Media Companies Are Ready to Sell. Does Anyone Want to Buy?

[michael hagerty]

Big piece from the Hollywood Reporter today---a scorecard to help identify the players:

The Vultures Are Circling: Who Will Walk Away With Paramount?

As Shari Redstone decides how to part with her empire, a number of players have emerged as suitors — all with varying, and conflicting, motivations to make a bid for the historic studio.

www.hollywoodreporter.com

 

[Rusty Muck]

Big piece from the Hollywood Reporter today---a scorecard to help identify the players:

The Vultures Are Circling: Who Will Walk Away With Paramount?

As Shari Redstone decides how to part with her empire, a number of players have emerged as suitors — all with varying, and conflicting, motivations to make a bid for the historic studio.

www.hollywoodreporter.com

The wishcasting and hopium is so obvious in that piece, it is painful.

 

[michael hagerty]

The wishcasting and hopium is so obvious in that piece, it is painful.

Really? What I got from it is Shari wants out and these are the people who are most likely to be involved in that. I didn't see anything in there that went beyond that.

 

[TheBigA]

Paramount Global stock has been trending down since mid December. From $21 to $18.

 

[Rusty Muck]

Really? What I got from it is Shari wants out and these are the people who are most likely to be involved in that. I didn't see anything in there that went beyond that.

It's not treading any new ground. The players in such a deal have largely been known quantities, even the likes of John Malone.

Paramount Global stock has been trending down since mid December. From $21 to $18.

Which is itself not helping Shari's cause if she wanted to sell. You'd think that the exploratory talks with Discovery would boost stocks for both companies, but Wall Street largely let out a collective yawn.

If Shari's really intent on parting with Sumner's empire, she might be setting herself up for disappointment.

 

[Kelly A]

It's not treading any new ground. The players in such a deal have largely been known quantities, even the likes of John Malone.

Which is itself not helping Shari's cause if she wanted to sell. You'd think that the exploratory talks with Discovery would boost stocks for both companies, but Wall Street largely let out a collective yawn.

But isn't that the case with all media companies lately? The Street is over traditional media and sees streaming as having too many competitors to crown more than one or two winners.

If Shari's really intent on parting with Sumner's empire, she might be setting herself up for disappointment.

I suspect, just like Bob Iger, she sees the writing on the wall and would like to get out before media as an industry devalues much further.

 

[tall_guy1]

Getting back to the Paramount Global sweepstakes, and who will buy the company that owns CBS. Now there are reports that one of the possible buyers might be Comcast, owner of NBC-Universal:

Paramount Global Clinches Cable Carriage Deal with Comcast as Acquisition Rumors Swirl

Paramount Global has clinched a carriage deal with Comcast that is crucial to its financial future as acquisition rumors swirl around the company.

variety.com

Obviously the latest announcement from the FCC about its ownership rules reiterated the ban on one company owning two of the major networks, so CBS couldn't be part of the deal.

Comcast is just carrying them on their cable/satellite. Not sure if it has anything to do with merging.

 

[Rusty Muck]

But isn't that the case with all media companies lately? The Street is over traditional media and sees streaming as having too many competitors to crown more than one or two winners.

So what is to be gained from having the studio conglomerates buying each other out?

Regardless of if Comcast or Discovery were to buy Paramount, the combined company would still be stuck with a lot of old media assets that make the merger unattractive to investors from the get-go. It's not going to make the likes of Warren Buffett happy, that's for sure.

I suspect, just like Bob Iger, she sees the writing on the wall and would like to get out before media as an industry devalues much further.

Bob occasionally floats the idea of spinning off ABC, then removes it from the table. I don't think anyone really knows if he wants to, or even CAN, sell that network.

 

[tall_guy1]

So what is to be gained from having the studio conglomerates buying each other out?

Regardless of if Comcast or Discovery were to buy Paramount, the combined company would still be stuck with a lot of old media assets that make the merger unattractive to investors from the get-go. It's not going to make the likes of Warren Buffett happy, that's for sure.

Bob occasionally floats the idea of spinning off ABC, then removes it from the table. I don't think anyone really knows if he wants to, or even CAN, sell that network.

If they sell, they gain money. Otherwise they lose it.

 

[Rusty Muck]

If they sell, they gain money. Otherwise they lose it.

You need to have investor support for a sale like this, and it's just not happening. That is a problem.

One might have to consider the possibility that Shari waited too long to sell, if she wanted to sell, and won't get anything close to what she wants.

 

[michael hagerty]

It's not treading any new ground. The players in such a deal have largely been known quantities, even the likes of John Malone.

So by"wishcasting" and "hopium", you meant "redundant"?

Which is itself not helping Shari's cause if she wanted to sell. You'd think that the exploratory talks with Discovery would boost stocks for both companies, but Wall Street largely let out a collective yawn.

If Shari's really intent on parting with Sumner's empire, she might be setting herself up for disappointment.

If Shari hangs on to Sumner's empire, she's absolutely setting herself up for disappointment. The world has changed. Paramount as a standalone won't survive. Stockholder value is eroding. Gotta move.

