Warren Buffett's Latest Moves to Invade Your Living Room

Warren Buffett is known for his love of banks and consumer companies, but it turns out he is aggressively buying up media companies like Liberty Global and DirecTV, while also selling his position in Starz.

Feb 18, 2014 at 7:29AM

The latest stock-picking data from Warren Buffett's Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) is in, and as it turns out, he made a few major moves in the media and television industries in the fourth quarter of last year.

By Woodleywonderworks

Source: woodleywonderworks on Flickr.

Most people think of Buffett as operating in the financial services and consumer goods industries, as he is well known for his massive positions in Wells Fargo, Coca-Cola, American Express, and IBM, which total $64 billion and make up more than 60% of the Berkshire Hathaway portfolio.

Yet as it turns out, although most people do not think of Buffett as being active in the media industry, the ninth largest holding of Berkshire Hathaway is DirecTV (NASDAQ:DTV), which is valued at $2.5 billion. In September of 2011, Buffett and team "only" had a $200 million position of the popular satellite company, but over the course of the next year, his position grew by $1.5 billion and was worth more than $1.7 billion by the end of 2012.

Berkshire also has a $775 million stake in Liberty Media, which itself is a media company with equity interests in a variety of other entertainment firms, including a 53% stake in SiriusXM and even the Atlanta Braves. Buffett first amassed the position in Liberty Media in the first quarter of 2013 and has held onto it ever since. Berkshire also has a $660 million stake in cable giant Viacom.

Insider Monkey

Source: Insider Monkey.

One big buy
In the fourth quarter, Buffett and his investment team amassed a $262 million position in Liberty Global (NASDAQ:LBTYA), which is the largest cable company in Europe. And while the company reported a loss of $2.87 per share in 2013, many have taken an interest in the stock because of Chairman John Malone, who has an excellent record of leading companies. Malone is using the company's cash flow to invest in its businesses and make acquisitions of other cable companies. It also added more than 1.3 million subscribers to its businesses in 2013.  

The company itself has also increased its share repurchase program to $4.5 billion, and it still has more than $3.5 billion remaining on that. Buffett is known to favor companies that repurchase shares, generate cash, and have highly regarded management -- Malone ran Tele-Communications, which was valued at $43.5 billion when it was taken over by AT&T in 1999, and also sits on the board of Liberty Media -- so this addition of Liberty Global should perhaps come as no surprise.

Sarah Reid

Source: Sarah Reid on Flickr.

Two major sales
In addition to the big purchase of Liberty Global, Buffett also unloaded his position in two other media companies. Buffett sold another 19% of his stake in Starz (NASDAQ:STRZA), which continued the trend seen in all of 2013. At the end of 2012, Berkshire had a $650 million position in the media company that was actually spun off from Liberty Media, and by the end of March, Buffett and team unloaded more than 80% of it, or $500 million worth of the company, with the position standing at almost $125 million. Berkshire patiently held onto that stake until September, but proceeded to sell in the fourth quarter of 2013.

And lastly, although it was a small position, Berkshire Hathaway unloaded its $25 million stake in Dish Network, which it added in June. It may have peaked his interest then, but clearly not enough for him to add more.

The key takeaway
Almost 25 years ago, in his 1991 letter to shareholders, Buffett remarked, "most media properties continue to have far better economic characteristics than those possessed by the average American business. But gone are the days of bullet-proof franchises and cornucopian economics," and the recent Time-Warner Cable and Comcast merger, plus the broader industry consolidation, demonstrates the second point very clearly. However, his continual purchases of media companies also shows he still holds on to the first point, and the media industry still intrigues him.

More from Buffett
Curious to learn the secret to Warren Buffett's success? While he has made billions through his investing, the reality is, he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

Patrick Morris owns shares of Berkshire Hathaway. The Motley Fool recommends Berkshire Hathaway and DirecTV. The Motley Fool owns shares of Berkshire Hathaway and Liberty Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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