Is Now the Time to Drop $1,000 into Media Titan Paramount?
Paramount's stock just hit turbulence—but savvy investors see blood in the water.
Streaming Wars Take No Prisoners
Legacy media's scrambling as cord-cutting accelerates. Paramount's betting big on Paramount+ but faces brutal competition from Netflix, Disney, and Amazon. Content costs soar while subscriber growth stutters.
The $1,000 Question: Bet or Pass?
Dumping a grand into a single stock screams either genius or desperation—usually the latter. Paramount trades at a discount, sure, but that's often a value trap, not a value play. Remember: 'cheap' can always get cheaper.
Final Verdict: High Risk, Maybe Reward
Only throw money you're ready to lose. Or just buy crypto instead—at least those swings come with memes.
A wealthy new owner
You may have heard that Larry Ellison, the CEO and co-founder of software giant(ORCL -0.37%), briefly became the wealthiest human on the planet earlier this month. The price of his company's stock surged on great earnings news and sent him ahead of(TSLA 0.86%) CEO Elon Musk for a while.
Skydance Media, a movie production and media company owned by the Ellison family, acquired Paramount last month for $8 billion, creating a new media conglomerate called Paramount Skydance. That deal suddenly gives the aging movie and television production firm a new lease on life -- and a massive injection of cash it can use to compete better.
Paramount is a Hollywood legend. It was one of the original "Big Five" studios in Los Angeles. It produced legendary films such as The Godfather, Chinatown, Titanic, and the Mission: Impossible, Indiana Jones, and Star Trek franchises, among many, many other recognizable films and television shows.
Image source: Getty Images.
Paramount's current portfolio includes:
- Paramount Pictures and Television
- CBS and CBS News
- Nickelodeon, MTV, and BET
- Comedy Central
- Showtime
- Paramount+ streaming
Investors burned
Despite those assets, Paramount stock languished for years before the recent merger. The company struggled to compete in a fast-evolving media industry that needed to adapt to new technologies and changing viewer behaviors.
The stock burned none other than the Oracle of Omaha (different Oracle). Beginning in 2022,(BRK.A -0.10%) (BRK.B -0.09%) accumulated 63 million shares of Paramount, but the stock fell 44% in 2022 and another 12% in 2023. Berkshire CEO Warren Buffett sold the entire Paramount stake in 2024 for a loss.
But with the recent merger, Paramount now has an influx of essentially endless money from one of the world's richest families. It also has a close connection to a major tech firm (Oracle). That's likely to come in handy as new technologies -- from streaming to VIRTUAL reality and 3D pictures to artificial intelligence and machine learning -- continue to transform the entertainment industry.
Bold moves
David Ellison, Larry's son and CEO of the new conglomerate, is already using his father's fortune to make bold moves. Those include a recent $7.7 billion deal for rights to Ultimate Fighting Championship content and the acquisition of the rights to South Park.
Ellison is also working on an acquisition of Warner Bros. Discovery, which owns HBO, CNN, and the Warner Bros. movie and television studio.
In an Aug. 7 letter to shareholders and employees, Ellison promised to use cutting-edge technologies "to transform Paramount into a tech-forward company that blends the creative heart of Hollywood with the innovative spirit of Silicon Valley."
Trading at just under 13 times future earnings, Paramount Skydance is a bargain at the moment. The company has a market cap of just under $20 million, about 77% of which is owned by the Ellison family.
If you think technology and money can MOVE an aging movie studio into the future (as I do), and that good things are in store for Paramount Skydance and its shareholders, you should consider an investment today before the shares become expensive.
