Communications Sector

[gfp927z]

Paramount Global - >>> Another relatively recent investment made by Berkshire is Paramount Global (PARA), a leading global media and entertainment giant. For Buffett, this pick appears to be a way to play declining interest in conventional media names, at a time when streaming and innovation is looking to disrupt this overall sector. Over the past year alone, Paramount has lost roughly 30% of its value, and much more from its 2021 peak.


https://finance.yahoo.com/m/b6aa7a04-2450-3273-aae3-a4758c72e87e/want-passive-income-in-a-bear.html


Paramount does have its own streaming network, Paramount Plus. Accordingly, this isn't a company that's completely falling behind its peers in monetizing its offerings in different ways. The company's impressive release of Top Gun: Maverick last year certainly provided investors with the idea that perhaps the franchises this outfit owns aren't completely washed up. (This movie was the highest-grossing film at the domestic box office last year, and quite good, if I don't say so myself.)

Paramount's performance at the box office was notable, putting forward 10 films, six of which debuted at the No. 1 spot, with the company earning more than $2 billion in ticket sales. Top Gun: Maverick brought in the lion's share of that take, with $1.5 billion in ticket sales, but it proves what solid media franchises may be worth as stand-alone businesses.

The question many investors have with Paramount is how its streaming platform will perform moving forward. Paramount Plus does hold a considerable library of content, including more than 30,000 television episodes from CBS, BET, Nickelodeon, MTV, Comedy Channel, and Paramount Pictures. Its film library is also impressive, leading to many investors attempting to value this business on the basis of its content alone.

It appears Buffett is making the bet that Paramount's streaming platform, along with its library of content (which may be undervalued relative to its peers) could propel this dividend-producing stock higher over time. Such a view would lead one to believe that the company's dividend outlook could be more rosy than what the market is pricing in, making this a unique value, income, and growth bet for the medium- to longer-term.

While Paramount appears to be among the more difficult companies to assess due to its uncertain outlook, this is a company that's profitable, trading at around 21 times earnings, and pays a dividend yield of 4.4%. That's the kind of business Buffett clearly likes, and is reason enough for many investors to at least consider this often-overlooked company.

<<<



---