 

[Kelly A]

So what is to be gained from having the studio conglomerates buying each other out?

To gain scale. The combined content of three players to one entity has a better chance of competing than three separate players with one-third the amount of content each. Think larger piece of the pie.

Regardless of if Comcast or Discovery were to buy Paramount, the combined company would still be stuck with a lot of old media assets that make the merger unattractive to investors from the get-go.

The problem with this talk of Comcast-Paramount, or Comcast-Warner/Discovery, is it likely wouldn't pass muster with the SEC. I'm sure Redstone and Iger would like to avoid needless long and expensive lawyer battles with the government, followed by all sorts of capital gains trouble.

It's not going to make the likes of Warren Buffett happy, that's for sure.

Bob occasionally floats the idea of spinning off ABC, then removes it from the table. I don't think anyone really knows if he wants to, or even CAN, sell that network.

To simplify the process as I stated above, it will probably require spinning divisions separately before big chunks are merged/sold.

 

[tall_guy1]

So by"wishcasting" and "hopium", you meant "redundant"?



If Shari hangs on to Sumner's empire, she's absolutely setting herself up for disappointment. The world has changed. Paramount as a standalone won't survive. Stockholder value is eroding. Gotta move.

She could perhaps sunset some cable channels, perhaps. There are a lot of Viacom stations that do not get watched much. (Logo, MTV classic, BET Her, ect) They could maybe shrink Paramount Plus into a smaller service like Starz and could perhaps move forward.

 

[Kelly A]

She could perhaps sunset some cable channels, perhaps. There are a lot of Viacom stations that do not get watched much. They could maybe shrink Paramount Plus into a smaller service like Starz and could perhaps move forward.

That would be like throwing assets away. Once you have existing cable channel space, you, or another owner, would lose money trying to ever get it back. Same with shrinkage. That would be like intentionally devaluing your assets while the company is on the block for sale.

 

[michael hagerty]

So what is to be gained from having the studio conglomerates buying each other out?

Are you just reading the headline and not the piece? Because it answers exactly what which party finds attractive.

Regardless of if Comcast or Discovery were to buy Paramount, the combined company would still be stuck with a lot of old media assets that make the merger unattractive to investors from the get-go. It's not going to make the likes of Warren Buffett happy, that's for sure.

The Hollywood Reporter story contains this quote:

Onstage at the CHI Health Center Arena in May in Omaha, Nebraska, Buffett was asked about the Paramount investment as part of his annual marathon Q&A session with Berkshire shareholders. “It’s not good news when any company cuts its dividend dramatically,” Buffett said of Paramount.

He was similarly bearish on the streaming business: “There are a lot of companies doing it, and you need fewer companies or you need higher prices, or it doesn’t work,” Buffett said. “You’ve got a bunch of companies that don’t want to quit. Who knows what pricing does under that?”

Now Buffett appears to be looking for an exit, and a sale could be the ticket to profitability for his investment … or at least to break even.

Bob occasionally floats the idea of spinning off ABC, then removes it from the table. I don't think anyone really knows if he wants to, or even CAN, sell that network.

"Occasionally", a word here which means "once".

 

[michael hagerty]

If they sell, they gain money. Otherwise they lose it.

And there it is---the post that matches the avatar.

 

[Rusty Muck]

If Shari hangs on to Sumner's empire, she's absolutely setting herself up for disappointment. The world has changed. Paramount as a standalone won't survive. Stockholder value is eroding. Gotta move.

If the only suitors are those who simply won't pass regulatory muster (Comcast, Discovery) or don't want the entire company (Skydance) then she's already too late.

 

[michael hagerty]

One might have to consider the possibility that Shari waited too long to sell, if she wanted to sell, and won't get anything close to what she wants.

The front half of that sentence is absolutely spot on. What the back half forgets is that what she'll get today still beats what she'll get tomorrow.

 

[Rusty Muck]

Are you just reading the headline and not the piece? Because it answers exactly what which party finds attractive.

I read the piece and it broke absolutely no new ground aside from Buffett.

The Hollywood Reporter story contains this quote:


Onstage at the CHI Health Center Arena in May in Omaha, Nebraska, Buffett was asked about the Paramount investment as part of his annual marathon Q&A session with Berkshire shareholders. “It’s not good news when any company cuts its dividend dramatically,” Buffett said of Paramount.

He was similarly bearish on the streaming business: “There are a lot of companies doing it, and you need fewer companies or you need higher prices, or it doesn’t work,” Buffett said. “You’ve got a bunch of companies that don’t want to quit. Who knows what pricing does under that?”

Now Buffett appears to be looking for an exit, and a sale could be the ticket to profitability for his investment … or at least to break even.

Everyone has a mistake to their name. This is the Oracle of Omaha's lone mistake. And he invested in newspapers a decade ago before bailing on that endeavor.

 

[Rusty Muck]

The front half of that sentence is absolutely spot on. What the back half forgets is that what she'll get today still beats what she'll get tomorrow.

Even if she wants to sell to Discovery, she has to wait until tomorrow (April 8).