Streaming Giants Divide Investors: Michael Burry Invests in Warner Bros Discovery, Warren Buffett Sells Paramount Stocks
Investors Take Different Paths Over Streaming Giants
Investors Michael Burry and Warren Buffett have staked different positions in the streaming industry, according to recently-filed stock reports. While Burry’s Scion Asset Management increased its holdings in Warner Bros Discovery, Buffett’s Berkshire Hathaway significantly reduced its investments in Paramount Global.
Burry’s Move: Adding 375,000 Shares in Warner Bros Discovery
As per the Securities and Exchange Commission filing, Scion Asset Management, backed by investor Michael Burry, has added 375,000 shares in Warner Bros Discovery to its portfolio. This move preceded the announcement of Warner Bros Discovery’s alliance with ESPN and Fox to launch a new sports streaming service in the fall of 2024.
Buffett’s Sale: Paramount Stocks Disposed
In contrast, Berkshire Hathaway, led by legendary investor Warren Buffett, has sold 30.4 million shares in Paramount Global, roughly a third of its previous holdings.
Warner Bros Discovery: Challenges and Opportunities
Revenue and Consumer Interest: A Tale of Mixed Results
Warner Bros Discovery reported a minimal revenue increase of 1% to $9.9 billion, with advertising revenue declining up to 50% in certain segments. However, the company’s performance also showcased promising elements. It posted record-breaking box office collections with films like “Barbie,” grossing nearly $1.5 billion worldwide. Additionally, the film series “The Conjuring” achieved the distinction of being the highest-grossing horror franchise in history, with “The Nun II” crossing $250 million at the global box office. Furthermore, the newly-launched CNN Max news streaming service indicated early signs of increased user engagement and reduced churn.
Stock Volatility and Potential Suitors
Despite the positive developments, Warner Bros Discovery’s stock prices have declined by 36.6% over the past year and 16.5% in the year to date. Speculation is rife in the media regarding the potential sale of Warner Bros Discovery’s parent company, National Amusements. Such offers may come from well-known investors like Apollo Global Management and David Ellison’s Skydance Media.
Paramount Global Facing Uphill Battle
Financial Struggles and Stock Sell-Off
Berkshire Hathaway’s recent disclosure reveals that it has sold 30.4 million shares in Paramount Global, which sent the business’s stock prices tumbling by 6.7% following the news. Paramount Global’s share prices have slumped by over 46% in the past year, and it is currently encountering several challenges.
Redstones in the Spotlight
The majority of Paramount’s voting stock is held by the Redstone family, led by Shari Redstone. They are actively pursuing potential investors and evaluating offers to purchase National Amusements, the parent company of Paramount. Apollo Global Management and David Ellison’s Skydance Media have emerged as potential suitors.
Exploring Possible Partnerships
Paramount is considering a collaboration with Apple, which may mirror the successful Disney-Fox-ESPN collaboration. Such a deal could potentially join forces with Apple TV and Paramount Plus, with the aim of improving Paramount Plus’s financial performance.
Contrasting Outlooks amidst Significant Changes
Burry’s Investment and Buffett’s Confidence
Although both investors have taken divergent paths, both Michael Burry and Warren Buffett exhibit a measure of hope for historic media giants amidst the streaming revolution. Buffett’s retention of tens of millions of shares demonstrates his faith, as demonstrated by the record-breaking viewership for CBS’s recent Super Bowl.
As the streaming landscape continues to evolve, the industry’s stability and future profitability will ultimately determine the correctness of these divergent investment strategies.
