In the second quarter Warren Buffett (Trades, Portfolio) increasingly bet on Charter Communications (CHTR, Financial) in the media industry while reducing his stake in Viacom (VIAB, Financial). During the quarter Buffett bought approximately $456 million worth of stock in Charter and decreased his portfolio share of Viacom by approximately $250 million. After his second quarter trades Buffett’s portfolio allocation to the media industry was 5.21%.
Charter has been a media stock in the spotlight recently for its merger with Time Warner Cable (TWC, Financial). The merger attempt announced on May 26 follows an attempt by Comcast which was ended in April 2015. While the previous attempt was ended due to opposition and lack of support many industry speculators believe the Federal Communications Commission will more greatly favor the Charter-Time Warner Cable merger because of the competition it promotes in the industry and the service benefits it provides to consumers.
The Charter merger with Time Warner Cable was announced on May 26. Terms of the deal value Time Warner Cable at $78.7 billion or approximately $195.71 per share. Upon merger of the two companies a New Charter operating company will be created. The New Charter operating company will provide consumers with an even wider product offering and will allow the company to expand its service coverage areas even further. Currently, the Charter-Time Warner Cable merger is awaiting approval from Charter and Time Warner Cable shareholders as well as primary approval from the Federal Communications Commission.
Upon approval of the merger Charter would have approximately 24 million customers which would make it the second-largest cable provider after Comcast with approximately 27 million customers. Since the announcement of the deal on May 26 the market has reacted favorably with Charter’s shares gaining 2.56%. Warren Buffett (Trades, Portfolio)’s buy in provides further support for the company and the merger overall. In the second half of the year Charter’s shares are currently up 5% to a closing price of $179.82 on August 14.
During the second quarter Warren Buffett (Trades, Portfolio) also sold shares of media company Viacom which recently missed revenue estimates for its third quarter of 2015. For the third quarter the company reported total revenue of $3.1 billion down 11% from the comparable quarter and off $230 million from analysts’ estimate. The company’s Filmed Entertainment segment was the primary reason for the quarter’s lower revenue. The segment reported revenue of $479 million down 44% from the comparable quarter. Since the company’s earnings announcement on August 6 the stock is down 15.06%.
Following Warren Buffett (Trades, Portfolio)’s second quarter media industry trades his portfolio now holds 1.36% in Charter and he holds 7.6% of the company’s outstanding shares. In Viacom he holds 1.42% of the company’s shares and his portfolio position in the stock is at 0.34%. In media broadcasting Warren Buffett (Trades, Portfolio) is also a shareholder of Directv (DTV, Financial). In Directv he holds 6.2% of the company’s outstanding shares and has a portfolio stake of 2.72%.
