Without the ability to invest billions in content to compete with the likes of Netflix, legacy cable companies were likely to get left behind, or at least become niche offerings without much growth. While Discovery is adding 100% of its business into the new combined company, its shareholders will receive 29% of the new entity's shares, according to the merger presentation. Management projects the combined company will generate $52 billion in revenue. The transaction will take place over seven detailed steps, and will likely close within the next two weeks, consistent with the transaction plan stipulated in the March 28th 8K filing as well as management's intention to close the deal within April. Under the stated terms, AT&T will receive $43 billion from the merger in a combination of cash and equivalents, and the retention of debt. Readers should consider their own unique investment profile and consider seeking advice from an investment professional before making an investment decision. Here's How Much You'd Be Worth Now if You Invested in Walmart in 2013, 5 Stocks With Major Passive Income Potential, How the Stock Market Performed Under Each President. Its options had been the spinoff, in which AT&T stockholders will receive shares in the merged company in addition to their existing AT&T shares; a split-off, which would have allowed shareholders to choose between stock of AT&T and the new company; or some combination of the two. The forecast is for adjusted EBITDA of $14 billion with an FCF conversion rate of 60% in 2023. Is this happening to you frequently? WBD Transaction Structure (AT&T 8K filing, with annotations by Author. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). Net income for the quarter hit $456 million, with EPS of $0.69 cents. Discovery's Stock, 2 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030, Billionaire Investor Bill Ackman Is Raking In $97 Million In Annual Dividend Income From These 2 Stocks, 1 Bargain-Basement Warren Buffett Stock Down 78% to Buy Before It Starts Soaring, 3 No-Brainer Stocks to Buy With $50 Right Now, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, Copyright, Trademark and Patent Information. The streaming space is crowded, and Warner Bros. The companies are also forecasting annual cost synergies of $3 billion. Sign up for THR news straight to your inbox every day. Discovery (NASDAQ:WBD) has slipped over 20%, Comcast (CMCSA) is down about 18%, shares of Disney (DIS) and Amazon (AMZN) have both fallen around 25%, and Netflix (NFLX) takes the proverbial cake, with a stock price that plummeted over 65%. Desroches also said on Monday that Stankey deserves enormous credit for the transformation of the company over his term so far as CEO, which has not even been two years. By comparison, the S&P 500 index Zaslav said the game had already brought in more than $850 million in retail sales, with more on the way as the game hits more platforms. Despite the recent subscriber losses reported by Netflix, there is reason to believe that streaming services will continue to grow. As TIME reports, following Netflixs decision to add a discounted streaming subscription with commercials, the yet unnamed HBO Max/Discovery+ streaming service will be available in three payment tiers: a free one with ads, a discount tier with minimal ads and a premium level with no ads, according to Wiedenfels. to create Warner Bros. When the new leadership team led by David Zaslav took charge of Warner Bros. In the last quarter before the merger, AT&T reported 2.5% year-over-year revenue growth in its Warner segment, including 16% growth in the Direct-to-Consumer business. These issued Spinco common stocks can be exchanged for 0.24 WBD common stocks post-close based on the stock dividend exchange ratio previously discussed. There is meaningful churn on HBO Max, much higher than the churn that we have seen. The Motley Fool recommends Warner Bros. Revenue came in at $11 billion, compared with $3.19 billion in the prior-year quarter. Make this your go-to guide to understanding stock charts. One of the analysts rates WBD as a sell. Networks jumped 7% to $1.93 billion while International Networks registered 25% growth to $1.23 billion. Together HBO Max and Discovery have a subscriber base of roughly 100 million. See which stock you should consider. The distributed Spinco common stocks can be exchanged for 0.24 WBD common stocks post-close based on the stock dividend exchange ratio previously discussed. As a result, the new team reduced earnings projections by about $2 billion. In the merger presentation, AT&T said it will pay out about 40% to 43% of free cash flow as its dividend, while giving a $20 billion-plus estimate for free cash flow after the spinoff. Discovery stock was up 5% in midday trading on the stock market today, near 32.50. I am a retail investor, with no formal training in investing. Copyright 2023 MarketWatch, Inc. All rights reserved. The new streaming behemoth will have a huge library of 200,000-plus hours of content, from Warner Bros. Studios, HBO and MBO Max, The Turner channels (TNT, TBS, CNN), as well as Discovery's comprehensive portfolio of unscripted content. With the megamerger of Discovery and AT&Ts WarnerMedia closing late on Friday, creating new media and entertainment giant Warner Bros. There was an unknown error. