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Comcast (CMCSA) is scheduled to announce quarterly results on July 23, while Warner Bros. Discovery (WBD) and Paramount (PARA) are expected to report earnings on August 7 and 8, respectively. What to watch for:

RATING CHANGES: Late last month, Goldman Sachs initiated coverage of Comcast with a Buy rating and $44 price target and Warner Bros. Discovery with a Neutral rating and $8.50 price target as part of a broader research note on U.S. Media names. The U.S. media industry is in a state of transition given increasing content competition from streaming, social, and mega tech as well as technology disruptions in distribution, and the firm prefers U.S. media stocks with deep competitive moats that should provide better visibility into growth, the firm told investors in a research note. The company has been subject to market share losses, but Comcast's Domestic Broadband, Domestic Wireless, International Connectivity, and Business Services Connectivity revenue growth will offset declines in Video, Advertising, and Other, Goldman Sachs added.

The previous day, Seaport Research downgraded Comcast to Neutral from Buy without a price target. The firm said at the time that it believed broadband subscriber growth was still "several quarters" away. It could still take a few quarters for Comcast's negative subscriber trend inflection point to change given the necessary competitive upgrades underway, it added. The firm believes broadband subscriber growth is key to investor sentiment, even as Comcast's NBCUniversal faces strong cyclical advertising-driven cash flow events approaching, including the Paris Olympics and political ad spending season.

TARGET CHANGES AHEAD OF EARNINGS: On Wednesday, Wells Fargo raised the firm's price target on Paramount to $10 from $9 but kept an Underweight rating on the shares. The firm said it is reshaping Paramount estimates and that it expects a more typical EPS quarter/call now that the deal has been announced.

Earlier this month, Evercore ISI lowered the firm's price target on Paramount to $11.50 from $13 and kept an In Line rating on the shares after Skydance agreed to purchase the largest shareholder National Amusements for cash and merge Skydance with Paramount for equity, creating New Paramount and offering public Class B shareholders up to 48% of their shares for cash at $15 per share. The firm's "valuation rubric" ascribes about 50% of the value at $15 per share for the cash offer and the remaining roughly 50% of the value at comparative multiples to similar companies like Warner Bros. Discovery and Fox (FOXA), which implies a value in the $7-$8 per share range, leaving the average for these two components at about $11-$12 per Paramount share, the firm explained.

BEARISH AFTER DEAL: Meanwhile, Wolfe Research downgraded Paramount to Underperform from Peer Perform with a $10 price target. With David Ellison agreeing to spend about $8.4B for control of Paramount and a merger with Skydance through a $4.8B, all-stock transaction, and a breakup of the company off the table, the investment debate simplifies to whether Paramount can invest profitably in direct-to-consumer and if forecasts are "low enough," the firm tells investors. On those two questions, Wolfe is respectively "cautious and negative."

The Fly recalls that earlier this month, Skydance Media and Paramount announced that they have entered into a definitive agreement to form "New Paramount," through a two-step transaction including the acquisition of National Amusements, or NAI, which holds the controlling share stake in Paramount, and subsequently a merger of Skydance and Paramount Global.

BREAK-UP DISCUSSIONS: Warner Bros. Discovery is discussing plans to split up, including splitting its digital streaming and studio businesses from its legacy television networks, The Financial Times' Maria Heeter, Antoine Gara, Sujeet Indap, James Fontanella-Khan and Christopher Grimes reported last week. According to people familiar with the matter, CEO David Zaslav is considering several strategic options, including selling assets to carving off its Warner Bros. movie studio and Max streaming service into a new company unburdened by most of the group's current $39B net debt load. Warner Bros. Discovery has not yet hired an investment bank to initiate any specific transaction, but its top management has been talking to advisers to find a solution in shareholders' best interest, people briefed on the matter say, adding that the company has also informally approached advisers to rival media groups to understand if they would be interested in exploring M&A options with some of its existing assets. The company previously considered combinations with Comcast's NBCUniversal and Paramount, which has since agreed to sell itself David Ellison's Skydance studio, according to the report.

Commenting on the news, Citi said it believes that with the shares down 25% year-to-date, Warner Bros. Discovery management may consider strategic alternatives. Press reports suggest one option the company may consider is breaking up into two entities, the firm tells investors in a research note. Under this scenario, Citi's sum-of-the-parts suggest the equity could be worth $11 per share. It keeps a Buy rating on the shares.

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