Archegos Capital Selloff effected stocks

What makes you believe Viacom and/or Discovery is at a bottom?

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Affected

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Thank you

Anyway I’m buying some VIAC

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Yikes.

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Well played

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What makes you believe Viacom and/or Discovery is at a bottom

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I think Viac bottomed, and over the last two months it’s become my largest holding. Their earnings are strong and it pays almost a 3% dividend. Paramount+ and Pluto are their wildcards, for substantial growth. They have a great IP library, which is shown by all the programming they produce and license to Netflix and Amazon. (Netflix is a gorilla, but when you consider the questionable quality of most their original content against how much they pay to create it…there’s an opening for rivals)

However, Viacom’s content is a double edged sword. 1/4 of their revenue comes from licensing to rival streaming. To make their platforms competitive they’d need to pull everything from competitors and invest considerably more for original content. That will be a monstrous revenue suck.

For true growth potential that excites investors they really needed Amazon to acquire them, but that idea was shot after the MGM acquisition.

The next best option is an apple acquisition, which seems unlikely.

A Comcast merger would be next, but CBS and NBC together would trigger anti trust issues.

The next logical merger would be with HBO, but the ATT-Discovery deal seems to have killed that.

Nonetheless, I think the stock has the potential to really pop if a merger develops or there’s signs P+ and Pluto outperform their peers or steal some share from Netflix/Amazon. Worst case, I think it runs flat like ATT, and I haven’t seen anything to indicate a drop any worse than the high 30’s.

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Fwiw, I posted that before Viacom fell another 12% and Discovery fell another 39%.

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I don’t think discovery’s done falling. At best the A shares will drop down to match the K shares since there’s no differentiation in value for the merger. I foolishly bought in at $38 thinking there was some genius to their Dollar General business model of paying a bunch of mentally unstable degenerates $1000/episode and then flipping the content into a $4.99/mo streaming service. At best that money’s dead for the immediate future.