When is Enough, Enough?
Adding to the Watch List and we’re betting on a sale of the streaming business.
It would bring in a boatload of money, and more importantly cut the losses and see the stock re-ignite, potentially doubling in value. Paramount Global’s direct-to-consumer businesses lost $424 million in the second quarter and $511 million in the first quarter. The company reports third-quarter earnings Nov. 2.
Paramount+ has accumulated more than 60 million subscribers. The usual and unusual subjects in our opinion would be Apple (AAPL) TV+ or Amazon’s (AMZN) Prime Video. It would also give Alphabet’s (GOOG) YouTube a bigger foothold into subscription streaming beyond the National Football League’s Sunday Ticket and YouTube TV.
Even with Paramount market value below $8 billion, which would be a mere pittance for any of those trillion giants to acquire, there’s no evidence these technology companies would want to own of the declining legacy media assets such as cable and broadcast networks. On demand and advertiser supported streaming is another story though!
So we’re betting on the sale of streaming.
Is Paramount Global Stock a Hidden Gem in Plain Sight? (MarketBeat)
Global media entertainment giant Paramount Global has undergone an image makeover and rebranding after its stock collapsed as ViacomCBS. Hoping to shed its controversial past with the Redstone family drama and the Archegos Capital Management $20 billion blowup, the company has emerged as a still profitable sum-of-all parts media empire which may be vastly overlooked by the market.
Its shares trade at less than a fifth of its value just over a year ago. Paramount Global is an entertainment powerhouse with brands that include Paramount, Pluto, Showtime, CBS, CBS Sports, Nickelodeon, MTV, Comedy Central, BET and the Smithsonian Channel.
CBS is the No. 1 broadcast network in the country and it grew its market share by 20% from last year. Warren Buffett increased his shares from 68.95 million to 78.42 million through the Berkshire Hathaway Inc. (BRK.A) 13F filing for Q2 2022 on August 15. Shares have since fallen as they now sell for 8x forward earnings with a 5.15% annual dividend yield.
Paramount Studios released five No. 1 box office films in a row. It had the strongest movie of the year, “Top Gun 2,” which raked in $1.45 billion worldwide on a $170 million budget. The movie has surpassed the $714 million box office mark in the U.S., making it the 22nd largest grossing movie of all time in unadjusted global earnings. Management showed impeccable timing for the release of the surprise blockbuster.
Streaming Empire
Its streaming empire faces fierce competition from rivals, including Netflix (NFLX), The Walt Disney Company (DIS), Amazon.com Inc. Prime Video (AMZN )and Warner Brothers Discovery Inc. (WBD). Its streaming assets include the Paramount+ streaming service, which has grown to over 43 million paid subscribers. Pluto has had over 70 million monthly active users (MAUs) on its ad-supported streaming network and its legacy platform, Showtime OTT, still brings in subscription fees from cable TV as well as its streaming platform.
ViacomCBS’ Wild Stock Slide and What’s Behind it (LA Times)
This is comical, unless of course you bought into the secondary at $85.00. Older but insightful article.
A year ago, ViacomCBS was trading at $13 a share. But reservations over the 2019 merger of Viacom and CBS had eased by last fall and stock in the combined company began to soar. On March 23, ViacomCBS topped $100 a share, which valued the parent of CBS, Nickelodeon, MTV, Comedy Central, Showtime and Paramount Pictures at $60 billion.
Late last week, the stock collapsed. The rout continued Monday, resulting in a five-day sell-off that erased more than $30 billion in market value. Since then, ViacomCBS’ stock has largely stabilized, closing Thursday down 1% to $44.64 a share.
ViacomCBS, as one of the smallest of the major media companies, has unique challenges. It spooked the market last week with a $3-billion stock offering, which some investors took as an admission that ViacomCBS lacked the financial firepower to compete in the streaming world against deep-pocketed rivals Netflix, Walt Disney Co. and Amazon Prime Video.
The stock offering put in motion a chain of events that has shaken Wall Street. Bets made by a little-known hedge fund, Archegos Capital Management, and backed by some of the world’s biggest banks spectacularly unraveled. Stocks of ViacomCBS and cable programming company Discovery took a hit.
Media company executives didn’t know who was behind the massive run-up in their shares, according to two people close to the companies who were not authorized to comment.
But with its stock in the stratosphere, ViacomCBS saw an opportunity to generate some much-needed cash to help finance its streaming ambitions.
ViacomCBS announced the stock offering after markets closed March 23. The next day, with the company flooding the market with millions of new shares priced at $85, the stock began to fall.
The offering raised $2.65 billion.
