Paramount studio assets 'rare gem' that could be worth $30B in a sale: Wells Fargo
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Following the report that Netflix (NASDAQ:NFLX) may have looked at buying some of Paramount Global's (NASDAQ:PARA) (NASDAQ:PARAA) studio assets, investment firm Wells Fargo called them a "rare gem" that could generate strong interest in a sale.
Analyst Steve Cahall, who has an underweight rating on Paramount Global's (PARA) (PARAA) shares, said Paramount Studios and CBS Studios could "garner significant M&A interest from streamers" but he isn't convinced the Bob Bakish-led company will sell. 
"In 2016, the late Sumner Redstone was publicly opposed to selling a stake in the studio," Cahall wrote in an investor note. "Shari Redstone has moved to consolidate core assets and her most recent commentary has seemed add to [direct-to-consumer] conviction. Without a studio, [direct-to-consumer] is orphaned. 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."
Cahall added that Paramount's (PARA) direct-to-consumer business is "misguided" and it should shut it down and put the studios up for sale. He pointed out that Amazon (AMZN) paid 8 times enterprise value-to-library sales for MGM and at 5 times, Paramount's studios are worth roughly $30B. 
Cahall sees a break-up of Paramount (PARA) (PARAA) as "inevitable" and the question remains if it happens sooner than later, perhaps staving off some further value destruction from management.
Paramount (PARA) (PARAA) shares have fallen nearly 8% year-to-date, well below the 14% gain for the S&P 500.
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