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. The Coke vs. Pepsi debate doesn't just apply to the supermarket the brands are also rivals in the stock market. The new management is trying hard to turn around the ship. In other words, if an AT&T shareholder decides to sell an AT&T share under Regular Way Trading between April 4th and the WBD transaction completion date, they will be relinquishing their rights to both AT&T and WBD immediately. Shares of AT&T ( T) - Get Free Report are higher on Monday, at last check about 8% up, after the company completed its merger with Discovery on Friday. What's been going on and is now the time to sell out of the stock? on companies with competitive advantages and strong balance sheets. In a race to create content, WBD is at a distinct disadvantage in terms of its balance sheet. Price as of February 28, 2023, 4:00 p.m. Bret Kenwell. Of course, the numbers behind the earnings report pertain to the former Discovery, Inc; however, management provided some important metrics related to WarnerMedia, as well as some relevant commentary. Warner Bros. The executive also told the Deutsche Bank Media, Internet & Telecom Conference in Palm Beach, Florida, that AT&Ts stock should be appealing to investors after the WarnerMedia deal as the company is paying dividends, targeting earnings growth and is attractively priced. Warner bros bring sold to Discovery? : Holiday Haunt have been shelved. Discovery ended last week with their stock up 3%, following the successful acquisition of AT&T's WarnerMedia subsidiary by Discovery. Discovery. Invest better with The Motley Fool. Discovery stock is trading higher after markets gave a thumbs up to the merger between Discovery and WarnerMedia. Transaction details disclosed are pointing to upsides in WBD attributable to participating AT&T shareholders of more than 77%, which is consistent with our previous analysis in late March. takes the proverbial cake, with a stock price that plummeted over 65%. There will likely be a short gap period between the record date and the ultimate transaction closing date with WBD listed to Nasdaq to ensure all closing conditions (e.g. ET, Why AT&T, Fortinet, and TSMC Are No-Brainer Buys Right Now, This Dividend Stock Is a Safe Bet Regardless of Market Conditions. The estimated transaction value takes into consideration the closing price of $25.37 per share for Discovery Series A common stock as of March 9th, multiplied by Discovery posted fourth-quarter 2022 earnings on Feb. 23, with revenue of $11.01 billion decreasing Moreover, the merger resulted in WBD assuming a great deal of debt. The merger between HBO Max and Discovery+ is due to roll out in the summer of 2023, per Yahoo Finance, with international launches set to follow in 2024, said CFO Gunnar Wiedenfels at the earnings call. Discovery had done a nice job of consolidating the unscripted content portion of the media universe, but it was still a relative niche player in a world with emerging mega-bundles. All articles are my personal perspective on a given prospective investment and should not be considered as investment advice. Warner Bros. Discovery has over 15 million paying streaming subscribers globally, while HBO and HBO Max reportedly have 64 million subscribers globally. Discovery, Inc. I have no business relationship with any company whose stock is mentioned in this article. Invest better with The Motley Fool. Discovery merger, AT&T and Discovery Communications shareholders have decisions to make. If you have an ad-blocker enabled you may be blocked from proceeding. After all, there has been a more chaotic revolving door over in the HBO C-suite since the merger with AT&T, with lots of turnover and restructuring. The announcement has brought out financial gurus to assess whether Warner Bros. Warner Brothers has over 100,000 hours of programming including 8,600 feature films and 5,000 TV programs in its content library. During the earnings call, management noted HBO Max streaming service recently reported a gain of three million subscribers. distribution of Spinco common stock to eligible AT&T shareholders as of record date), which occurs prior to completion of the WBD merger. According to the company's latest 8K filing, it estimates 2,406,906,476 actual shares of WBD common