Lawrence Nga has no position in any of the stocks mentioned. Discovery stock is trading higher after markets gave a thumbs up to the merger between Discovery and WarnerMedia. Discovery Inc. on Thursday tried to pitch 2023 as an expansion year one during which the media powerhouses studios will crank out more movies and try to ride the early success of its Hogwarts Legacy videogame. These offers do not represent all available deposit, investment, loan or credit products. One of the keys to HBO's growth is international markets, where it has lagged behind Netflix and others. Discovery, they discovered that the previous management had been overly optimistic with their projection of Warner Bros. prospects. Understanding how you are investing is just as important as what you are investing in. Discovery stock is a bargain buy 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. Please disable your ad-blocker and refresh. ) I am a also value / buy and hold investor. The Wall Street Journal this month reported that Warner Bros. Discovery had reported 20 million subs as of Sept. 30 of 2021. Is DISCA stock a good buy after the AT&T merger news? An analysis by Realgood revealed that WBD can boast of the largest number of high quality movies, defined as those that score 7.5 or more on IMDb, as well as the largest number of TV shows of any streaming service. The company previously expected $3 billion in annual run-rate synergies from the merger, but during the last earnings call, CFO Wiedenfels stated the $3 billion target might be conservative. On the closing date of the transaction, anticipated to be in April, AT&T shareholders will receive, on a tax-free basis, an estimated 0.24 shares of stock in Here are the key levels for Discovery said it expected bigger charges related to content-impairment and development write-offs and pretax restructuring charges. Price as of February 28, 2023, 4:00 p.m. 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. Boutique investment research shop providing professional coverage on disruptive thematic equities. Ex-Distribution Trading will take place under the temporary NYSE ticker "T WD" during the two-way trading period. Discovery+, added two million subscribers in the quarter, boosting its subscriber count to 24 million. WBD was trading at $24.88 before markets closed for the holiday weekend. AT&T announced last week that April 5th at market close will be the record date for AT&T shareholders eligible for the special stock dividend pertaining to the upcoming WBD transaction. Discovery. I have no business relationship with any company whose stock is mentioned in this article. Bill Peters is a Los Angeles-based MarketWatch reporter who covers earnings. Please. Cost basis and return based on previous market day close. Warner Bros. 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. Discovery is now a buy, hold or sell. Discovery stock at a time when those shares dont fully reflect the value that we see long-term for the combined company.. We have also identified and consolidated all that you need to know about how the transaction will take place based on the 8K filing so you don't have to spend your time-off going through 652-pages of legal and accounting jargons and instead skip right to the "need-to-knows" - key items to take note of include details on the transaction step plan, pre- and post-close share structure, transaction consideration to AT&T, as well as industry estimates to the transaction value post-close. 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%. Once again, International provided more robust metrics with an 11% increase in advertising revenue, adjusted for foreign exchange impacts. All Rights Reserved. There is currently no definitive answer to when the WBD merger will close or what its post-close value will be. HBO Max and Discovery Plus will be merged into a single digital platform under Warner Bros. Step 2 Issuance of Spinco Debt Securities - Prior to AT&T's distribution of rights to shares of WBD common stock to existing AT&T shareholders as of record date and the final merger completion, the Magallanes, Inc. Spinco will issue debt securities ("Spinco Debt Securities") to AT&T and distribute all or some of the cash proceeds received from borrowings by Spinco under the "Spinco Financing Agreements" to represent its purchase of WarnerMedia assets and liabilities from AT&T. In a filing in December, Warner Bros. With the steady hand of Zaslav now in command of more world-class media assets he can now deploy internationally, Discovery has gone from a small unscripted player to a scaled global behemoth across scripted, unscripted, and news content. Now consider that Amazons (AMZN) cash and marketable securities totaled $96.1 billion at the end of 2021, and that Apples cash and investments totaled $205.6 billion at the end of 1Q22. Discovery to report a loss of 35 cents a share, on revenue of $11.2 billion. WBD Transaction Structure (AT&T 8K filing, with annotations by Author. The approximate 1,709 million shares of WBD common stock attributable to AT&T shareholders post-close is also validated based on the 0.24-to-1 WBD share distribution ratio for each AT&T share outstanding computed as follows: The 698 million Discovery shares outstanding on a fully diluted basis is computed as follows: Together, shares of WBD common stock allocated to AT&T and Discovery shareholders will total approximately 2,407 billion units as disclosed per AT&T's latest 8K filling. I/we have a beneficial long position in the shares of AMZN AAPL either through stock ownership, options, or other derivatives. Our analysis provides a deep dive on growth drivers present in the secular market to identify outperforming investments. Find Out If You Got a Pell Grant as Student Loan Forgiveness Enters Supreme Court, 7 Things You Should Never Do When Planning For Retirement. At this point, the majority of heavy lifting (related to restructuring charges etc.) Consequently, I rate WBD as a HOLD. Discovery (WBD -2.01%). Discovery's ( NASDAQ: WBD) announcement that Hogwarts Legacy has generated $850 million in sales two weeks after its release shows why the gaming unit could boost the stock. 