Dear Reader,
Happy Monday!
Let me start by saying this: I’ve done a lot of dumb things in my life.
From starting an internet company right at the peak of the dot-com bubble to being skeptical about the iPhone’s potential—my list of mistakes is long.
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But recently, I made another one that’s been on my mind: recommending Paramount (SYM:PARA) at over $20 a share, which has now dropped to $11, down 50%.
It wasn’t fun to add that to my list.
Reflecting on it last night, as I flipped through the endless streaming services I now subscribe to (with prices that seem to rise every three months), I realized the bigger issue I missed with Paramount.
It’s not just about having a great content library or even getting new subscribers.
It’s about how insanely expensive it is to attract and retain those subscribers.
Think about it—business is all about generating revenue by getting new customers and then selling them things they need.
For a company like Paramount, it might cost them $100 to bring in a new subscriber.
But if that subscriber is only paying $10 a month, it takes them 10 months just to break even on that initial ad spend.
And that’s not even considering the massive costs of producing new content to keep those subscribers engaged.
If the content isn’t fresh and compelling, people will simply unsubscribe.
Another thing I realized was that I was underestimating the competition.
Paramount, as an independent studio, just can’t compete with giants like Amazon, Netflix, and Apple.
These companies can throw money at scale, bidding for the best shows and movies, leaving Paramount in the dust.
It’s no wonder there’s massive consolidation happening in the streaming industry.
And yet, I haven’t recommended selling Paramount.
Why?
Because there’s still hope.
There are active deals in the works.
Skydance has an offer on the table, and just this week, Edgar Bronfman made another offer.
If these deals go through, shareholders could see up to a 35% bump from today’s prices.
So, while this may be mistake number 422 (or maybe 4,022) in my life, I’m not ready to throw in the towel just yet.
One thing I’ve learned over the years is to try not to make the same mistake twice.
But, I’ve also learned that the mistake family is big—if I dodge one, I might just stumble onto its cousin.
That’s exactly what happened with Paramount.
But we’re going to work our way out of this, and there might be some upside if we play our cards right.
So, for those of you who bought on my recommendation, I want to apologize.
But I also want to reassure you—we’re in this together, and I believe we’ll see some positive outcomes as these deals develop.
Wishing you a great week ahead!
“The Buck Stops Here,”
P.S. I almost forgot to tell you that my new “Income Alert” just went live…
Membership is limited and I don’t want my most loyal members to miss this opportunity!
