If you think about the revenues of an entertainment company, they will produce movies but few are going to be blockbusters, however some will make money. Then they will need subscribers and advertising and the more the better. At some level, the number of subscribers will be profitable, but to reach the level it will need to generate momentum or appeal to a specific audiences.

In an article by Wyatte Grantham-Philips and Michelle Chapman of the Associated President, recently the FTC approved the $8 billion merger between Paramount and Skydance to become the Parmount Skydance Corp. The business plan includes many ideas of using the cloud to facilitate media productions. The company also needs to attract subscribers and increase advertising rates.

Chairman and CEO David Ellison of Paramount Skydance made his first deal to buy the rights to be home to Ultimate Fighting Championships (UFC) through a 7 year agreement with TKO Group Holdings.

UFC market is under 30 men and many of them are avid followers and will pay to watch the championships. It is expected a number of them will add Parmount + to their streaming services at costs between $7.99 and $12.99 a month.

Prior to the deal, the UFC was on ESPN which had been paying $550 million a year as opposed to the $1.1 billion Paramount will pay. TKO also owns WWE or world wide wrestling, but the WWE sign a long term contract with Disney’s ESPN for a exclusive rights for 5 years. ESPN will launch a ESPN streaming service for the WWE.

Linking to dividend paying stocks, if you are going to own entertainment companies, in many respects the need commercials to pay for the operations of the company. Key metrics of how many new subscribers came in during the quarter? who is advertising on the company at what rates? then you will know if the strategy is paying off, so you can determine if the company is hold or seek alternatives.

There are more questions than answers, till the next time – to raising questions.