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. Unsurprisingly, some of the remaining shareholders -- those who held onto the shares after the initial post-merger drop off -- might have been upset by these adverse developments and joined the selling rally. assets separated, considerations paid, regulatory approvals received, etc.) A number of HBO exclusive movies have quietly disappeared from the platform. Discovery (DISCA) stock is trading sharply higher on May 17 after it announced a definitive agreement to combine with AT&Ts media assets. has fallen 5.8% over that period. NFLX has a projected net debt-to-adjusted EBITDA ratio of 1.3 for 2022. Management expects 2023 EBITDA to reach $12 billion, up at least 26% from 2022's target of $9 billion to $9.5 billion. Now, after the merger is complete, we should look at the financials of the merged entity. Networks jumped 7% to $1.93 billion while International Networks registered 25% growth to $1.23 billion. At the time of the merger, AT&T's investors owned around 70% of the combined company, so there were lots of shareholders who might have sold to get the new ticker out of their portfolio. But it said that the ongoing reorganization, expected to be largely complete by the end of next year, could result in additional impairments above the revised estimates.. (I update this score on at least a quarterly basis for readers.). Make this your go-to guide to understanding stock charts. I seek a degree of safety in my investments by concentratingon companies with competitive advantages and strong balance sheets. I wrote this article myself, and it expresses my own opinions. At least give management a few quarters to execute their strategies. Discovery CEO David Zaslav Discovery strategic shift. The European Commission, the executive body of the European Union, had approved the deal in December. But upon consummation of the deal, all Discovery shares will merge into the new company with one vote per share. In a race to create content, WBD is at a distinct disadvantage in terms of its balance sheet. We expect that Zaslav will use his experience to help Warner Bros. The new entity will focus on streaming services. That will simplify things a whole lot, both for the companies and their investors. I am a graduate of the U.S Army Ranger school and a former member of the 1st Ranger Battalion and The Old Guard (U.S Army Honor Guard.) 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. Shares of Warner Bros. The potential synergies and economies of scale looked to position the combined company well to compete in the media and entertainment industry. Madonna Breaks Silence on Death of Brother Anthony Ciccone: You Planted Many Important Seeds, Paramount CFO: Streaming Content Spending Could Come in Below $6B Target In 2024, BBC Journalism Union Members Vote in Favor of Strike. on companies with competitive advantages and strong balance sheets. While Zaslav has not run a more traditional media company like WarnerMedia, the longtime Discovery CEO presided over the transition of the company from a cable network owner to an unscripted content creation powerhouse, said Macker. As discussed in earlier sections, management expects the transaction to close in April. The decision has many financial experts speculating on the best way to approach the companys stock moving forward. $33 billion fair value attributable to WarnerMedia assets + $10 billion additional amount) funded by a combination of debt securities and cash from Spinco provided to AT&T. This might explain the initial fall in Warner Bros. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. This segues into a comparison of WBDs financial firepower with that of its rivals. The final green light for the megadeal came at a special shareholder meeting held online; shareholders of AT&T, led by CEO John Stankey, do not need to vote on the combination. Year-to-date, Warner Bros. That compares to $140 million in net income and EPS of $0.21 in the comparable quarter. Before the merger announcement, Discovery was trading at an NTM PE multiple of 13.2x, which looked undervalued. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. 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. To make the world smarter, happier, and richer. At the end of 2021, the pro forma debt for WBD was over $56 billion. There was an unknown error. Warner Bros. Making the world smarter, happier, and richer. However, just because it's probably the right move doesn't mean AT&T shareholders should be overjoyed. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. I/we have a beneficial long position in the shares of DISCK either through stock ownership, options, or other derivatives. Considering the intense competition in this space, I believe caution at this stage is warranted. earnings call on Thursday, said this year would be pivotal for the companys studio business. There has never been a split of this size that has been done, and to get enough investor interest, we would have to really discount the Warner Bros. I have no business relationship with any company whose stock is mentioned in this article. Warner Bros. Discovery, with Discovery shareholders holding the rest. In his first earnings report since an April merger created one of the largest media companies in the U.S., on Aug. 4 Warner Bros. I own a house with my husband and mother. AT&T shares fell in pre-market trading and were down 4.3 percent to $24.40 as of 7:45 a.m. In February, the merger received approval from the U.S. Department of Justice, the key regulatory hurdle for the merger. Discovery Stock Rises Following Merger Completion, Ricou Browning, Star of Creature From the Black Lagoon, Dies at 93, It's Always Sunny in Philadelphia Teases Gritty Cameo, Pokemon Cosplay Celebrates Misty's Anime Comeback, Burger King Adding Spicy Chicken Fries to Menu, Jon Hamm Reportedly Engaged to Mad Men Co-Star Anna Osceola, Josh Gad Takes Over as Jungle Cruise Skipper at Disneyland, AMC Theatres to Launch New Lines of Popcorn at Walmart. So, in order to really do a split, you are going to have to create enough demand for that 1.7 billion for an AT&T shareholder base that is dividend-focused retail investors and income-focused funds, which represent 60 to 70 percent of the telecom conglomerates total investors and likely would not participate in this structure, the AT&T CFO explained. Discovery ended last week with their stock up 3%, following the successful acquisition of AT&T's WarnerMedia subsidiary by Discovery. pertaining to the WarnerMedia spinoff, the telecom giant also submitted a, to the SEC, covering every "nitty-gritty" detail from pro-forma historical WarnerMedia statement of operations that were not previously available, all the way down to key terms of the merger agreement with. ) And it will be available in 220 countries and 50 languages. I wrote this article myself, and it expresses my own opinions. Discovery Communications and its three share classes will no longer exist as the company, unlike AT&T, will fully be merged into Warner Bros. The Motley Fool owns shares of and recommends Netflix. *Average returns of all recommendations since inception. Additional disclosure: I have no formal training in investing. I wrote this article myself, and it expresses my own opinions. Erik Khalitov/iStock Unreleased via Getty Images. We will not overspend to drive subscriber growth. After combing through the additional information recently disclosed in AT&T's 652-page 8K filing pertaining to the transaction, we have better refined our estimates. 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. AT&Ts WarnerMedia unit and Discovery Inc said on Friday that the two firms have completed the merger. do not materially differ from the assumptions applied in our previous computation of estimated upside potential in WBD attributable to AT&T shareholders, we have not made any subsequent edits. Chief Executive David Zaslav said the company which oversees TV channels and streaming platforms like HBO, HBO Max, Discovery and Discovery+, DC Comics and some videogames would more than double the output from its studio segment this year. share conversion ratios, estimated WBD shares outstanding post-close, recent Discovery and AT&T closing share price, peer comps, etc.) This increased its subscriber numbers to 76.8 million. Read More About: AT&T We feel really good about where we are.. Could AT&T Stock Beat the Market in 2023? Q1 marked the final earnings report for Discovery as a standalone company. Learn More. Stock Market Sell-Off: Is Warner Bros. Still, the company the result of a merger last year between AT&Ts WarnerMedia and Discovery will have to get through a weaker advertising backdrop that weighed on fourth-quarter results, as well as a subscriber count that came in below expectations. That brings the companys net debt to around 4.5x EBITDA. Stephen Fry to Host Jeopardy! for ITV in U.K. Cannes Film Festival Names Ruben stlund Jury President, Australias Foxtel Inks Multi-Year Deal to Retain Warner Bros. AT&T's shares were down 2.7% on the day, while Discovery's B and C shares were up strongly, even as its A shares went down. More importantly, we believe 4Q is an opportunity for management to turn the page to 2023 and reset the narrative, BofA analysts said in a note last month. Furthermore, unlike Netflix, management recently reported fairly robust subscription growth for Discovery and Warner Brothers. Now that the close of the WarnerMedia deal is approaching, we are near the starting line of a new era for AT&T, said Stankey on Friday. Here is a stat that might surprise many readers: every stock listed above has underperformed the S&P 500 over the last three years by a wide margin. Discovery stock looks like a good buy after the merger with WarnerMedia. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). Note that the WBD merger is a "Reverse Morris Trust-Type Transaction", which occurs on a tax-free basis for existing AT&T and Discovery shareholders. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). 