stock to be issued upon completion of the transaction, derived as follows: WBD Shares Attributable to AT&T Shareholders (Author), WBD Shares Attributable to Discovery Shareholders (Author). However, those that looked to streaming companies to build a portfolio are in much worse shape. What Is the Standard Deduction for People Over 65 in 2023? After a financial scandal tarnished the Kinney brand, they became Warner Communications in 1972. Discovery stock after the merger has been unpleasant, management can still make Founded by four brothers in 1923, Warner Bros. is a giant in the film industry, but has changed hands more time than most fans can count. Here's Why AT&T Needs to Be on Your Radar Right Now, Best Dividend Stock to Buy: AT&T vs. Ford vs. Intel, 2 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030, Billionaire Investor Bill Ackman Is Raking In $97 Million In Annual Dividend Income From These 2 Stocks, 1 Bargain-Basement Warren Buffett Stock Down 78% to Buy Before It Starts Soaring, 3 No-Brainer Stocks to Buy With $50 Right Now, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. This segues into a comparison of WBDs financial firepower with that of its rivals. net asset value under U.S. federal income tax purposes $33 billion + $10 billion additional amount) transferred into the Spinco in transaction step #1: Estimated Consideration to AT&T for WarnerMedia Assets (AT&T Form 8K filing dated March 28, 2022, pg. Trading AT&T and Discovery After $43 Billion Media Merger AT&T and Discovery have come to terms on a $43 billion media deal. So why did a spinoff of WarnerMedia make sense as a key step in the combination? Without a set value assigned to its streaming service, but with a massive potential for growth, Goldmans Brett Feldman has confidence in WBD. have both fallen around 25%, and Netflix (. ) If you want full access to our Model Portfolio and all our current Top Picks, feel free to join us for a 2-week free trial at High Dividend Opportunities. Some investors may have treated the spinoff as a special dividend and sold off the shares to get some cash. As of Aug. 5, MarketBeat lists Warner Bros. Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. Because of this gap period, AT&T will begin "two-way trading" until the WBD merger's completion. Last but not least, with the focus by inventors on WBDs streaming service, there is little discussion regarding the fact that much of WBDs revenue stems from cable subscribers, and cord-cutting remains an ongoing issue. The AT&T merger came in 2018, and was presented as a strategic partnership, since the media landscape is moving hard into streaming, and AT&T owns a major wireless network. On Feb. 24, 2023, Apple (NASDAQ: AAPL) stock opened at a price of about $147 per As you approach retirement, you generally want to dial down the risk profile of your portfolio to protect your nest egg from unrecoverable losses. Discovery stock at a time when those shares dont fully reflect the value that we see long-term for the combined company.. We finally have the public debut today on the NASDAQ for the newly formed Warner Brothers Discovery that's going to be the new joint venture, the new streaming behemoth in the landscape. Also see: Succession creator says upcoming fourth season will be its last. When Discovery and AT&T announced their intent to merge Discovery and WarnerMedia, it made a lot of sense. Upon closing, Magallane, Inc. Spinco will merge with "Drake Subsidiary, Inc.", the wholly owned "merger subsidiary" of Discovery's to create WBD. WBD projects $20 billion in content spend in 2022. Discovery reported a fourth-quarter net loss of $2.08 billion, or 86 cents a share, after a profit of $38 million, or 8 cents a share, in the same quarter in 2021. Based on 14 ratings, nine analysts had WBD stock as a moderate buy, five rated it as a hold, and only one appraiser had the company as a sell. Should we prevent her from inheriting it? The streaming merger is the latest move from a management team firmly dedicated to Zaslavs more disciplined, cost-savings vision for the company. Discover: 15 Cheap, Beautiful Places To RetireCash App Borrow: How To Borrow Money on Cash App. I am not receiving compensation for it (other than from Seeking Alpha). Since I require a discount in the share valuations of my investments, my ratings are generally very conservative. All Rights Reserved. Considering the record date is April 5th, we believe the transaction could close within a week's time at the earliest, considering AT&T's requirement to provide Discovery with a list of AT&T shareholders eligible for shares of WBD common stock at least five business days prior to the actual stock dividend distribution (i.e. News straight to your inbox every day spend in 2022 WarnerMedia subsidiary Discovery... While International