Boeing and Paramount
I wasn’t sure if I wanted to write about Boeing having to pay a fine, or Paramount finally beginning the last stage of its life, so I chose to write about both. We’ll tackle Boeing first since it is the simpler of the two.
Boeing killed 346 people when they made two awful jets that fell out of the sky in 2018 and 2019. In 2021, the DOJ and Boeing made a deal where Boeing promised not to kill any more people and tighten up on their safety. Then, they made a plane so poorly that its door flew off mid-flight, a ton of whistleblowers came out, and there was a senate hearing that was Succession level. In May, after those PR disasters, the DOJ doubled back and filed a suit against Boeing, saying that the aviation company had failed to uphold its end of the deal.
Quickly, Boeing came to a deal with the DOJ in which they would be forced to pay a $250,000,000 fine, and Boeing was forced to agree to invest $450,000,000 into its safety programs. The company would also be put on probation, and they would have to be overseen by an independent compliance monitor for the next three years.
Overall, this was a pretty light punishment. In 2023, Boeing made $78,000,000,000 in revenue. The fine is equivalent to .3% of their revenue last year. The punishment is so light that the families of the people who were killed by incompetence filed to have this deal stopped because it is so light on Boeing.
Boeing stock was up by as much as 3% on the announcement of the news but finished up .35% on the day. Boeing got off super light as always, but you should still never invest in this stock. There is something rotten to the core of Boeing, and you should never be part of that.
Now we’ll get to Paramount. This is finally, finally done I believe. The Paramount saga has been in my life for almost exactly seven months now, and I am so tired of having to hear about this forsaken company.
I’m not going to recap the entire saga because that would take too long, but in the end, David Ellison’s Skydance Media won out. Skydance will pay Shari Redstone and her family a total of $8 billion to buy National Amusements. So Paramount isn’t being sold as an entire company, just the Redstone family company which owns the majority of voting shares.
Then, after buying the majority of shares, Skydance will then merge with Paramount, which is sort of weird. The reason Shari Redstone accepted this deal but rejected the previous Skydance deal is because this deal gave her slightly less money but more protection from lawsuits.
Included in those protections is a $1.5 billion injection to pay down debt and $4.5 billion to buy out 50% of nonvoting shares at $15. Voting shareholders would be able to sell out at $23 a share, or they could pick up nonvoting shares equitable to their current ones in the new, merged company. This is about a 6% premium for those who are nonvoting and 21% for those with voting.
This is a done deal, but there is a 45-day period where others can make a better offer, but nobody is going to make another offer. I would be willing to bet all my shares in Pax Romana Capital.
Paramount really sucks. Perhaps David Ellison could turn things around, but it will be tough. He is getting all the assets for cheap, however, so it is definitely not impossible. Paramount has NFL rights, tons of valuable properties, Nickelodeon, etc. I think David Ellison could turn this ship around, but the more likely outcome is that this fails, and Skydance disintegrates on this risky bet, which would be a bummer because I like David Ellison.