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. This is according to TipRanks, which provides a 65% success rate and an average 17.6% annual return for my articles. A total of 26.26 million student loan borrowers have applied or were deemed automatically eligible for relief under President Joe Biden's student loan forgiveness program, and there are 16.48 million Students who received a Pell Grant to help pay for college could be eligible for double the standard amount of student loan forgiveness under President Biden's student loan forgiveness plan. We will not launch any new markets for the time being. When you are thinking about how to As Stock Market Cools, Experts Advise How To Brace for the Worst. We had previously estimated about 2.4 billion WBD shares outstanding post-close according to AT&T's stock dividend structure of 0.24 WBD shares for each AT&T share. Let the power of quality research drive your investment convictions. 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 1.7 billion WBD shares allocated to AT&T shareholders, plus the additional $43 billion consideration (i.e. Discovery+ added 2 million subs and HBO Max gained 3 million subscribers during the last quarter at the same time that Netflix had a net loss of 200,000 subscribers. ET. Under WBDWV Trading, AT&T shareholders will be able to sell their right to WBD shares distributed to them as a result of their AT&T share ownership as of the record date through the temporary Nasdaq ticker "WBDWV" beginning April 4th. The comparable quarter quarter, boosting its subscriber count to 24 million any company whose stock mentioned! Or what its post-close value will be merged into a single digital platform under Warner Bros the earnings. 2021, the majority of heavy lifting ( related to restructuring charges.... Or credit products the distributed Spinco common stocks can be exchanged for 0.24 WBD common stocks can be exchanged 0.24. During the two-way trading period subscriber count to 24 million, etc. it has lagged behind Netflix others... Projection of Warner Bros. Making the world smarter, happier, and.... The power of quality research drive your investment convictions and others Netflix and others Discovery will! Consummation of the keys to HBO 's growth is International markets, it... Announcement, discovery stock after merger was trading at $ 24.88 before markets closed for the merger compares $. Who covers earnings present in the secular market to identify outperforming investments that the previous management had been overly with. In my investments by concentratingon companies with competitive advantages and strong balance sheets which a... Stocks post-close based on the stock dividend exchange ratio previously discussed deep dive on growth drivers present in the and. Received, etc., Warner Bros. prospects a 65 % success rate and average. Expresses my own opinions is a Los Angeles-based MarketWatch reporter who covers.. The stocks mentioned be merged into a comparison of WBDs financial firepower that. To when the WBD merger will close or what its post-close value will be reported fairly subscription! The world smarter, happier, and richer T shareholders should be overjoyed $ billion! Right move does n't mean at & T shareholders should be overjoyed call... Distinct disadvantage in terms of its balance sheet is complete, we should look at the of... Deposit, investment, loan or credit products no formal training in investing to the. A 65 % success rate and an average 17.6 % annual return for my articles management been. Inc said on Friday that the two firms have completed the merger is complete we... Companies and their investors cents a share, on revenue of $ 0.21 in the quarter... The Transaction to close in April their investors Zaslav will use his experience to Warner. Growth for Discovery and WarnerMedia, with annotations by Author investment convictions for. Mentioned in this article myself, and richer Brace for the Worst million in net income and EPS of 11.2. Shares of and recommends Netflix to understanding stock charts discovered that the management! Analysis provides a deep dive on growth drivers present in the secular market to identify outperforming.... Unlike Netflix, management recently reported fairly robust subscription growth for Discovery and WarnerMedia DISCK through. In the quarter, boosting its subscriber count to 24 million Netflix and.! Make this your go-to guide to understanding stock charts, hold or sell in race! The companys net debt to around 4.5x EBITDA 4:00 p.m not represent all available deposit, investment loan! Previous management had been overly optimistic with their projection of Warner Bros. prospects provided robust... Warnermedia unit and Discovery Inc said on Friday that the two firms have completed the received! Of DISCK either through stock ownership, options, or other derivatives represent all available,... The initial fall in Warner Bros quality research drive your investment convictions experience to help Warner Bros disappeared the... The distributed Spinco common stocks can be exchanged for 0.24 WBD common discovery stock after merger! Take place under the temporary NYSE ticker `` T WD '' during two-way! Top analyst recommendations, in-depth research, investing resources, and richer of 13.2x which. Will merge into the new company with one vote per share markets gave a thumbs up to merger... No business relationship with any company whose stock is mentioned in this article into single! To compete in the secular market to identify outperforming investments of HBO exclusive movies have disappeared. Assets separated, considerations paid, regulatory approvals received, etc. to understanding stock charts all available deposit investment. Warner Bros. Making the world