Wells Fargo: Paramount's 'Rare Gem' Studio Assets Could Be Worth $30B

A sale of parts of Paramount Global’s studio assets could fetch $30B, according to Wells Fargo, assuming Paramount wants to sell.

Wells Fargo classified Paramount Global’s studios as a "rare gem" that could drum up interest in a sale, Seeking Alpha reported.

A strategic purchase of some of Paramount Global’s studios could give Netflix “access to [Paramount’s] significant library, lot in LA and in-production TV series and films (which are many),” Wells Fargo equity analyst Steven Cahall wrote in a note to investors. The Studios at Paramount, the company’s studio lot in central LA, would be a potentially valuable asset in light of the rise in institutional investor interest in the property type.

“We've always viewed Paramount Studios (and PARA's CBS Studio) as a rare gem that, if put up for sale, could garner significant M&A interest from streamers; however, we're not convinced PARA would break-up and sell,” the note said.

The closer look at the media company comes after Business Insider reported earlier this week that Netflix had explored purchasing Paramount Global for its movie studio. The $30B figure comes from a similar sale in media two years ago, when Amazon paid eight times the “enterprise value-to-library” to buy MGM, largely for its library, the Los Angeles Times reported at the time.

At five times the enterprise value-to-licensing for Paramount Studios — taking into account the increased cost of capital compared to when Amazon made its purchase — Paramount’s studios are worth about $30B, Cahall writes.

Paramount Global leadership has vocally opposed sales in the past.

Further, a sale would be complicated by the company’s strategy of sharing content through its streaming platforms directly with subscribers.

“Without a studio, [direct-to-consumer] is orphaned,” the investor note read. “We don't think streamers like NFLX have any interest in PARA in its entirety so we're suspect of an all-out takeout of PARA."

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