Warren Buffett, renowned investor and CEO of Berkshire Hathaway, announced during Berkshire’s annual meeting in Omaha, Nebraska, that his company has divested its position in Paramount Global, marking the end of a two-year investment journey.
Buffett candidly disclosed the decision, acknowledging the financial setback incurred. “We sold it all, and we lost quite a bit of money, that happens in this business too,” he shared with the audience, emphasizing that the decision to invest in Paramount was solely his own. Speculation had arisen previously regarding whether one of Buffett’s deputies initiated the trade, but Buffett clarified, “I did it all by myself, folks.”
Berkshire Hathaway had surprised Wall Street in May 2022 when it revealed a $2.6 billion stake in Paramount. Over time, it expanded its holdings, eventually becoming the largest shareholder in the company, particularly in its non-voting shares, while Shari Redstone and the Redstone family’s National Amusements retained control of the majority of voting shares.
However, Paramount’s stock experienced a downward trajectory due to the substantial costs associated with competing in the streaming industry and a lukewarm mergers and acquisitions landscape, placing the company in a challenging financial position. The decision to reduce dividends last year aimed to allocate resources toward streaming investments.
In recent months, Paramount engaged in sale discussions, including an exclusive negotiating window with a consortium led by David Ellison’s Skydance, which recently concluded, and a new proposal from Apollo and Sony. While these talks led to slight stock price increases, uncertainty prevailed regarding the likelihood of a deal and its potential implications if negotiations fell through.
Furthermore, the company underwent leadership changes, parting ways with CEO Bob Bakish and appointing a trio of executives to form an “office of the CEO.”
Reflecting on the experience, Buffett, now 93 years old, admitted to gaining valuable insights but also acknowledged the financial toll. “Actually, owning Paramount made me think even deeper, but I certainly looked harder about the whole question of what people do with their leisure time and what the governing principles are of running an entertainment business of any sort, whether it’s sports or movies or whatever it might be,” Buffett remarked. “I think I’m smarter now than I was a couple of years ago, but I also think I’m poorer because I acquired the knowledge in the manner I did.”
