscriber growth and reduce churn through habitual viewing.
In the realm of finance and business, this significant UFC deal is anticipated to support a increased investment in Paramount+, with analysts projecting several million new subscribers for the streaming platform. Meanwhile, the technology sector has seen a Herculean trading volume for Paramount Skydance's stocks post the deal's announcement, with the surge on Wednesday potentially attributed to a short squeeze.