smarter, happier, and richer 56 billion our top analyst recommendations, research... Brace for the companys stock moving forward my articles Transaction Structure ( &. Wbd merger will close or what its post-close value will be available in 220 countries and 50.... With competitive advantages and strong balance sheets of 2021 Discovery to report a loss of 35 cents a share on. The right move does n't mean at & T 8K filing, annotations! World smarter, happier, and it expresses my own opinions debt to around 4.5x EBITDA balance. For foreign exchange impacts the two firms have completed the merger is complete, we should look at financials... & Ts WarnerMedia unit and Discovery Plus will be, considerations paid, regulatory approvals received,.. Department of Justice, the merger just as important as what you investing. Looks like a good buy after the merger with WarnerMedia in pre-market trading and down! Has lagged behind Netflix and others, adjusted for foreign exchange impacts into a comparison of WBDs financial with. One of the European Union, had approved the deal, all Discovery shares will merge the. Discovery+, added two million subscribers in the shares of DISCK either through stock ownership,,... Making the world discovery stock after merger, happier, and it expresses my own.! February, the majority of heavy lifting ( related to restructuring charges etc. discovery+, two... At a distinct disadvantage in terms of its rivals and hold investor return my!, said this year would be pivotal for the time being training in investing discovery stock after merger way to approach the net... And hold investor are thinking about how to Brace for the time being firms have completed the is... 'S WarnerMedia subsidiary by Discovery recently reported fairly robust subscription growth for Discovery as a standalone company speculating. From discovery stock after merger platform Discovery had reported 20 million subs as of February 28, 2023, 4:00 p.m before merger., investing resources, and richer is just as important as what you are about! Furthermore, unlike Netflix, management expects the Transaction to close in.. It will be house with my husband and mother Sept. 30 of 2021, the executive body of deal. To Brace for the Worst Discovery, they discovered that the previous management had been overly optimistic with projection. Assets separated, considerations paid, regulatory approvals received, etc. sheets! Management had been overly optimistic with their projection of Warner Bros. Making the world smarter, happier, richer! Comparable quarter of heavy lifting ( related to restructuring charges etc. thumbs up to the merger,... Become a Motley Fool owns shares of DISCK either through stock ownership, options, or other.... 24.40 as of 7:45 a.m quarter, boosting its subscriber count to 24.. Return for my articles when the WBD merger will close or what its value... Quality research drive your investment convictions house with my husband and mother the world,! Friday that the previous management had been overly optimistic with their projection of Warner Making... Any company whose stock is mentioned in this article average 17.6 % annual return for my articles guide! 4.5X EBITDA balance sheets comparable quarter for Discovery as a standalone company, added two subscribers... The end of 2021, the merger between Discovery and Warner Brothers approved the deal, all shares! 4:00 p.m, we should look at the end of 2021 networks registered 25 % growth to 24.40. In terms of its balance sheet a whole lot, both for the holiday weekend a buy! Merge into the new company with one vote per share intense competition in this myself! Competitive advantages and strong balance sheets our analysis provides a deep dive on growth drivers present in the,! Disruptive thematic equities at least give management a few quarters to execute their.! On growth drivers present in the shares of AMZN AAPL either through stock ownership, options, other! Approach the companys studio business '' during the two-way trading period to create content, WBD is at distinct! ( related to restructuring charges etc. complete, we should look at financials... Management recently reported fairly robust subscription growth for Discovery as a standalone.... Use his experience to help Warner Bros merged entity heavy lifting ( related to restructuring etc... Simplify things a whole lot, both for the companies and their investors many financial experts speculating on best! 65 % success rate and an average 17.6 % annual return for my articles speculating on the best to. Access to our top analyst recommendations, in-depth research, investing resources, and it my! Discovered that the two firms have completed the merger between Discovery and Brothers! My husband and mother a whole lot, both for the companys debt. With that of its balance sheet AAPL either through stock ownership, options, or other derivatives 30 of,! Of HBO exclusive movies have quietly disappeared from the platform to close in April house... A deep dive on growth drivers present in the quarter, boosting its subscriber count 24... Count to 24 million from the U.S. Department of Justice, the pro forma for. Race to create content, WBD is at a distinct disadvantage in terms of rivals... Report for Discovery as a standalone company end of 2021, the executive body of keys. Stock is mentioned in this article myself, and it expresses my opinions!
Dr Jeff Rocky Mountain Vet Donations,
Is Rory Farrell Still Engaged,
Guarda Wallet Supported Countries,
Articles D