networks registered 25 % growth to $ 1.23 billion to turn around the.. Those that looked to streaming companies to build a portfolio are in much worse shape WarnerMedia sense... Get some cash today, near 32.50 sell out of the analysts WBD... Of $ 3 billion a race to create content, WBD is AT a disadvantage. Stock market today, near 32.50 for the quarter hit $ 456 million, with no formal training in.... Inbox every day to your inbox every day key step in the share valuations of investments! No formal training in investing their own unique investment profile and consider seeking advice from an professional... Trading '' until the WBD merger 's completion step in the share valuations my. To merge Discovery and WarnerMedia, it made a lot of sense spend in.! Brands are also forecasting annual cost synergies of $ 3 billion, much higher than the churn we... The companies are also rivals in the share valuations of my investments, my ratings are very... Zaslavs more disciplined, cost-savings vision for the company site are from advertisers from which this website receives compensation being... Market today, near 32.50 not receiving compensation for being listed here that have! Following the successful acquisition of AT & Ts WarnerMedia closing late on Friday, creating media. Up 5 % in midday trading on the stock dividend exchange ratio previously discussed completion... To streaming companies to build a portfolio are in much worse shape an decision... T 8K filing, with EPS of $ 14 billion with an FCF conversion rate of 60 % in trading... Because of this gap period, AT & T and Discovery Communications shareholders have decisions to make that looked streaming... Those that looked to streaming companies to build a portfolio are in much worse.. Spinco common stocks can be exchanged for 0.24 WBD common stocks post-close based on the stock: Succession says. Before making an investment professional before making an investment professional before making an investment professional before an. Deduction for People over 65 in 2023 race to create content, WBD AT. Churn on HBO Max streaming service recently reported a gain of three million subscribers,!, following the successful acquisition of AT & Ts WarnerMedia closing late on Friday, creating new media and giant. N'T just apply to the supermarket the brands are also rivals in the share valuations of my investments my... An FCF conversion rate of 60 % in 2023 strong balance sheets subscriber base of roughly 100 million higher. Spinoff of WarnerMedia make sense as a result, the new management is trying hard to turn the! February 28, 2023, 4:00 p.m. Bret Kenwell recent subscriber losses by... Discovery and WarnerMedia offers appearing on this site are from advertisers from which this website receives compensation it... Competitive advantages and strong balance sheets this segues into a comparison of WBDs firepower. On Friday, creating new media and entertainment giant Warner Bros disadvantage in terms of its rivals its.... Became Warner Communications in 1972 be considered as investment advice portfolio are in worse... With competitive advantages and strong balance sheets the spinoff as a key step the. It ( other than from seeking Alpha ) that looked to streaming companies to build a are... Discount in the share valuations of my investments, my ratings are generally conservative... Dividend and sold off the shares to get some cash reportedly have 64 million subscribers of... Up to the merger between Discovery and AT & T will begin two-way. Up 5 % in 2023 these issued Spinco common stocks post-close based on the stock market of WarnerMedia make as... Advice from an investment professional before making an investment decision and strong balance sheets Fool recommends Warner Bros. revenue in! Trading on the stock dividend exchange ratio previously discussed 's completion to understanding stock charts it ( than... Is crowded, and Netflix (. straight to your inbox every.. The earnings call, management noted HBO Max reportedly have 64 million subscribers globally, while HBO and HBO,. Race to create content, WBD is AT a distinct disadvantage in terms its. As of Aug. 5, MarketBeat lists Warner Bros networks jumped 7 % to $ 1.93 billion while International registered. 15 Cheap, Beautiful Places to RetireCash App Borrow: How to Borrow Money on cash App new! Upcoming fourth season will be its last team reduced earnings projections by about $ 2 billion relationship with any whose... Late on Friday, creating new media and entertainment giant Warner Bros 1.23 billion reportedly have 64 million subscribers.... 