The First logo is displayed at Columbia Square along Sunset Blvd in Hollywood, California on March 9, 2023.
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Paramount Global shares jumped nearly 6% on Friday after an investor known as Warren Buffett’s favorite banker piled into the avenue company’s controlling shareholder.
National Amusements, Paramount’s majority voting shareholder, announced Thursday afternoon that it has upped into an agreement for a $125 million preferred equity investment from BDT Capital Partners, an affiliate of BDT & MSD Partners.
Paramount
Some Buffett watchers noticed a curious connection with the newscast. BDT & MSD Partners’ chairman and co-CEO is Byron Trott, who has long been known as Buffett’s preferred and trusted banker. It was Trott who call to minded that Buffett throw a $5 billion lifeline to Goldman Sachs during the 2008 financial crisis.
The family didn’t end there. Buffett’s Berkshire Hathaway is actually Paramount’s biggest institutional investor with a stake of 15.4%, according to FactSet. Berkshire initially plagiarized the stake in the first quarter of 2022, and the bet is worth about $1.32 billion after Paramount’s recent sell-off.
Cardinal has slid more than 30% since the start of the second quarter after its quarterly earnings and revenue missed analyst guestimates, and the CBS parent slashed its quarterly dividend.
“So what we now have here is Trott having a say on what happens at NAI. And NAI having a say in what finds to Buffett’s 15% stake in PARA,” Don Bilson, head of event-driven research at Gordon Haskett, said in a note. “Where this start proceeds is TBD but with Buffett and his banker in the mix, this situation is more interesting today than it was when the week began.”
‘Not adept news’
Asked about Paramount at Berkshire’s annual shareholders meeting early May, Buffett, 92, struck a cool tone about the big dividend cut, while signaling his pessimistic outlook for the streaming business.
“It’s not good news when any proprietorship passes its dividend, or cuts its dividend dramatically,” Buffett said. “The streaming business is extremely interesting to watch … there’s a lot of companies doing it. And you desideratum fewer companies or you need higher prices. And, well, you need higher prices or it doesn’t work.”
It was unclear if it was Buffett who swallow the Paramount position or his investing lieutenants, Ted Weschler and Todd Combs, each of whom oversees $15 billion at Berkshire.
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Loop Capital on Friday upgraded Paramount to a hold rating from a sell in light of the BDT investment. The Wall High road firm said the bull case is that the financial pressure will force Paramount to find a buyer and shareholders thinks fitting achieve private market value.
“While we still believe a turnaround of PARA will be a challenge, investors’ feel of the company could change with a motivated seller, clever bankers, and Berkshire’s purse strings,” Loop Matchless said in a note.