With News of Berkshire Hathaway Inc. (BRK.B) Stake, Is Starz (STRZA) Still Attractive?

Time Warner Inc (NYSE:TWX) owns HBO. While it is smaller than Starz (NASDAQ:STRZA) by subscriber count, the network has a near-flawless record in its recent original productions. Titles such as Game of Thrones, Girls, and True Blood have been tremendous successes in attracting and retaining subscribers. Time Warner trades at 14.12 times forward earnings, but includes many other factors — from film studio Warner Brothers to theme parks. Showtime parent CBS Corporation (NYSE:CBS) trades at just over 15 times earnings. All three networks have attractive economics as they have pushed original content that, though costly up front, creates better margins over time and saves the company from some difficult negotiations with other content providers. Recently, the company ended its contract with both Netflix, Inc. (NASDAQ:NFLX) and The Walt Disney Company (NYSE:DIS), startling some investors and analysts but ultimately proving a wise decision as it freed up cash to put toward in-house production.

As mentioned, Berkshire’s holding, which was not an open-market purchase but part of the spinoff from Liberty, is still intriguing as the conglomerate could have sold the stock upon receipt, but instead opted to keep it. All in all, Starz (NASDAQ:STRZA) looks to remain fairly valued and an attractive long-term pick. I would not worry too much about the short-term dip on the financial statements.

The article With News of Berkshire Stake, Is Starz Still Attractive? originally appeared on Fool.com and is written by Michael Lewis.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway, Netflix, and Walt Disney. The Motley Fool owns shares of Berkshire Hathaway, Netflix, and Walt Disney.

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