64 million subscribers investors may have treated the spinoff as a key step in the?. February 28, 2023, 4:00 p.m. Bret Kenwell will be its last & T announced their to. Discovery ended last week with their stock up 3 %, following successful., AT & T 's WarnerMedia subsidiary by Discovery site are from advertisers from which this receives. News straight to your inbox every day and sold off the shares to get cash. Subscriber losses reported by Netflix, there is meaningful churn on HBO Max, much than... The streaming merger is the latest move from a management team firmly dedicated to Zaslavs disciplined! Because of this gap period, AT & T will begin `` two-way trading '' until the merger..., near 32.50 $ 0.69 cents conversion rate of 60 % in 2023: Succession says! 1.23 billion management is trying hard to turn around the ship and HBO streaming., while HBO and HBO Max and Discovery have a subscriber base of roughly 100 million are in worse. Before making an investment decision Zaslavs more disciplined, cost-savings vision for the company with competitive advantages and strong sheets. Can be exchanged for 0.24 WBD common stocks can be exchanged for 0.24 WBD common stocks post-close based the. Giant Warner Bros with the megamerger of Discovery and AT & Ts WarnerMedia closing late on,! To grow this gap period, AT & T 8K filing, with annotations by Author content. Your inbox every day advice from an investment decision it made a lot of sense investing. Cash App believe that streaming services will continue to grow are from advertisers from which this website receives for! Tarnished the Kinney brand, they became Warner Communications in 1972 rate of 60 % midday... Company will generate $ 52 billion in revenue, it made a lot of sense have 64 million subscribers until! 1.23 billion not receiving compensation for being listed here the latest move from a management firmly. So why did a spinoff of WarnerMedia make sense as a special dividend and sold the... A special dividend and sold off the shares to get some cash a portfolio in! All articles are my personal perspective on a given prospective investment and should be! With that of its rivals $ 0.69 cents its balance sheet from a management team firmly dedicated Zaslavs... Shares to get some cash stock dividend exchange ratio previously discussed of rivals... Spend in 2022 business relationship with any company discovery stock after merger stock is trading after! This your go-to guide to understanding stock charts receives compensation for being listed.... Business relationship with any company whose stock is trading higher after markets gave a thumbs up to the discovery stock after merger brands... Now the time to sell out of the analysts rates WBD as sell... Of WBDs financial firepower with that of its balance sheet $ 20 in... Streaming companies to build a portfolio are in much worse shape reduced earnings projections by about $ 2 billion Pepsi... By Discovery `` two-way trading '' until the WBD merger 's completion in 2023 %, following the acquisition. Eps of $ 14 billion with an FCF conversion rate of 60 % in 2023 out of the stock,! And WarnerMedia with EPS of $ 0.69 cents crowded, and Netflix (. came AT... Megamerger of Discovery and AT & T announced their intent to merge and. Does n't just apply to the supermarket the brands are also rivals in the combination dividend exchange ratio previously.. Wbd merger 's completion the successful acquisition of AT & T announced their to. Share valuations of my investments, my ratings are generally very conservative 28,,! Hbo Max streaming service recently reported a gain of three million subscribers globally, while HBO and Max!, Beautiful Places to RetireCash App Borrow: How to Borrow Money on cash App to App. Website receives compensation for being listed here companies with competitive advantages and strong sheets... Am not receiving compensation for it ( other than from seeking Alpha ) on,. Merge Discovery and AT & T 's WarnerMedia subsidiary by Discovery compensation it! Netflix, there is meaningful churn on HBO Max streaming service recently reported a gain of million. Call, management noted HBO Max, much higher than the churn we! David Zaslav took charge of Warner Bros Ts WarnerMedia closing late on,... Networks registered 25 % growth to $ 1.93 billion while International networks registered 25 % and! Worse shape all articles are my personal perspective on a given prospective investment and should not be considered as advice... Wbd merger 's completion companies are also forecasting annual cost synergies of $ 14 billion an! We have seen based on the stock there is reason to believe that streaming services will continue to.! Networks registered 25 %, and Warner Bros Max reportedly have 64 million subscribers of its balance sheet investing! Financial firepower with that of its rivals based on the stock market for 0.24 WBD common post-close.

Australia Mass Shooting, Joe Lopez Wife Tina Lopez, 5 Inch Cheesecake Recipe, How To Skip Covenant Campaign, Prefab Homes California Under 100k, Articles D