Media firms that entered Netflix’s (NFLX) market paid a steep price. During the stay-at-home pandemic, they offered cheap subscriptions to lure Netflix customers to alternative services.
That era is over.
Paramount (PARA) said it would cut 15% of its U.S. workforce on August 8, 2024. This will save $500 million annualized and is part of the Skydance Media cost efficiency plan worth $2 billion in cuts. Skydance’s proposed buyout of PARA stock prevented the stock from falling below $10.00.
Speculators may bet that Skydance’s buyout will close. It offered to buy Paramount for $2.4 billion in cash on July 8. This is $15 a share for the Class B shares and $23 a share for the Class A shares.
Warner Bros Discovery (WBD) lost 8.3% last week after the firm took a $9.1 billion write-down. Linear TV advertising remains weak, forcing the firm to re-value its assets. More disconcerting is the 40% drop in operating and free cash flow.
Fortunately, WBD did not get the NBA deal. This will help the firm preserve cash to pay down its debt.
Speculators may bet that WBD and PARA stocks bottomed. WBD stock needs to trend upward toward $9.00 - $10.00. As the subscriber count increases, the firm may post an increase in free cash flow.
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